Weekly Market Overview | August 19, 2019

August 19, 2019 by Peter Sorrentino

Domestic Equity Overview:
Domestic equity prices were down roughly 1% last week, as the Dow Jones Industrial Average lost 1.5%. The Technology-heavy NASDAQ fell only eight tenths of a percent, thanks to a very minor three tenths of a percent drop in Technology stocks overall. For the second week in a row, the bulk of the selling pressure was found in the Energy and Financial Service sectors. The decline in Energy stocks, unlike last week, was impacted by a significant decline in gasoline prices and drilling. As a result, the share prices of refiners and oilfield service providers led the sector to a 3.5% decline. Among the Financial Services stocks, it was selling pressure on asset managers and insurance companies that propelled the sector’s 2.2% decline. Investors moved to the traditionally defensive Consumer Staples, Utilities and Health Care stocks, searching both for safety and yield. Thanks to the relatively benign week for Technology and the continued weakness for Energy and Financials, the growth style outperformed value by 60 basis points. Small Cap stocks mirrored their Large Cap brethren, down around 1%, but due to the preponderance of Consumer Staples and Utilities in the Mid-Cap segment, that size component of the market was fractionally positive for the week.

International Equity Overview:
Currency exchange rates continued to move in the dollar’s favor. Unlike the previous week, global markets, while down, were stable when the currency impact was removed. Many analysts began to anticipate further action by the Federal Reserve Bank to blunt further appreciation of the dollar. This has become even more of an imperative as the makings of crises unfold in Argentina and Italy. The MSCI EAFE® Index fell 1.6% last week on a 1.9% decline of the FTSE 100 Index in London. The surprising turn of events in Argentina served to chasten investors on the emerging markets, helping fuel the 1.1% decline registered by the MSCI Emerging Market Index.

U.S. Fixed Income Overview:
Yields on U.S. Treasury obligations continued to retreat, declining 8 to 23 basis points along the maturity scale. The decline became somewhat erratic mid-week and, in so doing, created a classic yield curve inversion, as the yield on the 30-year Treasury momentarily dropped below that of the four-week Treasury Bill. Even though this was an intraday event, the impact on stock and commodity prices was dramatic. By the close of trading, the curve resumed its familiar shape, albeit at a lower level. The corporate and municipal bond markets experienced declines in yields last week as well, just not to the same degree as Treasury Bonds. As illustrated in Exhibit 1, both the corporate and municipal yield curves continue to be positively sloped.

Commodity Overview:
Commodity prices were a study in contrast, as the inversion of the yield curve set off heavy selling that, by week’s end, had subsided and largely reversed. Agriculture prices were negative. The price of corn fell 9.6% on substantial revision to planting data released by the USDA. Soybeans were negatively impacted by this news as well, but to a much lesser extent. Energy prices were stable last week, apart from regular unleaded gasoline, which fell for the second week in row on inventory concerns and declining demand growth.


The appearance (although fleeting) of a full-blown yield curve inversion demonstrates the degree of uncertainty that prevails among investors. This despite a very solid productivity report that bodes well for future corporate profits. Not to overstate the obvious, but the markets really do not tolerate change well. We are in an extended recovery, due in large part because the opening years were so weak and lacked the hallmarks typically associated with a recovery. The same holds true even now. In past cycles, the Federal Reserve put the brakes on the money supply to reign in an overheating economy that is fueling inflation. While there are signs of inflation to be found, it is anything but widespread or pervasive. The other signpost that accompanies the onset of a recession is an inventory buildup. Like inflation, we have a handful of situations, but nothing like those that have presaged recessions past. So effectively, we have investors looking at the calendar and thinking that it is about that time, yet we struggle to find a catalyst that will trigger the event. Trade might do it, but it will take more than just China to start the ball rolling. So, for now, it looks like we are going to limp along with rising volatility and no clear theme, which is not such a bad thing, as companies will go about their business, and profits will begin to matter again. In such a climate, hopefully, investors can wean themselves off the news cycle and go back to investing in fundamentals.

Exhibit 1 (Source: Bloomberg)

For a PDF version of this publication, click here: 08.19.2019_WeeklyMarketOverview

 

NOTE: IMPORTANT INFORMATION
Source: Unless otherwise noted, all statistics herein obtained from Bloomberg.
This is not a complete analysis of every material fact regarding any company, industry or security. The information and materials herein has been obtained from sources we consider to be reliable, but Comerica Wealth Management does not warrant, or guarantee, its completeness or accuracy. Materials prepared by Comerica Wealth Management personnel are based on public information. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Comerica Wealth Management, including investment banking personnel. The views expressed are those of the author at the time of writing and are subject to change without notice. We do not assume any liability for losses that may result from the reliance by any person upon any such information or opinions. This material has been distributed for general educational/informational purposes only and should not be considered as investment advice or a recommendation for any particular security, strategy or investment product, or as personalized investment advice. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The investments and strategies discussed herein may not be suitable for all clients. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Comerica Wealth Management consists of various divisions and affiliates of Comerica Bank, including Comerica Bank & Trust, National Association; World Asset Management, Inc.; Comerica Securities, Inc.; and Comerica Insurance Services, Inc. and its affiliated insurance agencies. World Asset Management, Inc. and Comerica Securities, Inc. are federally registered investment advisors. Registrations do not imply a certain level of skill or training. Comerica Bank and its affiliates do not provide tax or legal advice. Please consult with your tax and legal advisors regarding your specific situation. Non-deposit Investment products offered by Comerica and its affiliates are not insured by the FDIC, are not deposits or other obligations of or guaranteed by Comerica Bank or any of its affiliates, and are subject to investment risks, including possible loss of the principal invested. Past performance is not indicative of future results. Information presented is for general information only and is subject to change.

The S&P 500® Index, S&P MidCap Index, S&P 600 Index and Dow Jones Wilshire 5000 (collectively, “S&P® Indices”) are products of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and Standard & Poor’s Financial Services, LLC and has been licensed for use by Comerica Bank, on behalf of itself and its Affiliates. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The trademarks have been licensed to SPDJI and sublicensed for certain purposes by Comerica Bank, on behalf of itself and its Affiliates. Nothing herein is sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”) or Standard & Poor’s Financial Services LLC. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC make any representation or warranty, express or implied, to the owners of the content herein, or any member of the public regarding the advisability of investing in securities generally or in particular strategies or the ability of any particular strategy to track general market performance. SPDJI and Standard & Poor’s Financial Services, LLC only relationship to Comerica Bank, on behalf of itself and its Affiliates with respect to the S&P® Indices is the licensing of the Indices and certain trademarks, service marks, and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P Indices are determined, composed and calculated by S&P Dow Jones Indices or Standard & Poor’s Financial Services, LLC without regard to Comerica Bank and its Affiliates or any of the content herein. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation to take the needs of Comerica and its Affiliates or the owners of any of the content herein into consideration in determining, composing or calculating the S&P Indices. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC are responsible for and have not participated in the determination of the prices, and amount of any particular strategy or the timing of the issuance or sale of any particular strategy or in the determination or calculation of the equation by which any particular strategy is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation or liability in connection with the administration, marketing or trading of any particular strategy. There is no assurance that any particular investment product based on the S&P Indices will accurately track index performance or provide positive investment returns. SPDJI is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.

NEITHER S&P DOW JONES INDICES NOR STANDARD & POOR’S FINANCIAL SERVICES, LLC GUARANTEES THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE WAM STRATEGIES OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNCATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES, OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY COMERICA AND ITS AFFILIATES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P INDICES OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES OR STANDARD & POOR’S FINANCIAL SERVICES, LLC BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND COMERICA AND ITS AFFILIATES, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.

“Russell 2000® Index” is a trademark of Russell Investments, licensed for use by Comerica Bank and World Asset Management, Inc. The source of all returns is Russell Investments. Further redistribution of information is strictly prohibited.

MSCI EAFE® is a trade mark of Morgan Stanley Capital International, Inc. (“MSCI”).

FTSE International Limited (“FTSE”) © FTSE 2016. FTSE® is a trade mark of London Stock Exchange Plc and The Financial Times Limited and is used by FTSE under license. All rights in the FTSE Indices vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE Indices or underlying data.

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Weekly Market Overview | August 12, 2019

August 12, 2019 by Peter Sorrentino

Domestic Equity Overview:
Domestic equity prices were down only slightly last week, with roughly half the market posting fractional gains, while the bulk of the selling pressure was found in the Energy and Financial Service sectors. The decline in Energy stocks was roughly in line with the drop in the price of crude oil, driven by 10% declines among selected refiners and oilfield service providers. Among the Financial Services stocks, it was selling pressure on brokers, regional banks and asset managers that propelled the decline. In a combination defensive move and yield search, shares of Utilities rose 1.2% to lead the advancing stocks. The Materials sector was in second place with a 0.7% gain. With only the commodity chemical names not posting gains last week, precious metals miners and industrial gas manufacturers enjoyed particularly strong buying pressure. The weakness in Financials and Energy were enough to pull the value style (as measured by the Russell 1000® Value Index) down 1%, while the Russell 1000® Growth Index clawed its way to a positive 0.1%.

International Equity Overview:
Currency exchange rates continued to play an outsized role in foreign equity market performance. The MSCI EAFE® Index fell 2.25% last week on a 1.3% decline in the developed European markets combined with a 1.9% loss among most Asian markets. The specter of a debt crisis, whether it starts in Italy or China, now has begun creeping onto the list of investor worries. Now, it is the strength of the U.S. dollar that has the spotlight. Illustrative of this is the return on the Shanghai CSI 300 Index, where a 3% decline in local market terms became a 4.7% loss when converted to U.S. dollars. The impact of a strengthening U.S. dollar is evident in the 2.25% decline registered by the MSCI Emerging Market Index, as these economies struggle with the impact of slowing global growth and deteriorating terms of trade. Even the benefit of the lower oil price is being blunted by the rising dollar.

U.S. Fixed Income Overview:
Yields on U.S. Treasury obligations and Municipal bonds continued to retreat, declining 6 to 12 basis points along the maturity scale. Bucking that trend were corporate bonds, where $36 billion in new issuance pushed rates up slightly for investment grade issues. The high-yield corporate bond market experienced a notable shift up in yields, as the investors continued to exit the lower quality high-yield sector for Treasuries. July witnessed the heavy redemptions for both exchanged-traded and open-ended, high-yield funds.

Commodity Overview:
Commodity prices, ex-energy, enjoyed positive price trends led by silver and gold with 4.7% and 3.6% gains, respectively. Agriculture prices were positive for a third week in a row, as U.S. corn and soybeans picked up another 2.7%. Energy prices were again weaker, as the price for West Texas Intermediate Crude lost 2%, and the price for regular unleaded gasoline lost another 6% on falling demand and rising inventory levels. The major beneficiary, besides the U.S. consumer, of falling hydrocarbon prices has been the Materials sector, which relies upon crude and natural gas as a feedstock for much of its product – hence the sector’s advance since the end of May.

 

The prospect of a currency war severely rattled global markets, but the history of such policies generally reflects very badly on those who instigate and perpetuate such episodes. Currency markets have always been vast in scope. Wasting national treasure on the buying or selling of one’s currency has time and again proven to be fruitless, generally profiting only the speculators who understand the scope of the folly. Remember that it was currency speculators that George Soros and Jim Rogers rose to global fame breaking the Bank of England. As illustrated in Exhibit 1, China has done little to upend the stability of its currency. China is now part of the WTO and trying to wean itself off the U.S. dollar for its terms of trade. There would be no quicker way to lose friends and make enemies than to undermine their faith in the currency as a reliable storehouse of wealth.

 

Renminbi vs. U.S. Dollar

Exhibit 1 (Source: Bloomberg)

For a PDF version of this publication, click here: 08.12.2019_WeeklyMarketOverview

 

NOTE: IMPORTANT INFORMATION
Source: Unless otherwise noted, all statistics herein obtained from Bloomberg.
This is not a complete analysis of every material fact regarding any company, industry or security. The information and materials herein has been obtained from sources we consider to be reliable, but Comerica Wealth Management does not warrant, or guarantee, its completeness or accuracy. Materials prepared by Comerica Wealth Management personnel are based on public information. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Comerica Wealth Management, including investment banking personnel. The views expressed are those of the author at the time of writing and are subject to change without notice. We do not assume any liability for losses that may result from the reliance by any person upon any such information or opinions. This material has been distributed for general educational/informational purposes only and should not be considered as investment advice or a recommendation for any particular security, strategy or investment product, or as personalized investment advice. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The investments and strategies discussed herein may not be suitable for all clients. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Comerica Wealth Management consists of various divisions and affiliates of Comerica Bank, including Comerica Bank & Trust, National Association; World Asset Management, Inc.; Comerica Securities, Inc.; and Comerica Insurance Services, Inc. and its affiliated insurance agencies. World Asset Management, Inc. and Comerica Securities, Inc. are federally registered investment advisors. Registrations do not imply a certain level of skill or training. Comerica Bank and its affiliates do not provide tax or legal advice. Please consult with your tax and legal advisors regarding your specific situation. Non-deposit Investment products offered by Comerica and its affiliates are not insured by the FDIC, are not deposits or other obligations of or guaranteed by Comerica Bank or any of its affiliates, and are subject to investment risks, including possible loss of the principal invested. Past performance is not indicative of future results. Information presented is for general information only and is subject to change.

