Jul 162016
 

Market Conditions

Up, up, and away! The bull is clearly back. Equities were up for the third week in a row, reaching a series of fresh record highs. The swift post-Brexit rebound has been driven by falling treasury yields (making bonds more expensive compared to stocks), better than expected economic data, and higher expectations for company earnings growth. The U.S. jobs report showed the strongest monthly hiring since last October, monthly retail sales rose sharply with three-month growth now the strongest in more than a year. Rate hike expectations did edge up a little, but concerns about a rate hike taking place before the end of 2016 are almost non-existent. The fed funds futures market estimates the likelihood of a hike in July at 2.4% while the implied probability of a hike in December sits at 47.8%.

The S&P 500 opened Monday at 2131.72 and closed on Friday at 2161.74, up 30.02 or 1.41% for the week.

Chart_071616_SPX

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Jul 022016
 

Market Analysis

Equities recorded their strongest weekly gains of the year following last week’s Brexit debacle. Markets were spurred higher by a vow to further ease monetary policy by the Bank of England during the summer. In the wake of those comments, markets have priced in an 85% chance of a rate cut in England by August. This all puts further pressure on central banks in the United States to keep interest rates low indefinitely. It appears that the zero-percent interest rate policy (ZIRP) is now the “new normal”. The S&P opened Monday at 2031.45 and closed on Friday at 2102.95, up 71.5 points, or 3.52%.

Chart_070216_SPX

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Jun 272016
 

The S&P 500 (SPX) is down over five percent in the past two trading days. However, trading today closed at 2000.54, a key psychological support level. It is difficult to predict the impact of Brexit both short- and long-term. However, the U.S. economy is in fairly good shape with seemingly low unemployment, strong consumer spending and sentiment, and housing demand remaining upbeat. Investors will be watching carefully for the effects of Brexit as new economic data is released. What is likely, however, is that volatility will continue in the financial markets over the course of the next few weeks or months. This presents an exceptional opportunity for premium sellers.

Chart_062716_SPX
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Jun 182016
 

Market Analysis

Stocks fell in volatile trading as investor sentiment continued to weaken ahead of next week’s “Brexit” vote. A clear swing in opinion polls in favor of the Leave camp put markets on edge this week. Investors also focused on commentary from central banks around the globe, which wasn’t surprising, considering the Federal Reserve, Bank of Japan, Bank of England, and Swiss National Bank all held their policy meetings. All four stood pat, keeping their key interest rates unchanged. However, all four cited growth concerns that fueled a flight to safety and a somewhat surprising aversion to stocks. Surprising, only because up until now, dovish commentary from the Federal Reserve has elicited strong rallies in recent years. The S&P surrendered nearly 1% on the week, opening Monday at 2091.75 and closing on Friday at 2071.22, down 20.53 points.

Chart_061816_SPX

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Jun 112016
 

Stocks rallied during the first half of the week marking a new high for 2016. However, the rally was short-lived. The SPX came within 12 points of its historic all-time high on Wednesday, but was unable to continue the upward momentum. On Friday, the market gave in to selling pressure and the SPX closed down on the week.  Investor fear has returned due in part to the World Bank lowering its global GDP forecasts. This report, along with nervousness around the looming “Brexit” vote and the FOMC meeting next week put traders into a risk-off mode before going into the weekend. The S&P 500 opened Monday at 2100.83 and closed on Friday at 2096.07, down 4.76 or 0.23% for the week.

Chart_061016_SPX

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