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Weekly Market Recap Mar 11, 2017

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Great week for the bulls with bookend big gains on both Monday and Friday.  The NASDAQ actually ended at all time highs so that swift correction is in the books.  While there was a lot of “trade war” riff raff, indexes showed it’s a side show.   White House economic adviser Gary Cohn announced his resignation Wednesday but all that did was put the S&P 500 down fractionally for a day.

“It is not so much the resignation, but the role that Cohn has played in the administration. He was seen as the voice of economic stability and a spokesperson for financial markets,” said Brad McMillan, chief investment officer for Commonwealth Financial Network, in a note to investors. “His resignation leaves the president with a set of economic advisers largely seen as outside of the mainstream, or at least perceived as less aligned with Wall Street interests. At a minimum, this introduces more uncertainty into economic policy and raises the chance of policy actions such as tariffs.”

For the week the S&P 500 roared higher 3.5% and the NASDAQ 4.2%.  Boo yah.

On the economic front, ISM Services slipped to 59.5 from 59.9 a month earlier — a level that still signals rapid growth in service-sector activity.  The U.S. trade deficit climbed 5% in January and hit a nearly 10-year high, continuing a steady rise since President Trump took over that could exacerbate already tense disputes between the administration and key trading partners.  Friday’s employment report was pretty much all you could ask as there was a lot of job growth without much wage pressure:

The U.S. created 313,000 new jobs in February, the biggest gain since mid-2016 and a reflection of the strongest labor market in two decades. Economists had predicted a 222,000 increase in nonfarm jobs. The unemployment rate was unchanged at 4.1%. Hourly pay rose 4 cents, or 0.1%, to $26.75 an hour, the government said Friday. The economy added 54,000 more jobs in January and December than previously reported.  Construction companies hired 61,000 people to mark the biggest increase in 11 years. Retailers added 50,000 jobs, as did professional-oriented businesses. And manufacturers filled 31,000 positions.

“You’re getting strong jobs with not a lot of wage growth, which is perfect below expectations. And that’s what’s sort of powering the futures right. It’s the best of both worlds,” said Robert Pavlik, chief investment strategist at SlateStone Wealth.

“For a labor market that we are told is rather tight this is quite a big number and the fact that we saw wage growth slow to 2.6% from 2.9% would suggest that there is much more slack in this particular jobs market than most people think,” wrote Michael Hewson, chief market analyst, at CMC Markets UK, in a Friday note.

Some nice graphs here showing wage growth over time…

Across the pond, the European Central Bank left interest rates unchanged but removed language from its statement saying it would boost the size of its asset purchases if conditions deteriorated. The move was widely described as a small step toward ending the ECB’s quantitative easing program later this year.

The bitcoin fell back below $10K.

Here is the 5 day weekly “intraday” chart of the S&P 500 …not via Jill Mislinski.

The week ahead…

Indexes – especially the NASDAQ – have righted themselves.  We’ll have some inflation reports coming up but again – that sort of thing was a “reason” we needed for a long awaited correction, more than an actual ‘thing’.

Index charts:

Short term: NASDAQ on fire.

The Russell 2000 was pretty solid this week – some are attributing it to little exposure to “trade wars!!! (pow wow bam!)”

The NYSE McClellan Oscillator held in well during the shakeout last week and now is – if anything – short term overbought!

Long term: Uber strong on that NASDAQ chart.

Charts of interest / Big Movers:

Monday, XL Group (XL) surged 29% after French rival AXA said it would acquire the insurer for $15.3 billion, pending approval from XL’s shareholders and regulators.

Dermira (DERM) plummeted 66% after the company’s acne drug failed to meet the co-primary endpoints of two phase 3 clinical trials.

Tuesday, CommerceHub (CHUBA) agreed to be bought by private-equity firm Sycamore Partners in a cash deal valued at $1.1 billion. The stock spiked 23%.

Wednesday, H&R Block (HRB) jumped 12% after the tax preparer reported late Tuesday a wider-than-expected fiscal-third-quarter 2018 loss but quarterly revenue that came in above expectations.

Dollar Tree (DLTR) slumped 15% after the retailer released its earnings.

Thursday, Kroger (KR) sank 13% after it reported its fourth-quarter results.

Have a great week and we’ll see you back here Sunday!



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Strategies & Ideas

Agustin Fuentes Interview with Michael Covel on Trend Following Radio

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Agustín Fuentes
Agustín Fuentes

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Agustín Fuentes is a primatologist and biological anthropologist focusing largely on human and non-human primate interaction, pathogen transfer, communication, cooperation, and human social evolution. His most recent book is “The Creative Spark: How Imagination Made Humans Exceptional.”

How did Agustín begin studying anthropology? From an early age he loved trying to figure out what made people tick. By studying other primates and what human ancestors did, he came to find that we are creative and imaginative in ways people didn’t think we had the capacity for.

Agustín found that through innovation, collaboration and creativity learning happens. What are some examples of innovation from our ancestors? Fire is one of the most basic, yet amazing discoveries of our ancestors. No species on the planet, besides humans, use fire. Use of fire gave humans the opportunity to change the composition of materials to mold utility items, change food composition, and provide the opportunity to break the day and night cycle.

Collaboration can be seen in instances of warfare. Are we inherently violent? Yes. Humans have the capacity for intense violence. However, when studying warfare, it is all about collaboration and putting your life on the line for the greater good of the army – not about who has the most violent army. Collaboration is the bottom line in when it comes to winning a war.

Once people were able to convey information with language, huge advancements were able to happen in creativity. In the last 100,000 years or so art happened, and humans were able to convey imagination. Speech and hearing coincided with art and showcased our capacity for creativity. Michael and Agustín finish the podcast talking diversity. Throughout the ages, diversity has been the norm for humans. When you get outside of your bubble, and explore the world a little, you see first hand the immense differences in advancements and innovation throughout cultures.

In this episode of Trend Following Radio:

  • Solo genius
  • Violence throughout history
  • Genghis Khan
  • Fire
  • Neanderthals
  • Male and female differences
  • Bone tools
  • Evolution of imagination

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“The Sleep Podcast Was Amazing…”

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Why We Sleep
Why We Sleep

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The sleep podcast was amazing. You should find a way to recirculate it to get some additional attention. Call Tim Ferriss? The flu vaccine portion was startling. I will be sharing this show with a lot of my friends!

Great job.

Best of luck from a fellow yogi – trader.

[Name]

Thanks. Matt’s book is great too.





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The 2018 Michael Covel Interview on Trend Following Radio

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Michael Covel
Michael Covel

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Frank Conway is host of the Economic Rockstar podcast. Michael made a recent appearance on Frank’s show and shares it today on his podcast.

In this episode of Trend Following Radio:

  • Origins of trend following
  • What is trend following
  • Trend following performance
  • Eugene Fama
  • Momentum
  • TurtleTrading
  • CNBC
  • Bitcoin

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