The S&P 500® Index, S&P MidCap Index, S&P 600 Index and Dow Jones Wilshire 5000 (collectively, “S&P® Indices”) are products of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and Standard & Poor’s Financial Services, LLC and has been licensed for use by Comerica Bank, on behalf of itself and its Affiliates. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The trademarks have been licensed to SPDJI and sublicensed for certain purposes by Comerica Bank, on behalf of itself and its Affiliates. Nothing herein is sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”) or Standard & Poor’s Financial Services LLC. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC make any representation or warranty, express or implied, to the owners of the content herein, or any member of the public regarding the advisability of investing in securities generally or in particular strategies or the ability of any particular strategy to track general market performance. SPDJI and Standard & Poor’s Financial Services, LLC only relationship to Comerica Bank, on behalf of itself and its Affiliates with respect to the S&P® Indices is the licensing of the Indices and certain trademarks, service marks, and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P Indices are determined, composed and calculated by S&P Dow Jones Indices or Standard & Poor’s Financial Services, LLC without regard to Comerica Bank and its Affiliates or any of the content herein. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation to take the needs of Comerica and its Affiliates or the owners of any of the content herein into consideration in determining, composing or calculating the S&P Indices. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC are responsible for and have not participated in the determination of the prices, and amount of any particular strategy or the timing of the issuance or sale of any particular strategy or in the determination or calculation of the equation by which any particular strategy is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation or liability in connection with the administration, marketing or trading of any particular strategy. There is no assurance that any particular investment product based on the S&P Indices will accurately track index performance or provide positive investment returns. SPDJI is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.

NEITHER S&P DOW JONES INDICES NOR STANDARD & POOR’S FINANCIAL SERVICES, LLC GUARANTEES THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE WAM STRATEGIES OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNCATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES, OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY COMERICA AND ITS AFFILIATES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P INDICES OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES OR STANDARD & POOR’S FINANCIAL SERVICES, LLC BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND COMERICA AND ITS AFFILIATES, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.

“Russell 2000® Index” is a trademark of Russell Investments, licensed for use by Comerica Bank and World Asset Management, Inc. The source of all returns is Russell Investments. Further redistribution of information is strictly prohibited.

MSCI EAFE® is a trade mark of Morgan Stanley Capital International, Inc. (“MSCI”).

FTSE International Limited (“FTSE”) © FTSE 2016. FTSE® is a trade mark of London Stock Exchange Plc and The Financial Times Limited and is used by FTSE under license. All rights in the FTSE Indices vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE Indices or underlying data.

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Weekly Market Overview | August 5, 2019

August 5, 2019 by Peter Sorrentino

Domestic Equity Overview:
The NASDAQ Index, which led the market last week, was the worst performing index for the opening days of August, surrendering 3.9%. Coming in at second place was the Russell 1000® Index, with a 3.2% decline. Despite the rate cut by the Federal Reserve Bank, the prospect of another 10% tariff on $300 billion of Chinese goods (surely to be followed by a retaliatory strike on U.S. exports) overshadowed the quarter point Fed Funds cut. The tariff news took the export-exposed Technology sector down 4.3% and the import-exposed Consumer Discretionary sector down 4.5%, as it has shown to be the U.S. consumer and not the Chinese who end up paying the tariff. The small-cap Russell 2000® Index fared somewhat better, losing 2.9%, as investors factored in the lower level of foreign exposure of smaller companies.

International Equity Overview:
Part of the motivation for the Federal Reserve to cut the benchmark yield was to support the efforts of other central banks attempting to stimulate economic growth in their economies and to stave off a liquidity and funding crisis in the emerging markets. The Fed’s actions did not achieve that end. The dollar continues to advance against most other currencies. This sent shares down 2.6% in the countries of the MSCI EAFE® Index; much of this decline is currency derived. Those in the MSCI Emerging Market Index suffered a larger degree of local market sell off, coupled with the adverse exchange rate movement posting a 4.3% price slide. Energy, Industrial and Technology sectors suffered the largest declines in these markets as well.

U.S. Fixed Income Overview:
Last week, the yield on U.S. Treasury obligations retreated by 10% from the six-year maturity out to 30 years. Short rates declined as well, with investors pouring stock proceeds into the safety of U.S. Treasury obligations. Municipal and corporate bonds benefited as well last week, but to a lesser extent, as investors leaned towards safety of capital over return on capital. Exhibit 1 depicts the movement of rates over the last week.

Recent Rate Movement

Exhibit 1 (Source: Bloomberg)


Commodity Overview:
The prospect of slowing global trade weighed on commodity prices, sending the bulk of the complex down for the week. Copper led the way among industrial metals, losing 4%, followed by a roughly 3.5% drop in U.S. grain prices. Crude oil fell 2.8%, but it was gasoline prices dropping 5.1% that surprised many traders. The seasonal change over to winter blend gasoline and heating oil is still some weeks off, but investors are reacting as if an inventory bubble is on the doorstep. Even with rising global tensions, gold managed to only add 0.9%, and silver’s recent run came to an abrupt halt with the metal falling 1.7%.

 

Virtually lost in the macro fog of war were second quarter earnings reports, which held more positive surprises than negative ones (not that they were enough to change the sentiment tide last week). The employment and PMI reports were also solidly positive and clearly showed an economy that, while slowing its pace of growth, is growing nonetheless. To be clear, last week did considerable damage, principally to investor psyches. But as we have covered before, a healthy market undergoes periodic adjustment; we will continue to climb the ‘Wall of Worry’. What we did not see last week was a spike in trading volume to new highs – it was not a race for the exits. Exhibit 2 shows the combined tape volume by trading day over the last twelve months. We did spike up, but nothing beyond what we have experienced before.

Trading Volume: 12-Month History

Exhibit 2 (Source: Bloomberg)

For a PDF version of this publication, click here: 08.05.2019_WeeklyMarketOverview

 

NOTE: IMPORTANT INFORMATION
Source: Unless otherwise noted, all statistics herein obtained from Bloomberg.
This is not a complete analysis of every material fact regarding any company, industry or security. The information and materials herein has been obtained from sources we consider to be reliable, but Comerica Wealth Management does not warrant, or guarantee, its completeness or accuracy. Materials prepared by Comerica Wealth Management personnel are based on public information. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Comerica Wealth Management, including investment banking personnel. The views expressed are those of the author at the time of writing and are subject to change without notice. We do not assume any liability for losses that may result from the reliance by any person upon any such information or opinions. This material has been distributed for general educational/informational purposes only and should not be considered as investment advice or a recommendation for any particular security, strategy or investment product, or as personalized investment advice. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The investments and strategies discussed herein may not be suitable for all clients. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Comerica Wealth Management consists of various divisions and affiliates of Comerica Bank, including Comerica Bank & Trust, National Association; World Asset Management, Inc.; Comerica Securities, Inc.; and Comerica Insurance Services, Inc. and its affiliated insurance agencies. World Asset Management, Inc. and Comerica Securities, Inc. are federally registered investment advisors. Registrations do not imply a certain level of skill or training. Comerica Bank and its affiliates do not provide tax or legal advice. Please consult with your tax and legal advisors regarding your specific situation. Non-deposit Investment products offered by Comerica and its affiliates are not insured by the FDIC, are not deposits or other obligations of or guaranteed by Comerica Bank or any of its affiliates, and are subject to investment risks, including possible loss of the principal invested. Past performance is not indicative of future results. Information presented is for general information only and is subject to change.

The S&P 500® Index, S&P MidCap Index, S&P 600 Index and Dow Jones Wilshire 5000 (collectively, “S&P® Indices”) are products of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and Standard & Poor’s Financial Services, LLC and has been licensed for use by Comerica Bank, on behalf of itself and its Affiliates. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The trademarks have been licensed to SPDJI and sublicensed for certain purposes by Comerica Bank, on behalf of itself and its Affiliates. Nothing herein is sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”) or Standard & Poor’s Financial Services LLC. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC make any representation or warranty, express or implied, to the owners of the content herein, or any member of the public regarding the advisability of investing in securities generally or in particular strategies or the ability of any particular strategy to track general market performance. SPDJI and Standard & Poor’s Financial Services, LLC only relationship to Comerica Bank, on behalf of itself and its Affiliates with respect to the S&P® Indices is the licensing of the Indices and certain trademarks, service marks, and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P Indices are determined, composed and calculated by S&P Dow Jones Indices or Standard & Poor’s Financial Services, LLC without regard to Comerica Bank and its Affiliates or any of the content herein. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation to take the needs of Comerica and its Affiliates or the owners of any of the content herein into consideration in determining, composing or calculating the S&P Indices. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC are responsible for and have not participated in the determination of the prices, and amount of any particular strategy or the timing of the issuance or sale of any particular strategy or in the determination or calculation of the equation by which any particular strategy is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation or liability in connection with the administration, marketing or trading of any particular strategy. There is no assurance that any particular investment product based on the S&P Indices will accurately track index performance or provide positive investment returns. SPDJI is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.

NEITHER S&P DOW JONES INDICES NOR STANDARD & POOR’S FINANCIAL SERVICES, LLC GUARANTEES THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE WAM STRATEGIES OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNCATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES, OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY COMERICA AND ITS AFFILIATES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P INDICES OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES OR STANDARD & POOR’S FINANCIAL SERVICES, LLC BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND COMERICA AND ITS AFFILIATES, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.

“Russell 2000® Index” is a trademark of Russell Investments, licensed for use by Comerica Bank and World Asset Management, Inc. The source of all returns is Russell Investments. Further redistribution of information is strictly prohibited.

MSCI EAFE® is a trade mark of Morgan Stanley Capital International, Inc. (“MSCI”).

FTSE International Limited (“FTSE”) © FTSE 2016. FTSE® is a trade mark of London Stock Exchange Plc and The Financial Times Limited and is used by FTSE under license. All rights in the FTSE Indices vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE Indices or underlying data.
 

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The Road Ahead | Second Quarter 2019

July 30, 2019 by Peter Sorrentino

The Economy

After a stronger-than-anticipated first quarter, the U.S. economy began to experience conflicting cross currents, as reported manufacturing activity dipped in five of the Federal Reserve Bank districts, housing activity tapered off, and auto sales appeared to falter. In contrast, employment, wages and retail sales continued to advance, and overall sentiment indicators gave little indication of a dramatic dour turn by consumers. Many of the data series have become notably more volatile since the financial crisis, and the magnitude of the statistical errors is such that it is often more informative to look at the magnitude and direction in the prior period revisions for direction and strength of the segment in question. This much is certain: housing remains largely on the sidelines in this recovery, and housing price appreciation has slowed nationally and, in selected markets, has fallen as rule changes regarding ownership disclosure have chastened some foreign investment.

One of the more surprising developments in this cycle is the impact of the trade tariffs on small and medium-sized domestic companies. Generally, these companies experience some of their best returns late in an economic cycle as production limits constrain supply, thus pushing prices and margins to higher levels. The globalization of the supply chain has reached such a degree that these smaller concerns are dependent upon offshore suppliers for critical componentry. And, as tariffs impose higher costs and supply channels become strained, these companies are now coping, not only with tight labor conditions, but with rising input costs. These factors have combined to short-circuit the historic pattern of profit growth. With wages and import prices rising, we would expect to see an upward push in inflation. That, too, has not occurred as energy prices appear unable to sustain a material advance with ever-rising U.S. production and now exports serving to cancel out OPEC’s efforts to hold the line on oil.

Other basic materials are also struggling to move higher as demand falters on slowing growth, and the overhang of surplus capacity from the previous commodity cycle limits what gains have been made. The one bright spot may be the agricultural commodities, as an outbreak of swine flu has decimated China’s hog in herds, and an extraordinarily wet spring negatively impacted U.S. wheat and corn planting. The full impact of these events will continue to play out over the second half of the year, but so far, they have served to push prices for these commodities up roughly 15%. Overall, the U.S. economy continues to forge ahead with little indication of the sort of excesses that require a recession to correct. Our positive outlook on the economy translates into a positive outlook for the U.S. equity market, but the tepid nature of this growth makes us vigilant regarding potential excess building within the financial markets that, if triggered, have the potential to spill over into the economy.

Equities

The domestic equity market began the quarter following up on the strength of the opening months of 2019. The advance continued until the first week of May where, after posting a new high, stock prices began to retreat as global trade disputes escalated. This led to a month-long pull-back that ended on June 3rd, at which time comments from Federal Reserve Chairman Powell indicated that the central bank would consider the adoption of a more accommodative monetary policy, if needed, to extend the economic advance.

Stock prices recovered most of May’s decline, as the market finished the quarter fractionally below the May 3rd record. The stocks most responsible for the positive quarter were the insurance carriers within the Finance sector. As most insurance companies resemble closed-end bond funds, the prospect of lower interest rates boosted the value of the insurer’s bond holdings. Following close behind Finance were the consumer-oriented Technology stocks, where the 15% advance of software creator, Microsoft, carried the sector. The weakest sector among the domestic stocks was the Energy sector, which was in keeping with a modest decline in energy commodity prices during the period. The weakest group with the domestic stocks were the Transports. A combination of lost revenue (due to the imposition of tariffs) and the unexpected costs associated with the grounding of the Boeing 737 Max aircraft to pressure results for the major carriers contributed to the weak performance.

