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November 12 – November 16 Week in Review

Wall Street took a tumble last week, with consumer discretionary and information technology sectors leading the pullback. The S&P 500 lost 1.61%, the Dow fell 2.22%, the Nasdaq lost 2.15%, and the Russell 200 fell 1.42%. Despite some positive news on the U.S.-China trade war front, investor concerns over earnings growth and another breakdown in oil prices seemed to weigh on sentiment.

A host of retailers reported earnings last week, including Walmart, Macy's, Home Depot, and Nordstrom to name a few. The reports generally showed better than expected profits, but shares sold off in response nonetheless. The SPDR S&P Retail ETF lost 4.5%, while the consumer discretionary sector lost 3.8%.

The tech sector got off to a rough start after two more Apple suppliers, Lumentum and Qorvo, cut their guidance. Results from chipmaker NVIDIA and chipmaker equipment supplier Applied Materials also weighed on the sector, with NVIDIA plunging nearly 20% on Friday in reaction to disappointing earnings guidance.

The oil sensitive energy space fell in tandem with WTI crude, which dropped 5% last week to $56.83 a barrel. Saudi Arabia announced it would reduce its oil exports in December by 500,000 barrels a day due to a seasonal slowdown in demand, but President Trump rebuked that decision on Twitter. There were also reports that OPEC and non-OPEC allies could be entertaining a plan to cut production by 1.4 million barrels per day in 2019.

Natural gas prices on the other hand rose over 18% last week, despite having their worst day in 15 years on Thursday, on a combination of short covering and anticipated demand due to earlier than normal cold temperatures.

In Washington, Democratic Congresswoman Maxine Waters, who is set to take over the House Financial Services Committee this January, vowed that the days of weakening bank regulations will be coming to an end. Ms. Waters' comments were not a surprise as it was understood this would likely be the case following the midterm election results. However, a sell off in the financial space, which finished the week lower by 1.3%, suggested otherwise.

A Financial Times report suggested China and the U.S. are trying to reach a trade truce ahead of the G-20 meeting at the end of the month. President Donald Trump chimed in that China is open to a trade deal, though a list of concessions reportedly presented from China before did not mention structural reforms that have been demanded by President Donald Trump. At a minimum, National Economic Council Director Larry Kudlow did confirm that the U.S. and China have resumed trade discussions.

Over in the UK Prime Minister Theresa May received cabinet approval for her draft withdrawal statement for Brexit. However, Brexit secretary Dominic Raab, and several other ministers, resigned after the approval, and reports indicate that the 1922 Committee received 48 letters needed to trigger a vote of no-confidence in Prime Minister Theresa May. The vote could take place this week.

In the bond markets, U.S. Treasuries saw increased demand due to the market turbulence and a softer sounding perspective from Fed Vice Chair Richard Clarida who conceded on Friday that he thinks the Fed is getting closer to a neutral rate, which is a dovish stance compared to Fed Chair Jerome Powell's "long way from neutral" comments from last month. The yield on the 2 year U.S. Treasury dropped 13 basis points to close at 2.80%, and the 10 year yield lost 12 basis points to close at 3.07%.

November 19 – November 23 Economic Calendar

  • Monday
  • John Williams Speaks
    9:40 AM ET
  • Housing Market Index
    10:00 AM ET
  • E-Commerce Retail Sales
    10:00 AM ET
  • John Williams Speaks
    10:45 AM ET
  • John Williams Speaks
    3:15 PM ET
  • Tuesday
  • Housing Starts  8:30 AM ET
  • Redbook
    8:55 AM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • Durable Goods Orders
    8:30 AM ET
  • Jobless Claims
    8:30 AM ET
  • Consumer Sentiment
    10:00 AM ET
  • Existing Home Sales
    10:00 AM ET
  • Leading Indicators
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Thursday
  • U.S Holiday:  Thanksgiving
  • Friday
  • PMI Composite FLASH 
    9:45 AM ET

     

     

  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET

PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. This commentary is a matter of opinion and is for informational purposes only. It is not intended as investment advice and does not address or account for individual investor circumstances. Investment decisions should always be made based on the client's specific financial needs, goals and objectives, time horizon and risk tolerance. The statements contained herein are based solely upon the opinions of Telemus Capital, LLC. All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice. Information was obtained from third party sources, which we believe to be reliable, but not guaranteed.

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