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No news is good news for the markets

by Fortem Financial September 17, 2018

Significant headline news events were in short supply last week yet the major indices moved higher which has been the path of least resistance.  For the week, large caps outpaced small cap stocks; the market leading Nasdaq rose 1.36%, followed by the S&P 500® Index (1.16%), Dow Jones Industrial Average (0.92%) and the Russell 2000® Index (0.50%).  Economic data, including the Consumer Confidence Index, continue to support the markets.  The Index’s 100.8 reading for August is the second highest since 2004, eclipsed only by the March 2018 reading.  Also, the S&P 500® Transportation Index has gained over 9% since late June.  Many traders view the Transportation Index as a barometer of economic growth; here, the recent performance suggests equity market gains over the next several months.  Last week, the U.S. Energy Information Administration announced that the U.S. likely surpassed Russia to become the largest oil producer in the world; Saudi Arabia is ranked third.  The recent jump in oil production has enabled the U.S. to lead the world in oil output for the first time since 1973.

The news on the trade front remains uncertain.  On Thursday, a spokesperson for the Chinese government commented that the U.S. and China were discussing details for a new round of trade negotiations; on Friday, however, President Trump told aides to go ahead with threatened tariffs on $200 billion of Chinese goods.  Separately, trade negotiations continue with Canada.  U.S. businesses have increased their lobbying efforts to avoid a trade war; China has also assured U.S. businesses of the country’s desire to support continued investment in the Chinese economy.  The stakes are high for both countries.  The markets, despite the sometimes-conflicting commentary, continue to believe that the countries will eventually negotiate trade agreements.

Looking ahead, the mid-term elections, and trade issues will continue to dominate news headlines; also, in the run-up to the end of the third quarter, investors will be alert for positive, or negative, earnings pre-announcements.  A good example is a company in the marine transportation and diesel engine business.  The stock fell approximately 10% last week due to concerns that delays in parts procurement and the slowdown in Permian basin oil production would hurt earnings.   Today, an industry analyst issued a report indicating that all of the company’s business segments are improving and their diesel engine business is ahead of previous projections; shares rose 6.5% today as investors reassessed their assumptions.  Federal Reserve interest rate policy, inflation and economic data continue to support positive market sentiment without the “irrational exuberance” that might signal a potential market peak.

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.

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Brian Amidei, along with Partners Joseph Romano and Brett D'Orlando have also been named *2014, 2015, 2016, 2017, 2018 Five Star Wealth Managers!

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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
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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.

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