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By Pete Biebel, Senior Vice President

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That may be my goofiest title ever.  Actually, it’s an anagram of “anagram fun,” which is the theme of this week’s article.  Take, for example: “A Ms. Prim Financed a Theft.”  That’s an anagram of “Tariffs and Impeachment,” the two topics that have been the top items in the news lately.  So far, the market hasn’t seemed too concerned about the impeachment circus, but it’s gone bonkers over the possibility of a bit of progress in the trade talks with China.

“Lemur Sends Telex” and “Nudes Exert Smell” are anagrams of “Extreme Dullness.”  For a week in which the major averages all recorded record highs, trading was surprisingly lackluster.  Nearly all the gains for the week came in the opening minutes of trading on Monday and Thursday.  On Monday morning, fueled by headlines of potential progress in trade talks, SPX rocketed up to new heights in the 3080s, but flamed-out just as quickly.  From early Monday through the close on Wednesday, the averages drifted lower in very narrow trading ranges.

Thursday morning brought a “Fastball for Rick,” an anagram of “Tariff Rollbacks.”  News that the two parties had agreed to proportionate, phased rollbacks of the tariffs in place touched off another moon-shot opening.  SPX soared into the mid-3090s that morning, hitting an intraday high near 3098 before giving back much of that gain later in the session after the White House denied that an agreement had been reached.  A late rally on Friday lifted SPX to near the Thursday high and produced a new closing record at 3092.47.

The Dow Jones Industrial Average (DJIA) was the best of the major averages, gaining 1.22% for the week.  The NASDAQ Composite Index (COMP) added just over 1% and the S&P 500 Index (SPX) was up 0.85%.  “Rich Red Hogs” is an anagram of “Record Highs.”  All three of the indices ended the week at their best levels ever.

“Sarcastic Lone Fin” and “Anticancer Fossil” are both anagrams of “Financials Sector,” the best performing U.S. equity sector for the week, up a little more than 2 ½%.  The Energy sector was next best; it racked up a big gain on Monday but gave back much of the early week advance to end the week up about 2.3%.  The Basic Materials and the Industrials sectors each added almost 2% for the week, with both sectors aided by the rumors of trade talk progress.

Ten-Year Treasury Notes were one of the biggest losers on the week, largely because the trade talk optimism suggested stronger growth ahead, which drove rates higher.  The yield on the Ten-Year spiked above 1.9%, its highest rate in more than three months.  Higher interest rates weighed on the Real Estate and Utilities sectors, which each lost between 3.5% and 4.0% last week.  The higher rates also took some of the shine of the precious metals market.  Gold had one of its worst weeks of the year, losing about 3.6%.

“Hunted Dirty Heron,” “Nutty Rhino Herded” and “Yonder Thunder Hit” are all anagrams of “Thirty-One Hundred.”  The 3100 level of SPX lies just overhead; that will be a key level to watch this week.  The index tends to stall at round-number levels.  SPX hovered around the 3000 level through most of July and again for a few weeks in September.  It was finally able to rally beyond that area in late-October and it hasn’t looked back since.  We shouldn’t be too surprised if SPX drops back away from 3100 for a few days to get a running start at breaking above that level.  There shouldn’t be much cause for concern unless and until SPX falls back below 3000.

“He Hewed a Teak” is an anagram of “The Week Ahead.”  Again this week, the earnings report calendar is a little shorter than previous weeks, but still loaded with some big-name reports.  The economic report calendar doesn’t have much of significance until late in the week.  The CPI and PPI data on Wednesday and Thursday will be closely watched but are unlikely to generate much of a reaction in the market.  The Retail Sales and Industrial Production numbers on Friday seem to be the most likely candidates to produce a market moving surprise.  This week also will be the market’s most serious test so far for what level of concern it has over the impeachment process.  News of progress, or lack thereof, in the trade talks will probably continue to have the greatest short-term impact on market performance.

Date Report Previous Consensus
Monday 11/11/2019 Veterans’ Day, banks and bond market closed    
Tuesday 11/12/2019 NFIB Small Business Optimism Index 101.8 102.0
Wednesday 11/13/2019 Consumer Price Index, M/M 0.0%  +0.3%
  Consumer Price Index, less Food & Energy, M/M +0.1%  +0.2%
Thursday 11/14/2019 Jobless Claims 211K  215K
  PPI-Final Demand, M/M -0.3% +0.3%
  PPI-Final Demand, less Food & Energy, M/M -0.3% +0.2%
Friday 11/15/2019 Retail Sales, M/M -0.3% +0.2%
  Retail Sales, less Autos & Gas, M/M -0.1%  +0.4%
  Empire State Manufacturing Survey 4.0 5.0
  Import and Export Prices, Imports, M/M +0.2% -0.2%
  Import and Export Prices, Exports, M/M -0.2% -0.1%
  Industrial Production, Production, M/M -0.4% -0.4%
  Industrial Production, Manufacturing, M/M -0.5% -0.5%
  Business Inventories, M/M 0.0% +0.1%

 
 

Links to previously published commentaries can be found at benjaminfedwards.com/Company News/Blog/Market.

November 11, 2019 |