October 23, 2017 – Weekly Market Commentary



 

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Jordan Carney and Niv Elis – The Hill
Senate Narrowly Passes 2018 Budget, Paving Way for Tax Reform

Summary: Senators voted 51-49 to pas the fiscal 2018 budget. No Democrat supported the budget. The vote is a major step toward passing a tax plan. An amendment to the new budget bill allows the plan to avoid a Democratic filibuster. The bill will now move on to the House for further approval. 

 

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Adam Becket and Adam Bienkov – Business Insider
Brexit Trade Negotiations Blocked by the EU Until Christmas

Summary: Formal trade negotiations between the UK and the EU have been delayed until the end of this year. Both sides of the table have been focused on determining the amount of the financial settlement that the UK will owe for leaving the economic bloc. The EU has previously stated that no further trade negotiations will occur until the amount is finalized. 

 

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Adam Taylor – The Washington Post
Abe Retains Supermajority in Japan’s Election

Summary: Polls show that current Prime Minister Shinzo Abe secured a landslide victory in the recent snap elections. He is now on track to govern Japan until 2021. Most importantly, Abe’s party retained a parliamentary majority which boosts his chances of passing what many see as supportive economic and government policy changes. 

 

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Caroline Valetkevitch – Reuters
Dow Ends Above 23,000 for Frist Time

Summary: The Dow Jones Industrial Average closed above 23,000 for the first time last week, driven by a surge in IBM’s stock price. It was the fourth time this year that the Dow has reached a 1,000-point milestone. The level itself has little meaning, but clearing a record high tends to encourage capital inflows into equities which can support a short-term rise in the index. 

 

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Yacov Arnopolin, Lupin Rahman, Vinicius Silva – PIMCO
10 Investor Takeaways From the IMF/World Bank Meetings

Summary: The main focus was on emerging markets. Participants expect emerging markets to continue their positive growth trajectory next year supported by stable inflation and developed market growth. In terms of risks, China’s soaring corporate debt and policy normalization at the Fed and European Central Bank were the most common concerns, but in the near-term, participants do not expect these risks to derail the economy.

 

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Russ Koeaterich, CFA – BlackRock
In Times of Eerie Calm, Don’t Neglect Quality

Summary: This year the market rally has been driven by risk-on asset classes such as emerging markets and secular growth companies. Koesterich argues that investors should consider adding holdings with a quality tilt to portfolios in order to mitigate risks. Historically, quality positions have outperformed momentum when the VIX, a measure of market volatility, is on the rise. 

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