Market capitalization returned as a significant determinant of price performance as witnessed by the return of the Russell 1000® Index (+2.54%) as compared to the return for the Russell 2000® Index (+0.7%). With the decline in interest rates, growth once again took center stage as the Russell 1000® Growth Index outpaced the Russell 1000® Value Index by an almost three to two margin. International markets opened the quarter closely, tracking one another until the first week in May when the developed markets (principally European) pulled ahead of the emerging markets. The prospect of the G-7 central banks lowering short-term interest rates buoyed prices in those markets, while the emerging markets were confronted by the prospect of slowing global growth, which would reduce the demand for the raw materials often supplied by these emerging economies.

Exhibit 1 (Source: Bloomberg)

Exhibit 2 (Source: Bloomberg)

Fixed Income Markets
Municipal bonds continued drawing buyers as witnessed by the unbroken string of weekly capital inflows. This unrelenting demand pushed the available yield on municipal obligations down roughly 15 basis points across the term structure for generic A-rated general obligation bonds. New issuance remains subdued, leaving investors to search the secondary market places to put money to work.

The corporate credit market enjoyed strong demand as well. The term structure for the generic A-rated corporates fell by almost 46 basis points during the quarter. As was the case for municipal debt, a light new issuance calendar boosted prices for sellers in the secondary market. The widening of credit spreads for corporates as compared to Treasuries reversed during the quarter, as the term structure for the Treasury market declined by 40 basis points, thus tightening the spread range by almost six basis points.

The health of the current economic expansion and corporate profit outlook have calmed concerns regarding deteriorating credit quality in the corporate bond sector. Non-dollar denominated debt enjoyed a sharp rebound following the news of a potentially more accommodative stance on monetary policy by the U.S. Federal Reserve Bank in late May.

 

Exhibit 3 (Source: Bloomberg)

 

Exhibit 4 (Source: Bloomberg)

Commodity Markets
Volatility continues to expand as weather and geopolitics join forces to roil the various components within the commodity complex. Persistent heavy rains delayed Midwest farmers from harvesting spring wheat and planting corn. As a result, corn prices rose 12.4% per bushel, while spring wheat gained 13.7% per bushel.

The prospect of higher feed prices served to push livestock prices down, as traders assumed farmers will likely reduce herd sizes rather than suffer higher feed costs. Events in the Middle East, attacks on production facilities in Saudi Arabia and oil tankers in the Strait of Hormuz, would briefly drive prices higher only to be pulled back down by even greater production from North America’s shale fields. At quarter’s end, the price per barrel of crude oil had slipped 3.6%.

The only part of the energy complex to post a gain for the period was the price per gallon of regular unleaded gasoline. A major refinery fire in the closing days of the quarter was enough to nudge the price of gasoline up 1.4%. Industrial metals continue under the cloud of slowing global growth with copper priced down 5.8% and finished steel unchanged.

 

Third Quarter Outlook

Equity Market
With the prospect of easing monetary policy as a backdrop, falling interest rates should serve to support equity prices and limit the magnitude of market declines. This environment will reinforce the market leadership, that of large cap stocks over small caps and growth stocks over value. We look for U.S. economic and corporate growth to outpace that of the other developed economies during the period and, therefore, expect U.S. equities to deliver better returns.

The question not yet answered is the impact on emerging economies and markets. Should the U.S. dollar reverse its strengthening trend, these markets would be poised to rally. If, on the other hand, the U.S. dollar were to continue to strengthen, the emerging markets will suffer, not only from adverse currency exchange but continued slower export demand growth. Among the domestic market sectors, falling rates will likely pressure lending margins for the banking sector while boosting returns for insurers and asset managers. Lower mortgage rates will support home sales and the Consumer Discretionary stocks in general.

The converse will be true for the Consumer Staples, as the lack of inflation pressure limits their pricing power, while rising wage and benefit costs continue to squeeze profit margins. Industrials will likely be under pressure, as five of the regional Federal Reserve Banks have already registered declines in their manufacturing indices, and recent business sentiment indicators (while still in positive territory) have registered persistent declines. With the 2020 political season already underway, health care providers may continue to fall prey to headline risk and, more importantly, a cloudier forward earnings picture.

Technology share prices have weathered considerable volatility resulting from the point, counterpoint relating to trade. So much so that prices in the group are becoming increasingly resilient and less responsive to the news flow. When stocks stop going down on bad news, typically, the worst is over.

Fixed Income Markets
One major concern coming into 2019 has been the deteriorating fundamentals of the corporate credit market and the magnitude of the refinancings that the market will need to fund over the next three years. The broader market has now begun to voice the same concerns with key industry voices, highlighting leveraged loans and the massive growth of the BBB, barely investment grade sector of the market. With demand for coupon yield still running strong, there has yet to be a significant widening of credit spreads in the market. As such, we continue to stress higher credit quality and shorter portfolio duration for corporate bond holdings.

The unprecedented demand for municipal bonds, having outstripped the available supply, has pushed tax-exempt yields to levels below the tax equivalency level of taxable bonds. This tempers our enthusiasm for municipal bonds until adequate new issuance comes to market and restores municipal bond yields to more attractive levels.

Commodity Markets
As more data emerges regarding the status of planting and crop health, we believe the recent run-up in grain prices will turn out to be overdone and will likely encounter at least a partial retracement of the advance. The converse holds true for livestock prices, as the assumed herd reductions could prove unfounded. Energy prices, barring the outbreak of armed conflict, should decline back to levels seen earlier this year, as North American production and export volumes show no signs of peaking, and Saudi Arabia appears committed to holding on to market share in the face of rising supply.

Industrial metals are unlikely to offer much in the way of upside, as manufacturing indicators around the globe are warning of slower growth. Precious metals have reached an important technical level and could be poised to follow through on recent gains. It is unlikely they will exceed previous highs unless the central banks of the G-7 nations adopt aggressive liquidity injections to reignite economic growth. Should this happen, gold as a storehouse of purchasing power would likely serve to attract buyers.

 
Third Quarter Asset Profile

For a PDF version of this publication, click here: 2Q2019_TheRoadAhead

 

NOTE: IMPORTANT INFORMATION
Source: Unless otherwise noted, all statistics herein obtained from Bloomberg.

This is not a complete analysis of every material fact regarding any company, industry or security. The information and materials herein have been obtained from sources we consider to be reliable but Comerica Wealth Management does not warrant, or guarantee, its completeness or accuracy. Materials prepared by Comerica Wealth Management personnel are based on public information. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Comerica Wealth Management, including investment banking personnel.

The views expressed are those of the author at the time of writing and are subject to change without notice. We do not assume any liability for losses that may result from the reliance by any person upon any such information or opinions. This material has been distributed for general educational/informational purposes only and should not be considered as investment advice or a recommendation for any particular security, strategy or investment product, or as personalized investment advice.

Past performance is not indicative of future results. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The investments and strategies discussed herein may not be suitable for all clients. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations.

Comerica Wealth Management consists of various divisions and affiliates of Comerica Bank, including Comerica Bank & Trust, National Association; World Asset Management, Inc.; Comerica Securities, Inc.; and Comerica Insurance Services, Inc. and its affiliated insurance agencies. World Asset Management, Inc. and Comerica Securities, Inc. are federally registered investment advisors. Registrations do not imply a certain level of skill or training. Non-deposit Investment products offered by Comerica and its affiliates are not insured by the FDIC, are not deposits or other obligations of or guaranteed by Comerica Bank or any of its affiliates, and are subject to investment risks, including possible loss of the principal invested. Comerica Bank and its affiliates do not provide tax or legal advice. Please consult with your tax and legal advisors regarding your specific situation.

The S&P 500®Index is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and Standard & Poor’s Financial Services LLC, and has been licensed for use by Comerica Bank, on behalf of itself and its Affiliates. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Comerica Bank, on behalf of itself and its Affiliates. S&P Trademarks are trademarks of S&P and have been licensed for use by SPDJI and Comerica Bank, on behalf of itself and its Affiliates.
“Russell 2000® Index” is a trademark of Russell Investments, licensed for use by Comerica Bank and World Asset Management, Inc. The source of all returns is Russell Investments. Further redistribution of information is strictly prohibited.
MSCI EAFE® is a trade mark of Morgan Stanley Capital International, Inc. (“MSCI”).

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Weekly Market Overview | July 29, 2019

July 29, 2019 by Peter Sorrentino

  • The NASDAQ Index was the top U.S. index, posting a 2.3% gain last week. Coming in with a 2% gain was the small-cap Russell 2000® Index. European markets averaged a positive 1%, while in Asia, emerging market declines effectively cancelled out the developed market advances. The 4.8% gain in the Argentine market was not enough to overcome the 2.25% decline in Mexican share prices last week.
  • The Communication Services sector bounced back from the prior week’s Netflix debacle. Thanks to a 9% gain in the shares of Google parent Alphabet, the sector led the way with a 4.3% rise. Google’s advance, coupled with Microsoft’s 3.6% earnings induced gain, were the principal drivers of the NADAQ’s strength. The Financial Services sector squeezed into second place with a 2.7% gain, thanks to earnings-fueled rallies of 7.6% and 4.4%, respectively, for shares of Wells Fargo and Bank of America.
  • The Utilities (-0.7%) and Energy (-0.5%) sectors were the sole decliners last week, as the 6% drop in shares of Exelon and the 9% decline in Williams Companies were enough to drag the sectors into negative territory (which, for Energy, came as something of surprise as the price of crude oil rose 1.6%).
  • Crude Oil was the leading commodity last week with a 1.6% gain, followed by gasoline, up 1.4%. Silver continued its recent rally, adding another 1.2%. Industrial metals surrendered some of the prior week’s advance, falling on average 1.7%. Agricultural prices continued to decline, as corn prices fell 3.8%, followed by soybeans at -2%.

The downdraft in forward guidance from the Industrials sector continued last week as the trade war begins to bite. China appears ready to make good on previously veiled threats against specific U.S. companies. The news regarding the Chinese investigation of FedEx and its handling of Huawei shipments is not a positive for those next in line: Ford, Honeywell and General Dynamics. The market has been increasingly pricing in this potentiality as evidenced in Exhibit 1, which compares the price earnings multiple for the Industrials sector to that of the broad market. The market is handicapping the likelihood that earnings for Industrials fall short of current forecasts.

 

Industrials vs. Broad Market

Exhibit 1 (Source: Bloomberg)

U.S. Equity Themes

While the NASDAQ strength was all about Large-Cap and very much Technology related, the quiet strength was to be found in the Small-Cap stocks, as those earnings reports came in very close to expectations without much drama or negative forward guidance. This reinforces our macro-economic view that there is resilient strength in the U.S. economy that underpins the equity market.

Credit Markets are in a holding pattern awaiting the formal action from the Federal Reserve and the context in which it is couched. As you can see in Exhibit 2, the inversion on at the short end of the term structure continues to gradually abate, while the slight pop higher at the long end has persisted. Both changes are potentially positive developments for the credit market. The inversion’s heritage as harbinger of recessions has been hanging over investors like a countdown to Armageddon, while the lack of an upward slope to the yield curve has been a cruel curse upon savers for most of this recovery.

 

U.S. Treasury Actives Curve

Exhibit 2 (Source: Bloomberg)

For a PDF version of this publication, click here: 07.29.2019_WeeklyMarketOverview

 

NOTE: IMPORTANT INFORMATION
Source: Unless otherwise noted, all statistics herein obtained from Bloomberg.
This is not a complete analysis of every material fact regarding any company, industry or security. The information and materials herein has been obtained from sources we consider to be reliable, but Comerica Wealth Management does not warrant, or guarantee, its completeness or accuracy. Materials prepared by Comerica Wealth Management personnel are based on public information. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Comerica Wealth Management, including investment banking personnel. The views expressed are those of the author at the time of writing and are subject to change without notice. We do not assume any liability for losses that may result from the reliance by any person upon any such information or opinions. This material has been distributed for general educational/informational purposes only and should not be considered as investment advice or a recommendation for any particular security, strategy or investment product, or as personalized investment advice. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The investments and strategies discussed herein may not be suitable for all clients. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Comerica Wealth Management consists of various divisions and affiliates of Comerica Bank, including Comerica Bank & Trust, National Association; World Asset Management, Inc.; Comerica Securities, Inc.; and Comerica Insurance Services, Inc. and its affiliated insurance agencies. World Asset Management, Inc. and Comerica Securities, Inc. are federally registered investment advisors. Registrations do not imply a certain level of skill or training. Comerica Bank and its affiliates do not provide tax or legal advice. Please consult with your tax and legal advisors regarding your specific situation. Non-deposit Investment products offered by Comerica and its affiliates are not insured by the FDIC, are not deposits or other obligations of or guaranteed by Comerica Bank or any of its affiliates, and are subject to investment risks, including possible loss of the principal invested. Past performance is not indicative of future results. Information presented is for general information only and is subject to change.

