October 30, 2017 – Weekly Market Commentary



 

Capitol Hill

David Morgan, Susan Cornwell, andy Sullivan – Reuters
House Narrowly Passes Measure Paving Way for Trump Tax Cuts

Summary: The House of Representatives voted to pass a budget plan for the 2018 fiscal year which will enable tax legislation to win congressional approval without any Democratic votes. No Democrats voted for the bill. Deliberations over tax-reform will now take center stage. 

 

European Central Bank Logo

Claire Jones – Financial Times
Draghi Refuses to Call End to ECB Crisis Measures

Summary: The ECB announced that it would be extending its current stimulus program until at least September of next year but will half the amount of bonds it purchases per month. Even with the reduction, the bank will be purchasing 30 billion euros of bonds per month over the next year. The news drove the euro lower and European markets higher. 

 

United States Flag

Lucia Mutikani – Reuters
Inventories, Trade Shield U.S. Economy From Hurricane Headwinds 

Summary: Initial data show the US growing at 3% during the third-quarter versus estimates of 2.5%. The results were driven by an increase in inventory investment and business spending along with a decrease in the trade deficit. Consumer spending slowed, likely as a result of the recent Hurricanes, but is expected to rebound in Q4. 

 

Spain Flag

BBC news
Catalans Declare Independence as Madrid Imposes Direct Rule

Summary: The Catalan regional parliament voted to declare independence from Spain, leading the Spanish parliament to approve direct rule over the region. Spain’s Prime Minister, Mariano Rajoy, must now decide what measures to take against Catalan’s government officials and how much control the Spanish government will exert on the region. 

 

Factset Logo

John Butters – Factset
S&P 500 Earnings Update

Summary: Over half of the companies in the S&P 500 have reported Q3 results and the results have been overwhelmingly positive. Seventy-six percent of companies have reported earnings per share above estimates and sixty-seven percent of companies have reported sales above estimates. The results should continue to support market appreciation. 

 

Charles Schwab Logo

Liz Ann Sonders, Jeffrey Kleintop, Brad Sorensen – Charles Schwab
Stocks Aren’t so Spooky

Summary: Stock indexes are hitting new highs and investor sentiment measures are showing widespread optimism, but households’ exposure to equities has not reached an extreme. Positive earnings results and stable global growth are expected to continue fueling the bull market. The Schwab team believes that we are heading into the later stages of the market cycle which generally leads to positive price appreciation as investors remain optimistic and boost their equity holdings. 

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