Saturday, October 15, 2016

MAD Weekly Review 10/15/2016

This week was a comparatively less exciting week than others. Besides Stumpf resigning from Wells Fargo there wasn't much else to talk about. At least if you listen to the regular media outlets. They seem to only talk about how unfit Trump is for President, while completely ignoring the massive Hilary Clinton WikiLeak e-mail dump. Oh and Ken Bone has been making the rounds for his week of fame so that's cool I guess.  The next debate is coincidentally scheduled on the 29th anniversary of the 1987 stock market crash. Could we get another?

We did get the Fed's September FOMC minutes. We got it in writing that a rate is coming. They buried this little nugget in there.

"Members generally agreed that the case for an increase in the policy rate had strengthened."

The market generally agrees too. Right now it's projected the next hike will be in

December just after the most interesting elections in my lifetime. This might be the most anticipated rate hike in history since Yellen & Co. have basically been saying in one form or another that a hike is coming. Of course the doves have been out to, but not nearly in the same force. 

Jobs & Spending Intact

We got another record low in Initial Claims for Unemployment coming in at 246k. In fact it was the lowest since 1973. It's not that jobs aren't available. There are tons of them according to the JOLTS report we also received showing 5.4 million jobs still available! While job growth is tepid, it's still on the right side of where it needs to be. 

This was followed up by decent Retail Sales at the end of the week showing a 0.6% increase from August to September and 2.2% YoY. One of the strongest categories was non-store retailers which showed an 11% gain. It's no secret the internet is changing the retail landscape big time, and is finally reaching the potential discussed over 15 years ago.

Surging Energy

Aside from Wells CEO Stumpf there has not been much big news other than the occasional Deutsche Bank worry, which by no means is a small one.  If that bank goes down you can bet there will be widespread contagion and volatility.

Oil continued it's rally, but has taken just a bit of a breather towards the end of the week.  A lot of that was due to purported curbs from OPEC. The only thing is OPEC only represents 4 out of 10 in the worlds top oil producing countries. True their reserves lead the pack, but with alternative energy forms gaining steam their influence is waning.

Visit to see more great charts.

The Market to Nowhere. What?

The S&P 500 has been trading between a tight range since July. In fact that range is only 96 points(2,097-2,193)!!! It literally looks to have gone nowhere in that time frame. What's deceiving is is that range is actually 4.5%, but based on Friday's close the total move is around 1.5% since July 1. The market definitely doesn't feel range bound as this year has seen it's fair share of violent short term swings.

We have seen 7 days with moves of 1% or more during that time frame. Doesn't sound like much, but compared to other days with little movement it seems kind of violent. When you think of it that way it's really kind of intriguing too. Many investors and traders continue to treat these pullbacks as buying or selling opportunities depending on their view. I don't think we'll see the range broken in either direction until after the elections. Participants want certainty, and with this election crazier than most there is definitely a lack of it.

For the week the S&P was down 1%, the Dow down 0.6%, and the Russel 2000 fared the worst at -2.0%. Long term rates continue to increase in anticipation of the rate hike. The US 10yr Treasury has risen 20bps this month to 1.80%. Q3 earnings hits full swing next week so it will be interesting to see how companies are handling currency issues.

On to some currency news. The Yen has weakened back to 1.04 vs the dollar after failing to break par again. The British Pound on the other hand continues to take a pounding. It's fallen an additional 5.6% since October started. And the Euro continues to look weak against the dollar too. For the week the dollar index was up 1.5% to 98.09.  A lot of movement going on around the world that's for sure as uncertainty persists overseas too.

I'm continuing to make some progress on sharing my own portfolio on the company website and blog.  That is taking longer than I anticipated.  It's almost unheard of in the financial services industry to have an adviser show you what they personally invest in. Many advisers are simply not willing to show you their personal portfolio. Maybe in private they are, but definitely not on the web.

I'm also working on some other exciting things behind the scenes and I'll post about that soon too. On top of that I'm trying to implement other ideas I think everyone will like. Always something to improve!

Have a great weekend!

The MAD Consultant.

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