The S&P 500® Index, S&P MidCap Index, S&P 600 Index and Dow Jones Wilshire 5000 (collectively, “S&P® Indices”) are products of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and Standard & Poor’s Financial Services, LLC and has been licensed for use by Comerica Bank, on behalf of itself and its Affiliates. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The trademarks have been licensed to SPDJI and sublicensed for certain purposes by Comerica Bank, on behalf of itself and its Affiliates. Nothing herein is sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”) or Standard & Poor’s Financial Services LLC. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC make any representation or warranty, express or implied, to the owners of the content herein, or any member of the public regarding the advisability of investing in securities generally or in particular strategies or the ability of any particular strategy to track general market performance. SPDJI and Standard & Poor’s Financial Services, LLC only relationship to Comerica Bank, on behalf of itself and its Affiliates with respect to the S&P® Indices is the licensing of the Indices and certain trademarks, service marks, and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P Indices are determined, composed and calculated by S&P Dow Jones Indices or Standard & Poor’s Financial Services, LLC without regard to Comerica Bank and its Affiliates or any of the content herein. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation to take the needs of Comerica and its Affiliates or the owners of any of the content herein into consideration in determining, composing or calculating the S&P Indices. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC are responsible for and have not participated in the determination of the prices, and amount of any particular strategy or the timing of the issuance or sale of any particular strategy or in the determination or calculation of the equation by which any particular strategy is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation or liability in connection with the administration, marketing or trading of any particular strategy. There is no assurance that any particular investment product based on the S&P Indices will accurately track index performance or provide positive investment returns. SPDJI is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.

NEITHER S&P DOW JONES INDICES NOR STANDARD & POOR’S FINANCIAL SERVICES, LLC GUARANTEES THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE WAM STRATEGIES OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNCATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES, OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY COMERICA AND ITS AFFILIATES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P INDICES OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES OR STANDARD & POOR’S FINANCIAL SERVICES, LLC BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND COMERICA AND ITS AFFILIATES, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.

“Russell 2000® Index” is a trademark of Russell Investments, licensed for use by Comerica Bank and World Asset Management, Inc. The source of all returns is Russell Investments. Further redistribution of information is strictly prohibited.

MSCI EAFE® is a trade mark of Morgan Stanley Capital International, Inc. (“MSCI”).

FTSE International Limited (“FTSE”) © FTSE 2016. FTSE® is a trade mark of London Stock Exchange Plc and The Financial Times Limited and is used by FTSE under license. All rights in the FTSE Indices vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE Indices or underlying data.

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Weekly Market Overview | July 22, 2019

July 22, 2019 by Peter Sorrentino

  • The Philadelphia Gold & Silver Index was the only significant U.S. index in positive territory last week, as the second quarter earnings reporting season got off to a tumultuous start. Most major U.S. stock indices fell roughly 1.4%.
  • The Communication Services sector fell the most last week, as Netflix lost 15% on a surprising decline in subscribers. Both Facebook and Disney slipped 3% in the sector as well, leaving the group down 2.52% on the week. Energy, which led the market advance just a week ago, fell 2.2% on a 7.6% decline in crude oil prices.
  • Basic Materials was the winning sector last week, up 1.06% on a 3.6% advance by Dow Chemical. The company received a favorable EPA ruling on one of its plastic feedstock chemicals.
  • Silver was the leading commodity last week with a gain of 6.5%, as investors sought to restore the traditional relative price ratio between gold and silver. Industrial metals were up – on average – 2%, while agricultural prices lost 4% due in large part to weakness in corn and wheat.

Unlike the earlier first quarter reports, second quarter surprises have been a mixed bag with a slight bias to the bad side. Recalling that the first two months of the quarter were pessimistic with reports of declining manufacturing, and housing activity was amplified by rising uncertainty regarding the sustainability of the economic expansion. Sentiment improved in early June, thanks to Federal Reserve Chairman Powell’s comment on monetary policy, but with the bulk of the quarter gone, it was too late to save the quarter. Fortunately, as soon as analysts reset their estimates following Q1’s upside surprise, they quietly set about lowering estimates.

U.S. Equity Themes
The impact of Netflix subscriber loss on not only the share price, but on the Communication Services sector as a whole, points out vividly the risk inherent in a narrow market leadership. Complacency tends to lead to excess, and market corrections, like recessions, are how these are remediated.

Credit Markets enjoyed another week of solid investor demands that pushed rates down across the term structure. There were two disconcerting new stories last week, both emanating from the leveraged loan market. One defaulted credit did enough damage to warrant the closure of a Chicago-based leveraged loan fund manager; you can see the price change in Exhibit 1 below.

This once small corner of corporate finance has grown exponentially over the last ten years to join the ranks of other high-yield credit instruments in size and scope. As investors discovered with subprime mortgages, the statement value means nothing if there are no buyers on the other side. With yields having been depressed for so long, investors have ventured into untested markets where the assumption of a consistent and orderly market could place them in peril. We have been strenuously encouraging customers to shed these lower-quality assets.

 

Price Plunge

Clover Term Loan Dives to Distressed Levels

Exhibit 1 (Source: Bloomberg)

For a PDF version of this publication, click here: 07.22.2019_WeeklyMarketOverview

 

NOTE: IMPORTANT INFORMATION
Source: Unless otherwise noted, all statistics herein obtained from Bloomberg.
This is not a complete analysis of every material fact regarding any company, industry or security. The information and materials herein has been obtained from sources we consider to be reliable, but Comerica Wealth Management does not warrant, or guarantee, its completeness or accuracy. Materials prepared by Comerica Wealth Management personnel are based on public information. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Comerica Wealth Management, including investment banking personnel. The views expressed are those of the author at the time of writing and are subject to change without notice. We do not assume any liability for losses that may result from the reliance by any person upon any such information or opinions. This material has been distributed for general educational/informational purposes only and should not be considered as investment advice or a recommendation for any particular security, strategy or investment product, or as personalized investment advice. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The investments and strategies discussed herein may not be suitable for all clients. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Comerica Wealth Management consists of various divisions and affiliates of Comerica Bank, including Comerica Bank & Trust, National Association; World Asset Management, Inc.; Comerica Securities, Inc.; and Comerica Insurance Services, Inc. and its affiliated insurance agencies. World Asset Management, Inc. and Comerica Securities, Inc. are federally registered investment advisors. Registrations do not imply a certain level of skill or training. Comerica Bank and its affiliates do not provide tax or legal advice. Please consult with your tax and legal advisors regarding your specific situation. Non-deposit Investment products offered by Comerica and its affiliates are not insured by the FDIC, are not deposits or other obligations of or guaranteed by Comerica Bank or any of its affiliates, and are subject to investment risks, including possible loss of the principal invested. Past performance is not indicative of future results. Information presented is for general information only and is subject to change.

The S&P 500® Index, S&P MidCap Index, S&P 600 Index and Dow Jones Wilshire 5000 (collectively, “S&P® Indices”) are products of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and Standard & Poor’s Financial Services, LLC and has been licensed for use by Comerica Bank, on behalf of itself and its Affiliates. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The trademarks have been licensed to SPDJI and sublicensed for certain purposes by Comerica Bank, on behalf of itself and its Affiliates. Nothing herein is sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”) or Standard & Poor’s Financial Services LLC. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC make any representation or warranty, express or implied, to the owners of the content herein, or any member of the public regarding the advisability of investing in securities generally or in particular strategies or the ability of any particular strategy to track general market performance. SPDJI and Standard & Poor’s Financial Services, LLC only relationship to Comerica Bank, on behalf of itself and its Affiliates with respect to the S&P® Indices is the licensing of the Indices and certain trademarks, service marks, and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P Indices are determined, composed and calculated by S&P Dow Jones Indices or Standard & Poor’s Financial Services, LLC without regard to Comerica Bank and its Affiliates or any of the content herein. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation to take the needs of Comerica and its Affiliates or the owners of any of the content herein into consideration in determining, composing or calculating the S&P Indices. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC are responsible for and have not participated in the determination of the prices, and amount of any particular strategy or the timing of the issuance or sale of any particular strategy or in the determination or calculation of the equation by which any particular strategy is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation or liability in connection with the administration, marketing or trading of any particular strategy. There is no assurance that any particular investment product based on the S&P Indices will accurately track index performance or provide positive investment returns. SPDJI is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.

NEITHER S&P DOW JONES INDICES NOR STANDARD & POOR’S FINANCIAL SERVICES, LLC GUARANTEES THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE WAM STRATEGIES OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNCATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES, OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY COMERICA AND ITS AFFILIATES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P INDICES OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES OR STANDARD & POOR’S FINANCIAL SERVICES, LLC BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND COMERICA AND ITS AFFILIATES, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.

“Russell 2000® Index” is a trademark of Russell Investments, licensed for use by Comerica Bank and World Asset Management, Inc. The source of all returns is Russell Investments. Further redistribution of information is strictly prohibited.

MSCI EAFE® is a trade mark of Morgan Stanley Capital International, Inc. (“MSCI”).

FTSE International Limited (“FTSE”) © FTSE 2016. FTSE® is a trade mark of London Stock Exchange Plc and The Financial Times Limited and is used by FTSE under license. All rights in the FTSE Indices vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE Indices or underlying data.

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Weekly Market Overview | July 15, 2019

July 15, 2019 by Peter Sorrentino

  • Dow Jones Industrial Average took top honors for leading, with the index gaining 1.52%, thanks in large part to United Health Care’s 8.44% rally.
  • The Energy Sector led the U.S. market as shares of refiners enjoyed gains ranging from 3.4% for Valero to 7% for HollyFrontier. The recent gains in refining, or ‘crack’ spreads, look to be here for a while.
  • Crude oil rebounded 4.7% and tied with Corn and Soybeans, leading to a three-way tie in commodities.
  • Gold recovered last week’s decline, while the price of Bitcoin fell another 17.31%.

After the excitement of the Fourth of July, trading this past week witnessed investors sliding right back into a typical mid-summer sleepwalk with volume trailing off and volatility, as measured by the CBOE VIX Index, closing the week at 12.28, after being over 20 as recently as the end of May. Last week’s positive showing by both the Dow Jones Industrial Average (up 1.52%) and the NASDAQ (up 1.01%) were deceptive, as the bulk of the market lost a little altitude as the Russell 2000® Index fell 0.36%. This mirrors trading in the Global markets, as the MSCI EAFE® Index lost 0.55%, and the MSCI Emerging Market Index dropped 0.75%.

U.S. Equity Themes:
Stock market leadership has been narrowing again. As highlighted by a few news outlets last week, the number of stocks driving the major indices to new record highs has declined to less than a dozen very large, very liquid stocks. This has happened before during this cycle, as most of 2017’s advance was driven by just seven stocks. So, it is not unheard of, but it does elevate the level of risk inherent in the market when it occurs. Fun fact: for both the Russell 1000® and the S&P 500® Indices, the number of stocks making new 52-week highs is precisely 10%.

In Exhibit 1, we can gain some insight into the lingering concerns of investors. The lines represent the earning estimate trends for the S&P 500® Index since the start of this year for the next twelve months. The line at the bottom represents the balance of 2019, the middle for 2020, and finally, 2021 on top. While each line is higher, and we did see a material revision to this year following the strong first quarter showing, there is a subtler trend here – the revisions across all three periods are persistently negative. A good deal of this has to do with uncertainty regarding interest rates, trade and the upcoming election cycle. So, if investors have crowded into a somewhat narrow part of the market, it is not without reason, and if history is a guide, that which we most expect is least likely to occur.

S&P 500® Earning Estimate Trends

Exhibit 1 (Source: Bloomberg)

Commodity prices did better last week, as both energy and agriculture enjoyed strong rallies with the prices of WTI, Corn and Soybeans up 4.7%. Industrial metals gained some ground, with copper adding 0.6% and nickel 7.9%.

The U.S. Treasury ten-year note edged up in yield to 2.122%, as investors moved back to the status quo while awaiting concrete actions from the Federal Reserve. An interesting development in this has been a steepening (though ever-so-slight) of the yield curve in the month since Chairman Powell’s comments. As seen in Exhibit 2, the yield on one-year bills has fallen from 2.20% to 1.96%, while the yield on the 30-year bond has gone from 2.589% to 2.6474%. While not earthshattering by any means, it may be the first sign that long bond investors are done with this and are starting to demand something for their money.

 
U.S. Treasury Actives Curve

Exhibit 2 (Source: Bloomberg)

For a PDF version of this publication, click here: 07.15.2019_WeeklyMarketOverview

 

NOTE: IMPORTANT INFORMATION
Source: Unless otherwise noted, all statistics herein obtained from Bloomberg.
This is not a complete analysis of every material fact regarding any company, industry or security. The information and materials herein has been obtained from sources we consider to be reliable, but Comerica Wealth Management does not warrant, or guarantee, its completeness or accuracy. Materials prepared by Comerica Wealth Management personnel are based on public information. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Comerica Wealth Management, including investment banking personnel. The views expressed are those of the author at the time of writing and are subject to change without notice. We do not assume any liability for losses that may result from the reliance by any person upon any such information or opinions. This material has been distributed for general educational/informational purposes only and should not be considered as investment advice or a recommendation for any particular security, strategy or investment product, or as personalized investment advice. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The investments and strategies discussed herein may not be suitable for all clients. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Comerica Wealth Management consists of various divisions and affiliates of Comerica Bank, including Comerica Bank & Trust, National Association; World Asset Management, Inc.; Comerica Securities, Inc.; and Comerica Insurance Services, Inc. and its affiliated insurance agencies. World Asset Management, Inc. and Comerica Securities, Inc. are federally registered investment advisors. Registrations do not imply a certain level of skill or training. Comerica Bank and its affiliates do not provide tax or legal advice. Please consult with your tax and legal advisors regarding your specific situation. Non-deposit Investment products offered by Comerica and its affiliates are not insured by the FDIC, are not deposits or other obligations of or guaranteed by Comerica Bank or any of its affiliates, and are subject to investment risks, including possible loss of the principal invested. Past performance is not indicative of future results. Information presented is for general information only and is subject to change.

