WEEKLY OUTLOOK-week of 7/31/17

Last Week’s Highlights

  1. Little movement in equities overall. In a slight reversal of year’s fortunes, Dow Jones Industrials were up 1% while the S&P 500 and Nasdaq were unchanged. Underperformers for 2017, Telecom (+6.5% week over week), energy (1.9%) and financials (+0.3). Caterpillar and Boeing posted higher than expected earnings leading the way. Technology stock were off 0.9%.
  2. The Federal Reserve left short term interest rates unchanged. Although the Fed noted recent weakness in inflation, they are expected to reduce the balance sheet (sell holdings back to market) and are expected to raise short-term in December.
  3. Continued dis function in Washington DC. President Trump replaced Reince Priebus with John Kelly as Chief of Staff. The President is still trying to push out Attorney General Sessions and replace Press Secretary Spicer last week.

This Week’s Expectations

  1. Economic data. On Tuesday, June personal income (exp. +0.2%) and consumption (exp. +o.2%). On Friday, July non-farm pay roll will be announced. Expectation is +180,000.
  2. Corporate earnings continue to be announced this week. The most anticipated is Apple. Last week’s tech numbers (Facebook, Amazon, Alphabet) were good but stock movements were mixed.
  3. What happens with tax reform. The Republican controlled Senate and House are expected to pivot after they could not agree on Health Care reform.
  4. Weak dollar. In past few weeks, the dollar has faded which helps commodity prices but raises costs to companies.