Friday’s eye-opening decline in the strongest gainers for 2017 has many people wondering:
Is it time for new market leadership?
Last Week Recap
The big news last week was the Comey hearing and speculation about what it meant. Markets have not been reacting to the political news, but it still commands media attention. CNBC provided non-stop coverage.
The punditry did spend time on my question from last week – bonds versus stocks – but seemed happy to turn to the action on Friday instead.
The Story in One Chart
I always start my personal review of the week by looking at this great chart from Doug Short via Jill Mislinski. The loss for the week was only 0.3%, but Friday’s trading added some excitement to a slow, summer Friday afternoon.
Doug has a special knack for pulling together all the relevant information. His charts save more than a thousand words! Read the entire post for several more charts providing long-term perspective, including the size and frequency of drawdowns.
Note to Readers
Thanks to all of those who offered suggestions for changes in WTWA and encouragement about my main mission. There are many great ideas that I am trying to implement and many loyal readers who like things as they are. Here are the changes so far:
Eliminating much of the material repeated every week and placing it in a static source. I need to find a good way to encourage new readers to check out the background.
Reducing the calendar to summarize my own views on what is most important.
Moving the Silver Bullet to a standalone series. I am trying to make it more visible, not diminishing the importance. I realize that this is a bit less convenient for current leaders, but I hope they will help me out in establishing this.
Moving the trading ideas to the Stock Exchange series. Once again, please read and give this a chance. WTWA readers must be aware of the different time frame.
Changing the emphasis of the weekly theme to what I see as more important, with secondary consideration to media attention.
The News
Each week I break down events into good and bad. For our purposes, “good” has two components. The news must be market friendly and better than expectations. I avoid using my personal preferences in evaluating news – and you should, too.
The economic news last week was mixed, but the market reaction was positive.
The Good
Household balance sheets show new records in wealth in nominal, real, and per capita terms. (Scott Grannis).
Rail traffic improved in May. (Calculated Risk). (See also Steven Hansen at GEI).
Earnings announcements are the most positive since 2012. (FactSet). (Brian Gilmartin).
ISM services registered 56.9. The strong value beat expectations. There was also strength in employment, business activity, and new orders. (ISM).
Commercial real estate is looking stronger according to the Dodge Momentum Index. This is claimed to be a leading indicator. See Calculated Risk for analysis and charts.
The Bad
Little progress in the debt ceiling debate.
Factory orders dropped 0.2%, the first decline in five months. (Reuters).
Wholesale sales declined to levels usually associated with recessions. (Steven Hansen at GEI). The lower inventories are also likely to affect Q2GDP.