The S&P 500® Index, S&P MidCap Index, S&P 600 Index and Dow Jones Wilshire 5000 (collectively, “S&P® Indices”) are products of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and Standard & Poor’s Financial Services, LLC and has been licensed for use by Comerica Bank, on behalf of itself and its Affiliates. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The trademarks have been licensed to SPDJI and sublicensed for certain purposes by Comerica Bank, on behalf of itself and its Affiliates. Nothing herein is sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”) or Standard & Poor’s Financial Services LLC. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC make any representation or warranty, express or implied, to the owners of the content herein, or any member of the public regarding the advisability of investing in securities generally or in particular strategies or the ability of any particular strategy to track general market performance. SPDJI and Standard & Poor’s Financial Services, LLC only relationship to Comerica Bank, on behalf of itself and its Affiliates with respect to the S&P® Indices is the licensing of the Indices and certain trademarks, service marks, and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P Indices are determined, composed and calculated by S&P Dow Jones Indices or Standard & Poor’s Financial Services, LLC without regard to Comerica Bank and its Affiliates or any of the content herein. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation to take the needs of Comerica and its Affiliates or the owners of any of the content herein into consideration in determining, composing or calculating the S&P Indices. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC are responsible for and have not participated in the determination of the prices, and amount of any particular strategy or the timing of the issuance or sale of any particular strategy or in the determination or calculation of the equation by which any particular strategy is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation or liability in connection with the administration, marketing or trading of any particular strategy. There is no assurance that any particular investment product based on the S&P Indices will accurately track index performance or provide positive investment returns. SPDJI is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.

NEITHER S&P DOW JONES INDICES NOR STANDARD & POOR’S FINANCIAL SERVICES, LLC GUARANTEES THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE WAM STRATEGIES OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNCATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES, OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY COMERICA AND ITS AFFILIATES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P INDICES OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES OR STANDARD & POOR’S FINANCIAL SERVICES, LLC BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND COMERICA AND ITS AFFILIATES, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.

“Russell 2000® Index” is a trademark of Russell Investments, licensed for use by Comerica Bank and World Asset Management, Inc. The source of all returns is Russell Investments. Further redistribution of information is strictly prohibited.

MSCI EAFE® is a trade mark of Morgan Stanley Capital International, Inc. (“MSCI”).

FTSE International Limited (“FTSE”) © FTSE 2016. FTSE® is a trade mark of London Stock Exchange Plc and The Financial Times Limited and is used by FTSE under license. All rights in the FTSE Indices vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE Indices or underlying data.

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Weekly Market Overview | July 8, 2019

July 8, 2019 by Peter Sorrentino

In what should have been a quiet and shortened holiday week, Friday’s release of June’s employment data ended the week in dramatic style. The strong uptick in payrolls and continued wage gains quickly brought into question the assumed interest rate cut at the next Federal Reserve Bank meeting. There are still indications of slowing, as both the ISM Manufacturing and Non-Manufacturing Indices notched lower in June. Despite the rising tide of tariffs, both imports and exports were reported higher in June. The majority of the increase in imports was attributable to autos and, for exports, most of the increase was for capital goods. Global markets were nowhere near as exciting as the U.S., with the MSCI EAFE® Index adding just 0.51%, and the MSCI Emerging Market Index adding 0.48%.

 

Winners

  • Financial Services Sector (+3.5%)
    Thanks to a strong employment report, the assumed rate cut by the Federal Reserve Bank may be on hold.
  • Communication Services Sector (+3.4%)
    Attributed to the 5.2% rebound in shares of Google

Losers

  • Crude Oil (-3%)
    Supply and inventory data edge higher.
  • Gold (-1%) & Bitcoin (-9.6%)
    The strong employment report forced speculators to reconsider their assumptions regarding monetary injection by central banks.

 

U.S. Equity Themes

While the economy is still expanding, investors are increasingly wary, as evidenced by the bulk of this rally being confined to the large-cap sector (see Exhibit 1 to compare the Russell 1000® Index [RIY] to the Russell 2000® Index [RTY]). We continue to climb the ‘Wall of Worry’, but investors have their eyes on the exits – hence the focus on trading liquidity.

 

RIY Index vs. RTY Index

Exhibit 1 (Source: Bloomberg)

Commodity prices were broadly lower last week, as crude oil prices fell 3%, and both industrial metals and commodity prices fell roughly 1.5%. Despite the strong employment picture and rising wages, there is little in the way of inflationary pressure and, thus, little incentive to hedge raw material costs.

The employment news brought interest rates back up but only ever so slightly, as the U.S. Treasury ten-year note did manage to finish the week above 2%, after spending most of the week just below that level. It worsened the inversion at the short end of the yield curve, as now the highest yields are on maturities measured in weeks rather than months or years. A four-week Treasury Bill now yields twenty basis points more than the ten-year note. That which cannot persist, will not.


For a PDF version of this publication, click here: 07.08.2019_WeeklyMarketOverview

 

NOTE: IMPORTANT INFORMATION
Source: Unless otherwise noted, all statistics herein obtained from Bloomberg.
This is not a complete analysis of every material fact regarding any company, industry or security. The information and materials herein has been obtained from sources we consider to be reliable, but Comerica Wealth Management does not warrant, or guarantee, its completeness or accuracy. Materials prepared by Comerica Wealth Management personnel are based on public information. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Comerica Wealth Management, including investment banking personnel. The views expressed are those of the author at the time of writing and are subject to change without notice. We do not assume any liability for losses that may result from the reliance by any person upon any such information or opinions. This material has been distributed for general educational/informational purposes only and should not be considered as investment advice or a recommendation for any particular security, strategy or investment product, or as personalized investment advice. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The investments and strategies discussed herein may not be suitable for all clients. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Comerica Wealth Management consists of various divisions and affiliates of Comerica Bank, including Comerica Bank & Trust, National Association; World Asset Management, Inc.; Comerica Securities, Inc.; and Comerica Insurance Services, Inc. and its affiliated insurance agencies. World Asset Management, Inc. and Comerica Securities, Inc. are federally registered investment advisors. Registrations do not imply a certain level of skill or training. Comerica Bank and its affiliates do not provide tax or legal advice. Please consult with your tax and legal advisors regarding your specific situation. Non-deposit Investment products offered by Comerica and its affiliates are not insured by the FDIC, are not deposits or other obligations of or guaranteed by Comerica Bank or any of its affiliates, and are subject to investment risks, including possible loss of the principal invested. Past performance is not indicative of future results. Information presented is for general information only and is subject to change.

The S&P 500® Index, S&P MidCap Index, S&P 600 Index and Dow Jones Wilshire 5000 (collectively, “S&P® Indices”) are products of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and Standard & Poor’s Financial Services, LLC and has been licensed for use by Comerica Bank, on behalf of itself and its Affiliates. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The trademarks have been licensed to SPDJI and sublicensed for certain purposes by Comerica Bank, on behalf of itself and its Affiliates. Nothing herein is sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”) or Standard & Poor’s Financial Services LLC. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC make any representation or warranty, express or implied, to the owners of the content herein, or any member of the public regarding the advisability of investing in securities generally or in particular strategies or the ability of any particular strategy to track general market performance. SPDJI and Standard & Poor’s Financial Services, LLC only relationship to Comerica Bank, on behalf of itself and its Affiliates with respect to the S&P® Indices is the licensing of the Indices and certain trademarks, service marks, and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P Indices are determined, composed and calculated by S&P Dow Jones Indices or Standard & Poor’s Financial Services, LLC without regard to Comerica Bank and its Affiliates or any of the content herein. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation to take the needs of Comerica and its Affiliates or the owners of any of the content herein into consideration in determining, composing or calculating the S&P Indices. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC are responsible for and have not participated in the determination of the prices, and amount of any particular strategy or the timing of the issuance or sale of any particular strategy or in the determination or calculation of the equation by which any particular strategy is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation or liability in connection with the administration, marketing or trading of any particular strategy. There is no assurance that any particular investment product based on the S&P Indices will accurately track index performance or provide positive investment returns. SPDJI is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.

NEITHER S&P DOW JONES INDICES NOR STANDARD & POOR’S FINANCIAL SERVICES, LLC GUARANTEES THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE WAM STRATEGIES OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNCATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES, OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY COMERICA AND ITS AFFILIATES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P INDICES OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES OR STANDARD & POOR’S FINANCIAL SERVICES, LLC BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND COMERICA AND ITS AFFILIATES, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.

“Russell 2000® Index” is a trademark of Russell Investments, licensed for use by Comerica Bank and World Asset Management, Inc. The source of all returns is Russell Investments. Further redistribution of information is strictly prohibited.

MSCI EAFE® is a trade mark of Morgan Stanley Capital International, Inc. (“MSCI”).

FTSE International Limited (“FTSE”) © FTSE 2016. FTSE® is a trade mark of London Stock Exchange Plc and The Financial Times Limited and is used by FTSE under license. All rights in the FTSE Indices vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE Indices or underlying data.

Read More

Weekly Market Overview | July 1, 2019

July 1, 2019 by Peter Sorrentino

Equity Market Overview

  • Domestic: The last week of the second quarter closed out with small cap stocks outpacing the blue chips, as the Russell 2000® Index added 1.09% to the fractional loss (-0.24%) of the Russell 1000® Index. Growth stocks suffered the brunt of the selling even though interest rates were unchanged. The strongest performing sectors were the Materials (+1.44%) and the Financials (+1.4%), while the Utility (-2.23%) and Health Care (-1.16%) stocks exerted the greatest drag on returns. The balance of the market fell in between the two camps with largely fractional changes. Wrapping up the second quarter, U.S. stocks gained just over two and a half percent.
  • International: Global markets closed out the last week of the quarter with fractional gains, with the MSCI EAFE® Index adding 0.18% and the MSCI Emerging Market Index up 0.16%. Equity markets in Europe were the leaders for the second quarter, outpacing Asia, Latin America and the bulk of the emerging markets.

Fixed Income Overview

  • Treasury Market: The final week of the second quarter was a quiet one as rates fluctuated around the recent lows. With the G20 meeting on tap for the weekend, most traders and investors alike were content to hold tight and watch for breaking developments.
  • Corporate Market: With a quiet new issue calendar and very little news flow, the corporate yield curve has fallen roughly 20 basis points over the last month.
  • Municipal Market: Municipal bonds continued to enjoy strong buying from investors as witnessed by the consecutive weeks of inflow, now at just over six months. Improving credit quality and limited supply continued to drive prices.

Commodity Market Overview

  • Industrial and Precious Metals: Gold and silver failed to follow the prior week’s strength as investor fears over possible Central Bank monetary intervention lost sway. Industrial metals continued to enjoy a rebound as iron ore and nickel continued to add to recent gains. As the rains in the Midwest abated, agricultural commodity prices have entered a holding pattern as traders await news regarding the impact on planting acreage and grain mix. South bound barge traffic on the Mississippi is resuming; however, north bound traffic is still awaiting better transit conditions.

 

For a PDF version of this publication, click here: 07.01.2019_WeeklyMarketOverview

 

NOTE: IMPORTANT INFORMATION
Source: Unless otherwise noted, all statistics herein obtained from Bloomberg.
This is not a complete analysis of every material fact regarding any company, industry or security. The information and materials herein has been obtained from sources we consider to be reliable, but Comerica Wealth Management does not warrant, or guarantee, its completeness or accuracy. Materials prepared by Comerica Wealth Management personnel are based on public information. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Comerica Wealth Management, including investment banking personnel. The views expressed are those of the author at the time of writing and are subject to change without notice. We do not assume any liability for losses that may result from the reliance by any person upon any such information or opinions. This material has been distributed for general educational/informational purposes only and should not be considered as investment advice or a recommendation for any particular security, strategy or investment product, or as personalized investment advice. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The investments and strategies discussed herein may not be suitable for all clients. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Comerica Wealth Management consists of various divisions and affiliates of Comerica Bank, including Comerica Bank & Trust, National Association; World Asset Management, Inc.; Comerica Securities, Inc.; and Comerica Insurance Services, Inc. and its affiliated insurance agencies. World Asset Management, Inc. and Comerica Securities, Inc. are federally registered investment advisors. Registrations do not imply a certain level of skill or training. Comerica Bank and its affiliates do not provide tax or legal advice. Please consult with your tax and legal advisors regarding your specific situation. Non-deposit Investment products offered by Comerica and its affiliates are not insured by the FDIC, are not deposits or other obligations of or guaranteed by Comerica Bank or any of its affiliates, and are subject to investment risks, including possible loss of the principal invested. Past performance is not indicative of future results. Information presented is for general information only and is subject to change.

