Small and Mid-Cap companies have been the best performing sector of the market this year and last week was no exception. The Russell 2000® Index, last week’s best performer, rose 0.80% followed by the Nasdaq which gained 0.35%. The S&P 500® Index and the Dow Jones Industrial Average lost 0.25% and 0.59%, respectively. Small cap stocks continued to perform well; strong earnings reports and upwardly revised guidance supported the momentum provided by the economy. A survey among economists projected a 3.0% GDP rate for 2018, an improvement over surveys conducted last month (+2.9%) and a year ago (+2.4%). Also, Japan reported quarterly GDP growth of 1.9% with increases led by consumer and capital spending.
In light trading, the markets sold off on Friday in reaction to concerns that Turkey could become the next Greek tragedy. The lira declined as much as 20% on Friday, and the superheated economy has exposed the vulnerabilities of some European banks which hold substantial Turkish debt. Friday’s announcement by President Trump of new additional steel and aluminum tariffs on Turkey added another layer of concern. Most strategists, though, do not expect a major crisis as the exposure of European banks is much more limited than during the Greek financial crisis.
Over 90% of the companies in the S&P have reported quarterly earnings; approximately 84% have exceeded earnings estimates and, amongst companies in the Index, upward revisions for 2018 earnings estimates have increased by 10.8% year-to-date. Corporate news beyond earnings releases was rather sparse. Elon Musk tweeted that Tesla is considering a leveraged buyout to become a private company; the Board plans to discuss the matter next week. On the trade front, President Trump announced plans to add another $16 billion of tariffs on Chinese imports. Predictably, China reciprocated by announcing a similar amount of tariffs on U.S. goods while notably omitting oil imports from the list. Unofficially, the two countries may be engaging in informal dialogue which might lead to more formal negotiations.
The markets’ upward bias continues, with the expectation of further gains through the end of the year. Corporate earnings and strong economic data are the key drivers. Call options, which enable investors to buy at current prices and potentially exercise if stock prices move higher, have been in high demand. Month-to-date, all major indices (except the Dow) have gained despite light end-of-summer trading volumes.
Source: Pacific Global Investment Management Company
Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.
Last Week's Headlines: 8/14/2018
1. The number of job openings was little changed at 6.7 million on the last business day of June, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were little changed at 5.7 million and 5.5 million, respectively. Within separations, the quites rate was unch...
Canadian dollar climbs to 7-week high on NAFTA optimism, ...
Mexico and the U.S. have agreed to step up talks in hopes of reaching an agreement on major issues by August
California's huge energy decision: link its grid to its n...
It's partly a decision about clean energy - with a huge trade off. California is Anerica's undisputed clean-energy leader, a kind of cultural and economic islan, liberal enough to pass...
Brian Amidei is Coachella Valley's only Barron's Magazine Top 1,000 Advisor in 2013 and 2014!
Brian Amidei, along with Partners Joseph Romano and Brett D'Orlando have also been named *2014, 2015, 2016, 2017 Five Star Wealth Managers!
Awards and recognitions by unaffiliated rating services, companies, and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if Fortem is engaged, or continues to be engaged, to provide investment advisory services; nor should they be construed as a current or past endorsement of Fortem or its representatives by any of its clients. Rankings published by magazines and others are generally based on information prepared and/or submitted by the recognized advisor. Awards may not be indicative of one client?s experience or of the Firm?s future performance. Neither Fortem nor the recognized advisor has paid a fee for inclusion on a list, nor purchased any additional material from the award provider. The criteria for each award is listed below:
The Barron's award is is based on the recognized adviser's assets under management, contribution to the firm's revenues and profits, and quality of practice. Investment performance is not an explicit criteria. Additional information about this award is available at http://online.barrons.com/report/top-financial-advisors.
Five Star Professional Disclosure:
The Five Star Wealth Manager award is based on 10 eligibility and evaluation criteria: 1) Credentialed as an investment advisory representative (IAR) or a registered investment advisor; 2) Actively employed as a credentialed professional in the financial services industry for a minimum of five years; 3) Favorable regulatory and complaint history review; 4) Fulfilled their firm review based on internal firm standards; 5) Accepting new clients; 6) One-year client retention rate; 7) Five-year client retention rate; 8) Non-institutionalized discretionary and/or non-discretionary client assets administered; 9) Number of client households served; and 10) Educational and professional designations. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or the magazine. The award methodology does not evaluate the quality of services provided. Additional information about this award is available at: fivestarprofessional.com/2016FiveStarWealthManagerMethodology.pdf
Fortem Financial 2016. All rights reserved.
Data Sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market Data: Based on reported data in WSJ Market Data Center (indexes); U.S. Treasury (Treasury Yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness.
Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. The opinions expressed are solely those of the author, and do not represent those of Fortem Financial, LLC or any of its affiliates. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful. Forward looking statements are based on current expectations and assumptions, the economy, and future conditions. As such, forward-looking statements are subject to inherent uncertainty, risks, and changes in circumstance that are difficult to predict. Actual results may differ materially from the anticipated outcomes. Carefully consider investment objectives, risk factors and charges and expenses before investing. Fortem Financial is a registered investment adviser with the SEC. Advisory services are offered through Fortem Financial.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighed index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.