The S&P 500® Index, S&P MidCap Index, S&P 600 Index and Dow Jones Wilshire 5000 (collectively, “S&P® Indices”) are products of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and Standard & Poor’s Financial Services, LLC and has been licensed for use by Comerica Bank, on behalf of itself and its Affiliates. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The trademarks have been licensed to SPDJI and sublicensed for certain purposes by Comerica Bank, on behalf of itself and its Affiliates. Nothing herein is sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”) or Standard & Poor’s Financial Services LLC. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC make any representation or warranty, express or implied, to the owners of the content herein, or any member of the public regarding the advisability of investing in securities generally or in particular strategies or the ability of any particular strategy to track general market performance. SPDJI and Standard & Poor’s Financial Services, LLC only relationship to Comerica Bank, on behalf of itself and its Affiliates with respect to the S&P® Indices is the licensing of the Indices and certain trademarks, service marks, and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P Indices are determined, composed and calculated by S&P Dow Jones Indices or Standard & Poor’s Financial Services, LLC without regard to Comerica Bank and its Affiliates or any of the content herein. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation to take the needs of Comerica and its Affiliates or the owners of any of the content herein into consideration in determining, composing or calculating the S&P Indices. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC are responsible for and have not participated in the determination of the prices, and amount of any particular strategy or the timing of the issuance or sale of any particular strategy or in the determination or calculation of the equation by which any particular strategy is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation or liability in connection with the administration, marketing or trading of any particular strategy. There is no assurance that any particular investment product based on the S&P Indices will accurately track index performance or provide positive investment returns. SPDJI is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.

NEITHER S&P DOW JONES INDICES NOR STANDARD & POOR’S FINANCIAL SERVICES, LLC GUARANTEES THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE WAM STRATEGIES OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNCATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES, OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY COMERICA AND ITS AFFILIATES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P INDICES OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES OR STANDARD & POOR’S FINANCIAL SERVICES, LLC BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND COMERICA AND ITS AFFILIATES, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.

“Russell 2000® Index” is a trademark of Russell Investments, licensed for use by Comerica Bank and World Asset Management, Inc. The source of all returns is Russell Investments. Further redistribution of information is strictly prohibited.

MSCI EAFE® is a trade mark of Morgan Stanley Capital International, Inc. (“MSCI”).

FTSE International Limited (“FTSE”) © FTSE 2016. FTSE® is a trade mark of London Stock Exchange Plc and The Financial Times Limited and is used by FTSE under license. All rights in the FTSE Indices vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE Indices or underlying data.

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Weekly Market Overview | June 24, 2019

June 24, 2019 by Peter Sorrentino

The coming of summer brought with it more optimism for global markets. The prospects of a meeting at the upcoming G20 summit between Presidents Trump and Xi lifted the markets. Dovish comments from the Federal Reserve sent interest rates lower across the term spectrum, with the U.S. Treasury 10-year below 2% inter-day on Wednesday. The prospect of the central banks opening the liquidity sluice gates helped push the value of both gold and bitcoin back to their one-half retracement levels – a point that market technicians view as critical for mounting a sustainable advance of these purchasing power safe harbors. Tanker attacks in the Strait of Hormuz helped send crude oil prices up 9.4%, while a refinery fire just south of New York City contributed to a 7.1% increase in gasoline prices last week. These served as the catalysts for the 4.9% gain enjoyed by the stocks in the Energy sector, making it last week’s leader. Following at +2.9% was the Technology sector, led higher by the large consumer technology providers. Health Care stocks rounded out the top three with a gain of 2.7%, led principally by the major pharmaceutical manufacturers. Last week’s declines were fractional with Consumer Staples, Materials and Financial Services, down 0.63%, 0.35% and 0.07%, respectively. Last week’s decline in the overall level of interest rates served to push precious metals prices higher and Financial Service stocks lower. It also served to reignite the large-cap growth bias in the overall market as witnessed by the 2.2% advance of the Russell 1000® Index over the 1.8% gain for the Russell 2000® Index. Within the Russell 1000® Index, growth stocks posted a 2.4% gain to the 1.4% gain for the value stocks. The prospect of lower rates sent global markets higher as well with the MSCI EAFE® Index up 2.2% and the MSCI Emerging Market Index up 3.8%.

The data table below is something I pull together manually each weekend. It would be easy enough to automate this process, but assembling the data by hand brings the details of what is happening into sharper focus. This year, I have noticed a significant pickup in the underlying volatility of all the markets. This week, we witnessed oil prices moving by almost 10%, and that was not the largest weekly move for oil this year. At the equity sector level, there have routinely been five percentage point performance swings each week for the year-to-date returns, and when you move out to the running twelve-month return, the changes are even larger. Perhaps the biggest surprise this year has been the volatility of interest rates as witnessed by the U.S. Treasury 10-year note’s brief dip under 2% on Wednesday. Recalling that in the first week of November last year, this same security was poised to break above the 3.25% level – a technical milestone that would, had it been breached, have had significant negative implications for equity prices. Now, just over six months later, rates have fallen by a staggering 38%. This rapidly-changing dynamic of market forces was a part of our decision to embrace a broader market benchmark, the Russell 3000® Index, for our investment management accounts. By broadening our market participation, we limit the possibility of missing out on a significant move within the financial market. Our stewardship mandate requires us to take as broad a view as possible and, to that end, we believe the recent change is both appropriate and timely.

 

For a PDF version of this publication, click here: 06.24.19_WeeklyMarketOverview

 

NOTE: IMPORTANT INFORMATION
Source: Unless otherwise noted, all statistics herein obtained from Bloomberg.
This is not a complete analysis of every material fact regarding any company, industry or security. The information and materials herein has been obtained from sources we consider to be reliable, but Comerica Wealth Management does not warrant, or guarantee, its completeness or accuracy. Materials prepared by Comerica Wealth Management personnel are based on public information. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Comerica Wealth Management, including investment banking personnel. The views expressed are those of the author at the time of writing and are subject to change without notice. We do not assume any liability for losses that may result from the reliance by any person upon any such information or opinions. This material has been distributed for general educational/informational purposes only and should not be considered as investment advice or a recommendation for any particular security, strategy or investment product, or as personalized investment advice. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The investments and strategies discussed herein may not be suitable for all clients. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Comerica Wealth Management consists of various divisions and affiliates of Comerica Bank, including Comerica Bank & Trust, National Association; World Asset Management, Inc.; Comerica Securities, Inc.; and Comerica Insurance Services, Inc. and its affiliated insurance agencies. World Asset Management, Inc. and Comerica Securities, Inc. are federally registered investment advisors. Registrations do not imply a certain level of skill or training. Comerica Bank and its affiliates do not provide tax or legal advice. Please consult with your tax and legal advisors regarding your specific situation. Non-deposit Investment products offered by Comerica and its affiliates are not insured by the FDIC, are not deposits or other obligations of or guaranteed by Comerica Bank or any of its affiliates, and are subject to investment risks, including possible loss of the principal invested. Past performance is not indicative of future results. Information presented is for general information only and is subject to change.

The S&P 500® Index, S&P MidCap Index, S&P 600 Index and Dow Jones Wilshire 5000 (collectively, “S&P® Indices”) are products of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and Standard & Poor’s Financial Services, LLC and has been licensed for use by Comerica Bank, on behalf of itself and its Affiliates. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The trademarks have been licensed to SPDJI and sublicensed for certain purposes by Comerica Bank, on behalf of itself and its Affiliates. Nothing herein is sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”) or Standard & Poor’s Financial Services LLC. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC make any representation or warranty, express or implied, to the owners of the content herein, or any member of the public regarding the advisability of investing in securities generally or in particular strategies or the ability of any particular strategy to track general market performance. SPDJI and Standard & Poor’s Financial Services, LLC only relationship to Comerica Bank, on behalf of itself and its Affiliates with respect to the S&P® Indices is the licensing of the Indices and certain trademarks, service marks, and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P Indices are determined, composed and calculated by S&P Dow Jones Indices or Standard & Poor’s Financial Services, LLC without regard to Comerica Bank and its Affiliates or any of the content herein. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation to take the needs of Comerica and its Affiliates or the owners of any of the content herein into consideration in determining, composing or calculating the S&P Indices. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC are responsible for and have not participated in the determination of the prices, and amount of any particular strategy or the timing of the issuance or sale of any particular strategy or in the determination or calculation of the equation by which any particular strategy is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation or liability in connection with the administration, marketing or trading of any particular strategy. There is no assurance that any particular investment product based on the S&P Indices will accurately track index performance or provide positive investment returns. SPDJI is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.

NEITHER S&P DOW JONES INDICES NOR STANDARD & POOR’S FINANCIAL SERVICES, LLC GUARANTEES THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE WAM STRATEGIES OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNCATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES, OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY COMERICA AND ITS AFFILIATES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P INDICES OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES OR STANDARD & POOR’S FINANCIAL SERVICES, LLC BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND COMERICA AND ITS AFFILIATES, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.

“Russell 2000® Index” is a trademark of Russell Investments, licensed for use by Comerica Bank and World Asset Management, Inc. The source of all returns is Russell Investments. Further redistribution of information is strictly prohibited.

MSCI EAFE® is a trade mark of Morgan Stanley Capital International, Inc. (“MSCI”).

FTSE International Limited (“FTSE”) © FTSE 2016. FTSE® is a trade mark of London Stock Exchange Plc and The Financial Times Limited and is used by FTSE under license. All rights in the FTSE Indices vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE Indices or underlying data.

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Weekly Market Overview | June 17, 2019

June 17, 2019 by Peter Sorrentino

Last week was one of relative calm as U.S. markets – both fixed and equity – managed to add slight gains to those of the week prior. There was some leveling of the playing field as the Small Cap segment of the market enjoyed a slightly better week, as the Russell 2000® Index added 0.54% to the 0.44% gained by the Russell 1000® Index. Domestic strength was fueled by a further price recovery in the Consumer Discretionary sector, which was last week’s winner, with a 2.34% advance. Communication Services stocks joined the recovery last week, picking up 1.16%. The weakness that did occur was minor, limited to fractional declines in Energy (-0.42%), Industrials (-0.41%) and Technology (0.12%). Interest rates for U.S. Treasury issues were largely unchanged for the week. International markets slipped somewhat, due in large part to a slight rise in the value of the U.S. Dollar. The real excitement last week was in the agricultural commodity space, as investors began to acknowledge the full magnitude of this spring’s cooler, wetter weather. Corn prices jumped 11%, followed by a 6.7% gain in winter wheat and a 5.7% increase for soy beans. Flooding on the Mississippi River has halted barge traffic in key sections, limiting the flow of product to the Gulf ports and the supply of fuel and raw materials up river from Gulf Coast refineries and ports.

Barring any breakthroughs at the upcoming G20 summit, we anticipate the markets to slip into the summer in gentle fashion as trading volume is already falling off faster this year than last and, by many measures, investors will require a significant change in the financial environment before reconsidering their current ‘wait and see’ approach. This whistling past the graveyard can only last a short while, as coming up fast on the horizon is the so called ‘Fiscal Cliff’ – the debt ceiling and the deadlines for further tariff impositions. Summer may begin softly, but it is unlikely to finish that way.

 

For a PDF version of this publication, click here: 06.17.19_WeeklyMarketOverview

 

NOTE: IMPORTANT INFORMATION
Source: Unless otherwise noted, all statistics herein obtained from Bloomberg.
This is not a complete analysis of every material fact regarding any company, industry or security. The information and materials herein has been obtained from sources we consider to be reliable, but Comerica Wealth Management does not warrant, or guarantee, its completeness or accuracy. Materials prepared by Comerica Wealth Management personnel are based on public information. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Comerica Wealth Management, including investment banking personnel. The views expressed are those of the author at the time of writing and are subject to change without notice. We do not assume any liability for losses that may result from the reliance by any person upon any such information or opinions. This material has been distributed for general educational/informational purposes only and should not be considered as investment advice or a recommendation for any particular security, strategy or investment product, or as personalized investment advice. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The investments and strategies discussed herein may not be suitable for all clients. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Comerica Wealth Management consists of various divisions and affiliates of Comerica Bank, including Comerica Bank & Trust, National Association; World Asset Management, Inc.; Comerica Securities, Inc.; and Comerica Insurance Services, Inc. and its affiliated insurance agencies. World Asset Management, Inc. and Comerica Securities, Inc. are federally registered investment advisors. Registrations do not imply a certain level of skill or training. Comerica Bank and its affiliates do not provide tax or legal advice. Please consult with your tax and legal advisors regarding your specific situation. Non-deposit Investment products offered by Comerica and its affiliates are not insured by the FDIC, are not deposits or other obligations of or guaranteed by Comerica Bank or any of its affiliates, and are subject to investment risks, including possible loss of the principal invested. Past performance is not indicative of future results. Information presented is for general information only and is subject to change.

The S&P 500® Index, S&P MidCap Index, S&P 600 Index and Dow Jones Wilshire 5000 (collectively, “S&P® Indices”) are products of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and Standard & Poor’s Financial Services, LLC and has been licensed for use by Comerica Bank, on behalf of itself and its Affiliates. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The trademarks have been licensed to SPDJI and sublicensed for certain purposes by Comerica Bank, on behalf of itself and its Affiliates. Nothing herein is sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”) or Standard & Poor’s Financial Services LLC. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC make any representation or warranty, express or implied, to the owners of the content herein, or any member of the public regarding the advisability of investing in securities generally or in particular strategies or the ability of any particular strategy to track general market performance. SPDJI and Standard & Poor’s Financial Services, LLC only relationship to Comerica Bank, on behalf of itself and its Affiliates with respect to the S&P® Indices is the licensing of the Indices and certain trademarks, service marks, and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P Indices are determined, composed and calculated by S&P Dow Jones Indices or Standard & Poor’s Financial Services, LLC without regard to Comerica Bank and its Affiliates or any of the content herein. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation to take the needs of Comerica and its Affiliates or the owners of any of the content herein into consideration in determining, composing or calculating the S&P Indices. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC are responsible for and have not participated in the determination of the prices, and amount of any particular strategy or the timing of the issuance or sale of any particular strategy or in the determination or calculation of the equation by which any particular strategy is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation or liability in connection with the administration, marketing or trading of any particular strategy. There is no assurance that any particular investment product based on the S&P Indices will accurately track index performance or provide positive investment returns. SPDJI is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.

NEITHER S&P DOW JONES INDICES NOR STANDARD & POOR’S FINANCIAL SERVICES, LLC GUARANTEES THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE WAM STRATEGIES OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNCATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES, OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY COMERICA AND ITS AFFILIATES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P INDICES OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES OR STANDARD & POOR’S FINANCIAL SERVICES, LLC BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND COMERICA AND ITS AFFILIATES, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.

“Russell 2000® Index” is a trademark of Russell Investments, licensed for use by Comerica Bank and World Asset Management, Inc. The source of all returns is Russell Investments. Further redistribution of information is strictly prohibited.

MSCI EAFE® is a trade mark of Morgan Stanley Capital International, Inc. (“MSCI”).

FTSE International Limited (“FTSE”) © FTSE 2016. FTSE® is a trade mark of London Stock Exchange Plc and The Financial Times Limited and is used by FTSE under license. All rights in the FTSE Indices vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE Indices or underlying data.

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Weekly Market Overview | June 10, 2019

June 10, 2019 by Peter Sorrentino

The U.S. equity market ended its month-long slide Tuesday, after having fallen 6.62% from May 3rd through Monday’s close. The 4.75% rebound had all the hallmarks of a relief rally; the potential tariff targets enjoyed a reprieve. Leading the market last week with a 9% gain was the Materials sector. The industrial chemical and gas producers drove most of the advance. Technology took second place with a 6% gain, leaving the balance of the market clustered around the plus 5% level. The only laggard was the Communication Services sector, which managed to add only 1% for the week. After three weeks of homogenous price action, last week, market capitalization appeared as a performance determinant as evidenced by the 4.4% gain posted by the larger Russell 1000® Index, versus the 3.3% registered by the smaller Russell 2000® Index. But the differentiation ended; there was no performance distinction between growth and value. Developed foreign markets were positive last week, as the MSCI EAFE® Index gained 3.2%. The size bias impacted international markets as well as witnessed by the 0.94% gain in the MSCI Emerging Market Index. While equity markets brightened last week, commodity markets fell largely silent with crude oil adding 1%, and the industrial metals and agricultural commodities were on balance, or unchanged. The U.S. Treasury yield curve steepened last week as the thirty-year remained unchanged, and shorter maturity yields fell. Particularly noteworthy was the drop in thirty-day to one-year maturity range. The inversion on the short end of the yield curve still exists but to a lesser extent than before. Slowing global growth has central banks warming up their liquidity engines, which is bad for bond yields but great for asset bubbles.

Last week, Comerica’s Investment Policy Committee voted to change both our recommended asset allocation and our performance benchmark for managed accounts. We moved to the broader Russell 3000® Index for domestic equity and the ACWI World Ex-U.S. for international. This provides us with greater depth into the U.S. equity market as the Russell 3000® Index contains a dedicated Mid-Cap allocation, something we have not explicitly addressed in past guidelines. The Russell Indices are only reconstituted once annually, as opposed to the quarterly rebalancing of competing indices. This should serve to reduce the drag on investment performance exerted by trading and the associated tax consequences it brings. The ACWI World Ex-U.S. captures 85% of the market capitalization outside of the U.S. market. This includes representation in both developed and emerging markets. In addition, we removed our overweight to Value over Growth, as the prospects of renewed monetary intervention by central banks dampens our earlier view that we would see a steady rise in U.S. interest rates. We believe this shift better positions us with the prevailing investment environment.

 

For a PDF version of this publication, click here: 06.10.2019_WeeklyMarketOverview

 

NOTE: IMPORTANT INFORMATION
Source: Unless otherwise noted, all statistics herein obtained from Bloomberg.
This is not a complete analysis of every material fact regarding any company, industry or security. The information and materials herein has been obtained from sources we consider to be reliable, but Comerica Wealth Management does not warrant, or guarantee, its completeness or accuracy. Materials prepared by Comerica Wealth Management personnel are based on public information. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Comerica Wealth Management, including investment banking personnel. The views expressed are those of the author at the time of writing and are subject to change without notice. We do not assume any liability for losses that may result from the reliance by any person upon any such information or opinions. This material has been distributed for general educational/informational purposes only and should not be considered as investment advice or a recommendation for any particular security, strategy or investment product, or as personalized investment advice. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The investments and strategies discussed herein may not be suitable for all clients. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Comerica Wealth Management consists of various divisions and affiliates of Comerica Bank, including Comerica Bank & Trust, National Association; World Asset Management, Inc.; Comerica Securities, Inc.; and Comerica Insurance Services, Inc. and its affiliated insurance agencies. World Asset Management, Inc. and Comerica Securities, Inc. are federally registered investment advisors. Registrations do not imply a certain level of skill or training. Comerica Bank and its affiliates do not provide tax or legal advice. Please consult with your tax and legal advisors regarding your specific situation. Non-deposit Investment products offered by Comerica and its affiliates are not insured by the FDIC, are not deposits or other obligations of or guaranteed by Comerica Bank or any of its affiliates, and are subject to investment risks, including possible loss of the principal invested. Past performance is not indicative of future results. Information presented is for general information only and is subject to change.

The S&P 500® Index, S&P MidCap Index, S&P 600 Index and Dow Jones Wilshire 5000 (collectively, “S&P® Indices”) are products of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and Standard & Poor’s Financial Services, LLC and has been licensed for use by Comerica Bank, on behalf of itself and its Affiliates. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The trademarks have been licensed to SPDJI and sublicensed for certain purposes by Comerica Bank, on behalf of itself and its Affiliates. Nothing herein is sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”) or Standard & Poor’s Financial Services LLC. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC make any representation or warranty, express or implied, to the owners of the content herein, or any member of the public regarding the advisability of investing in securities generally or in particular strategies or the ability of any particular strategy to track general market performance. SPDJI and Standard & Poor’s Financial Services, LLC only relationship to Comerica Bank, on behalf of itself and its Affiliates with respect to the S&P® Indices is the licensing of the Indices and certain trademarks, service marks, and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P Indices are determined, composed and calculated by S&P Dow Jones Indices or Standard & Poor’s Financial Services, LLC without regard to Comerica Bank and its Affiliates or any of the content herein. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation to take the needs of Comerica and its Affiliates or the owners of any of the content herein into consideration in determining, composing or calculating the S&P Indices. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC are responsible for and have not participated in the determination of the prices, and amount of any particular strategy or the timing of the issuance or sale of any particular strategy or in the determination or calculation of the equation by which any particular strategy is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation or liability in connection with the administration, marketing or trading of any particular strategy. There is no assurance that any particular investment product based on the S&P Indices will accurately track index performance or provide positive investment returns. SPDJI is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.

NEITHER S&P DOW JONES INDICES NOR STANDARD & POOR’S FINANCIAL SERVICES, LLC GUARANTEES THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE WAM STRATEGIES OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNCATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES, OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY COMERICA AND ITS AFFILIATES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P INDICES OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES OR STANDARD & POOR’S FINANCIAL SERVICES, LLC BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND COMERICA AND ITS AFFILIATES, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.

“Russell 2000® Index” is a trademark of Russell Investments, licensed for use by Comerica Bank and World Asset Management, Inc. The source of all returns is Russell Investments. Further redistribution of information is strictly prohibited.

MSCI EAFE® is a trade mark of Morgan Stanley Capital International, Inc. (“MSCI”).

FTSE International Limited (“FTSE”) © FTSE 2016. FTSE® is a trade mark of London Stock Exchange Plc and The Financial Times Limited and is used by FTSE under license. All rights in the FTSE Indices vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE Indices or underlying data.

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Weekly Market Overview | June 3, 2019

June 3, 2019 by Peter Sorrentino

Geopolitical forces took a dark and unexpected turn last week. China, which had been delicately walking a balance of tough talk without naming names and taking it to a personal level, took off the gloves early in the week. In an editorial, the largest Chinese daily criticized the President and spoke directly to the harm his actions were likely to inflict on the American citizenry. The Chinese also announced the formation of a list of unreliable entities. Shortly after this announcement, the Chinese opened an investigation into FedEx Corp. on the grounds the company had delivered components from Huawei to the wrong location.

Capping off the week was the unexpected announcement, Thursday, that the administration would begin imposing a 5% tariff on all imports from Mexico. The rationale given was to engender the Mexican administration into a greater urgency regarding the immigration situation on the U.S. southern border. This news sent an already tenuous market reeling; on Friday alone, the market slipped 1.32%.

For the week, however, it was energy once again leading the way down, as crude oil prices fell over 10% on rising U.S. output and an apparent breaking of the ranks by Russia with OPEC. The impact on the sector was to push share prices down 4.27%. The prospect of a 5% tariff on Mexican imports sent the normally defensive Consumer Staples and Health Care stocks down 3.7% and 2.4%, respectively. By the closing bell Friday, U.S. stock prices were off 2.4%. For the third week in a row, size was not a differentiating factor. Developed foreign markets fared slightly better, as the MSCI EAFE® Index lost 2.04%. The MSCI Emerging Markets Index bucked the trend, rallying 1.15% for the week.

U.S. commodity prices were a completely different picture, as traders are now beginning to realize the impact of the unusually wet spring on planting. Corn prices jumped 9.6%, wheat was up 7% and soy beans rose 6.9%. After multiple failed attempts, precious metals managed to post a positive weekly return; gold and silver added 1% on the week.

To understand why the market was shaken by the Mexican tariff announcement, it helps to have some perspective on the trade picture. In 2017 (the most recent year for which we have good data), Mexico imported $420 billion worth of goods, with 46%, or $193 billion, of that from the U.S. That same year, the U.S. accounted for 80%, or $328 billion, of Mexico’s $410 billion worth of exports. This makes Mexico the U.S.’s second largest trading partner after Canada. By way of comparison, in 2017, China exported $2.2 trillion (of which the U.S. consumed 19%, or $418 billion) and imported $1.7 trillion (of which 8.5%, or $144 billion, came from the U.S.). The impact on food, clothing and a myriad of other consumer products is largely why the Consumer Staples sector suffered such a severe price decline on Friday. This tariff, if enacted, would likely be directly felt by U.S. consumers.

 

For a PDF version of this publication, click here: 06.03.19_WeeklyMarketOverview

 

NOTE: IMPORTANT INFORMATION
Source: Unless otherwise noted, all statistics herein obtained from Bloomberg.
This is not a complete analysis of every material fact regarding any company, industry or security. The information and materials herein has been obtained from sources we consider to be reliable, but Comerica Wealth Management does not warrant, or guarantee, its completeness or accuracy. Materials prepared by Comerica Wealth Management personnel are based on public information. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Comerica Wealth Management, including investment banking personnel. The views expressed are those of the author at the time of writing and are subject to change without notice. We do not assume any liability for losses that may result from the reliance by any person upon any such information or opinions. This material has been distributed for general educational/informational purposes only and should not be considered as investment advice or a recommendation for any particular security, strategy or investment product, or as personalized investment advice. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The investments and strategies discussed herein may not be suitable for all clients. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Comerica Wealth Management consists of various divisions and affiliates of Comerica Bank, including Comerica Bank & Trust, National Association; World Asset Management, Inc.; Comerica Securities, Inc.; and Comerica Insurance Services, Inc. and its affiliated insurance agencies. World Asset Management, Inc. and Comerica Securities, Inc. are federally registered investment advisors. Registrations do not imply a certain level of skill or training. Comerica Bank and its affiliates do not provide tax or legal advice. Please consult with your tax and legal advisors regarding your specific situation. Non-deposit Investment products offered by Comerica and its affiliates are not insured by the FDIC, are not deposits or other obligations of or guaranteed by Comerica Bank or any of its affiliates, and are subject to investment risks, including possible loss of the principal invested. Past performance is not indicative of future results. Information presented is for general information only and is subject to change.

The S&P 500® Index, S&P MidCap Index, S&P 600 Index and Dow Jones Wilshire 5000 (collectively, “S&P® Indices”) are products of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and Standard & Poor’s Financial Services, LLC and has been licensed for use by Comerica Bank, on behalf of itself and its Affiliates. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The trademarks have been licensed to SPDJI and sublicensed for certain purposes by Comerica Bank, on behalf of itself and its Affiliates. Nothing herein is sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”) or Standard & Poor’s Financial Services LLC. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC make any representation or warranty, express or implied, to the owners of the content herein, or any member of the public regarding the advisability of investing in securities generally or in particular strategies or the ability of any particular strategy to track general market performance. SPDJI and Standard & Poor’s Financial Services, LLC only relationship to Comerica Bank, on behalf of itself and its Affiliates with respect to the S&P® Indices is the licensing of the Indices and certain trademarks, service marks, and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P Indices are determined, composed and calculated by S&P Dow Jones Indices or Standard & Poor’s Financial Services, LLC without regard to Comerica Bank and its Affiliates or any of the content herein. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation to take the needs of Comerica and its Affiliates or the owners of any of the content herein into consideration in determining, composing or calculating the S&P Indices. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC are responsible for and have not participated in the determination of the prices, and amount of any particular strategy or the timing of the issuance or sale of any particular strategy or in the determination or calculation of the equation by which any particular strategy is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation or liability in connection with the administration, marketing or trading of any particular strategy. There is no assurance that any particular investment product based on the S&P Indices will accurately track index performance or provide positive investment returns. SPDJI is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.

NEITHER S&P DOW JONES INDICES NOR STANDARD & POOR’S FINANCIAL SERVICES, LLC GUARANTEES THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE WAM STRATEGIES OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNCATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES, OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY COMERICA AND ITS AFFILIATES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P INDICES OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES OR STANDARD & POOR’S FINANCIAL SERVICES, LLC BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND COMERICA AND ITS AFFILIATES, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.

“Russell 2000® Index” is a trademark of Russell Investments, licensed for use by Comerica Bank and World Asset Management, Inc. The source of all returns is Russell Investments. Further redistribution of information is strictly prohibited.

MSCI EAFE® is a trade mark of Morgan Stanley Capital International, Inc. (“MSCI”).

FTSE International Limited (“FTSE”) © FTSE 2016. FTSE® is a trade mark of London Stock Exchange Plc and The Financial Times Limited and is used by FTSE under license. All rights in the FTSE Indices vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE Indices or underlying data.

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Weekly Market Overview | May 27, 2019

May 28, 2019 by Peter Sorrentino

The approach of summer did little to lift the market, slipping to its third weekly loss. Last week, global trade concerns were certainly weighing on investors, but the biggest single drag on the indices was the sudden drop in oil prices. WTI crude fell over 7%, closing the week at $58.60 per barrel. This precipitous decline was the result of higher-than-expected inventory levels, as the recent pick up in U.S. drilling and completions has been shown to generate greater supply. The Energy sector fell 3.34% for the week, giving it the dubious distinction of being the week’s biggest loser. Following at second, and off 2.76%, was the Technology sector. This group has become ground zero for the trade battle. With so much of its market and production situated in China, U.S. technology companies are fully caught in the cross-fire. The defensive sectors of the market continued to hold up, as Utilities climbed 1.8% this week, joined by Health Care providers clocking in with a 1.3% advance. Financials were perhaps the biggest surprise last week, as the drop in interest rates first drove them down sharply, only to rebound on the prospects of higher loan volume. The money flow into U.S. Treasuries continued apace, holding the yield on the 10-year note at 2.27%. In the broad market, there was not a significant size differential in performance, as the Russell 1000® Index fell 1.21% compared to the 1.41% drop for the Russell 2000® Index. International markets were fractionally lower, as the MSCI EAFE® Index dropped 0.27%, while the MSCI Emerging Market Index gave up 0.75%. Despite the drop in crude oil, the U.S. agricultural commodities posted a noteworthy turnaround with both corn and winter wheat prices up over 5%. Precious metals had a brief moment in the sun on Thursday, rallying over 1%, only to slip back once more as the week closed.

While we scour the data for indications of where and when the next U.S. recession will begin, it is useful to lift our sights and see how others might be doing. There has been a lot written about the Great Moderation and how our business cycles have become extended and less prone to spastic episodes. A quick search points out that Australia has not had a recession in 28 years, due, in no small part, to providing many of the raw materials that fueled China’s explosive growth and the reciprocate investment by the Chinese in Australia. Comerica’s Chief Economist, Dr. Dye, has spoken at length about how time allows excess to accumulate, and it is the correction of these excesses that take the heaviest toll on the economy. Consider this: even in the best of times, housing prices in Australia have risen to such a level that homes are now becoming out of reach for a growing portion of the population. For those who own a home, the ability to sustain the outlay required to hold on to it is also slipping away (thirty-year mortgages are a distinctly American creation). Home loans in Australia are full recourse so, unlike in America, you cannot simply leave the keys on the counter and let the bank take it back. Now for the brewing crisis part: over 60% of Australian bank assets are home mortgages. Not that we want to take solace in another’s misfortune, but it is reassuring to know that we are not facing that scenario.

 

For a PDF version of this publication, click here: 05.27.2019_WeeklyMarketOverview

 

NOTE: IMPORTANT INFORMATION
Source: Unless otherwise noted, all statistics herein obtained from Bloomberg.
This is not a complete analysis of every material fact regarding any company, industry or security. The information and materials herein has been obtained from sources we consider to be reliable, but Comerica Wealth Management does not warrant, or guarantee, its completeness or accuracy. Materials prepared by Comerica Wealth Management personnel are based on public information. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Comerica Wealth Management, including investment banking personnel. The views expressed are those of the author at the time of writing and are subject to change without notice. We do not assume any liability for losses that may result from the reliance by any person upon any such information or opinions. This material has been distributed for general educational/informational purposes only and should not be considered as investment advice or a recommendation for any particular security, strategy or investment product, or as personalized investment advice. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The investments and strategies discussed herein may not be suitable for all clients. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Comerica Wealth Management consists of various divisions and affiliates of Comerica Bank, including Comerica Bank & Trust, National Association; World Asset Management, Inc.; Comerica Securities, Inc.; and Comerica Insurance Services, Inc. and its affiliated insurance agencies. World Asset Management, Inc. and Comerica Securities, Inc. are federally registered investment advisors. Registrations do not imply a certain level of skill or training. Comerica Bank and its affiliates do not provide tax or legal advice. Please consult with your tax and legal advisors regarding your specific situation. Non-deposit Investment products offered by Comerica and its affiliates are not insured by the FDIC, are not deposits or other obligations of or guaranteed by Comerica Bank or any of its affiliates, and are subject to investment risks, including possible loss of the principal invested. Past performance is not indicative of future results. Information presented is for general information only and is subject to change.

The S&P 500® Index, S&P MidCap Index, S&P 600 Index and Dow Jones Wilshire 5000 (collectively, “S&P® Indices”) are products of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and Standard & Poor’s Financial Services, LLC and has been licensed for use by Comerica Bank, on behalf of itself and its Affiliates. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The trademarks have been licensed to SPDJI and sublicensed for certain purposes by Comerica Bank, on behalf of itself and its Affiliates. Nothing herein is sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”) or Standard & Poor’s Financial Services LLC. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC make any representation or warranty, express or implied, to the owners of the content herein, or any member of the public regarding the advisability of investing in securities generally or in particular strategies or the ability of any particular strategy to track general market performance. SPDJI and Standard & Poor’s Financial Services, LLC only relationship to Comerica Bank, on behalf of itself and its Affiliates with respect to the S&P® Indices is the licensing of the Indices and certain trademarks, service marks, and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P Indices are determined, composed and calculated by S&P Dow Jones Indices or Standard & Poor’s Financial Services, LLC without regard to Comerica Bank and its Affiliates or any of the content herein. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation to take the needs of Comerica and its Affiliates or the owners of any of the content herein into consideration in determining, composing or calculating the S&P Indices. Neither S&P Dow Jones Indices nor Standard & Poor’s Financial Services, LLC are responsible for and have not participated in the determination of the prices, and amount of any particular strategy or the timing of the issuance or sale of any particular strategy or in the determination or calculation of the equation by which any particular strategy is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices and Standard & Poor’s Financial Services, LLC have no obligation or liability in connection with the administration, marketing or trading of any particular strategy. There is no assurance that any particular investment product based on the S&P Indices will accurately track index performance or provide positive investment returns. SPDJI is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.

NEITHER S&P DOW JONES INDICES NOR STANDARD & POOR’S FINANCIAL SERVICES, LLC GUARANTEES THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE WAM STRATEGIES OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNCATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES AND STANDARD & POOR’S FINANCIAL SERVICES, LLC MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES, OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY COMERICA AND ITS AFFILIATES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P INDICES OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES OR STANDARD & POOR’S FINANCIAL SERVICES, LLC BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND COMERICA AND ITS AFFILIATES, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.

“Russell 2000® Index” is a trademark of Russell Investments, licensed for use by Comerica Bank and World Asset Management, Inc. The source of all returns is Russell Investments. Further redistribution of information is strictly prohibited.

MSCI EAFE® is a trade mark of Morgan Stanley Capital International, Inc. (“MSCI”).

FTSE International Limited (“FTSE”) © FTSE 2016. FTSE® is a trade mark of London Stock Exchange Plc and The Financial Times Limited and is used by FTSE under license. All rights in the FTSE Indices vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE Indices or underlying data.

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Weekly Market Overview | May 20, 2019

May 20, 2019 by Peter Sorrentino

The U.S. equity market suffered a second weekly decline fueled by the renewed uncertainty surrounding the fate of current trade negotiations with China. Unlike last week, there was a discernable direction in place by week’s end. Investors once more returned to a defensive, risk-off bias as the shares of utility and consumer staples companies managed to post gains. The leaders among the staples were the household names you would expect, and the buying was strong. Utility shares continued to benefit from both the defensive nature of the business itself, and once again, the attractive dividend yields. The surge in bond buying has pushed interest rates down once more. That same decline in interest rates weighed on the Financial sector, dragging it down 2.2% for the week. Industrials continued to lose ground, falling 1.9% last week. China’s retaliatory response to the latest round of U.S. tariffs was targeted at the agricultural sector, negatively impacting the farm machinery and heavy equipment companies. Another aspect indicative of the defensive turn was evident in the exodus from the shares of smaller domestic companies. The large and mid-cap Russell 1000® Index closed a fractional -0.8% for the week, while the small-cap Russell 2000® Index lost 2.4%. The international picture was even more stark, as the developed markets of the MSCI EAFE® Index rose 1%, while the MSCI Emerging Market Index lost 2%. Energy markets were strong last week, as fears of attacks on middle eastern oil installations roiled traders, and OPEC ministers showed no signs of altering current production rates. The balance of the commodity complex was quiet last week and, surprisingly, precious metals have shown no signs of panic buying.

Even though the trade disputes are far from over, the impact is already apparent, as U.S. imports – while still growing – are doing so at a declining rate. Adding to that, exports (now including energy) are rising. In Exhibit 1, you can see in the first set of charts the slowing rate of import growth, followed by the deceleration of the trade deficit. This continues to push the value of the U.S. dollar higher, back into the range of its 2017 peak, versus other major currencies. The benefit for U.S. consumers has been to hold import prices in check. That same dynamic is what Fed Chairman Powell referred to as ‘transitory’. If current trends hold, it may not be so transitory after all.

Exhibit 1 (Source: Crandall, Pierce & Company)

For a PDF version of this publication, click here: 05.20.19_WeeklyMarketOverview

 

NOTE: IMPORTANT INFORMATION
Source: Unless otherwise noted, all statistics herein obtained from Bloomberg.
This is not a complete analysis of every material fact regarding any company, industry or security. The information and materials herein has been obtained from sources we consider to be reliable, but Comerica Wealth Management does not warrant, or guarantee, its completeness or accuracy. Materials prepared by Comerica Wealth Management personnel are based on public information. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Comerica Wealth Management, including investment banking personnel. The views expressed are those of the author at the time of writing and are subject to change without notice. We do not assume any liability for losses that may result from the reliance by any person upon any such information or opinions. This material has been distributed for general educational/informational purposes only and should not be considered as investment advice or a recommendation for any particular security, strategy or investment product, or as personalized investment advice. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The investments and strategies discussed herein may not be suitable for all clients. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Comerica Wealth Management consists of various divisions and affiliates of Comerica Bank, including Comerica Bank & Trust, National Association; World Asset Management, Inc.; Comerica Securities, Inc.; and Comerica Insurance Services, Inc. and its affiliated insurance agencies. World Asset Management, Inc. and Comerica Securities, Inc. are federally registered investment advisors. Registrations do not imply a certain level of skill or training. Comerica Bank and its affiliates do not provide tax or legal advice. Please consult with your tax and legal advisors regarding your specific situation. Non-deposit Investment products offered by Comerica and its affiliates are not insured by the FDIC, are not deposits or other obligations of or guaranteed by Comerica Bank or any of its affiliates, and are subject to investment risks, including possible loss of the principal invested. Past performance is not indicative of future results. Information presented is for general information only and is subject to change.

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