May 8, 2017 – Weekly Market Commentary





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BBC News
Emmanuel Macron Defeats Le Pen to Become French President

Summary:
Emmanuel Macron secured over 66% of the popular vote to become the French President. The former investment banker is France’s youngest president and leads a new party, En Marche, which he founded after leaving the Socialist party.The immediate international reaction has been a sigh of relief given the populist nature of Le Pen’s policies.Macron has many hurdles ahead of him.The immediate challenge is securing parliamentary support. En Marche has no parliamentary seats and drumming up the backing to secure a majority prior to the June 11th and 18th elections is unlikely.

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Jeff Cox – CNBC
Fed Holds Rates Steady, Noted Slower Economic Growth

Summary:
The Federal Reserve voted to leave its key interest rate unchanged. Several Fed officials cited concern over slowing economic activity and household spending as reasons for inaction.The official statement indicated that despite slow first quarter growth, the Fed has not changed its intentions to raise rates multiple times this year. 

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Erin Kelly – USA Today
Senate Averts Shutdown, Funds the Government Through September

Summary:
The Senate approved a government funding bill which will fund federal agencies through September. The bill was previously approved by the House despite opposition from more than 100 Republicans. Republican’s displeasure with the bill was also apparent in the Senate. All of the “no” votes came from Republicans. The White House and both sides of the aisle were able to claim victories in the bipartisan agreement. 

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Chris Williamson – IHS Markit
Eurozone Starts Second Quarter With PMI at Six-Year High

Summary:
The eurozone’s strong start to 2017 continued in April. Headline PMI came in at 56.8, the highest reading in six years. Underlying data shows that eurozone growth is gaining broad-based momentum. The spread between Italy and the generally stronger economies of Germany and France was the lowest in euro area survey history. The positive data is encouraging for overall 2017 growth and could lead to more hawkish statements from the ECB. 

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Andrew Bary – Barron’s
Warren Buffett: Bonds are a terrible choice against stocks

Summary:
Following Berkshire Hathaway’s annual conference this weekend, Warren Buffett spoke with CNBC regarding themes he is seeing in the market. Commenting on stock valuations, he said that “bonds are a terrible choice against stocks.” He explained that the valuation of stocks is driven in part by interest rates. “Stocks are dirt cheap”  for anyone who believes that rates will stay low for the foreseeable future. 

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Robert Doll – Chief Equity Strategist – Nuveen Asset Management
Economic Growth Should Improve Modestly

Summary:
Mixed US economic data offers arguments for bull and bears, but Doll thinks that the positives will outweigh the negatives. Job growth has continued to improve, corporate earnings are solid, and Q2 GDP should rebound. Looking ahead, Doll sees opportunities in Europe as the spread between US and European equity performance narrows and deflation and recession risks fade. 

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Franklin Templeton Investment Team
French Election Result: Macron Wins, But Can He Deliver?

Summary:
The Franklin Templeton team believe that the upcoming parliamentary elections are particularly important for Macron. He will likely have to negotiate will all parties in order to implement reforms and his lack of political experience could lead to difficulties. Should he be able to gain support, Macron’s proposed growth reforms will benefit eurozone equities overall with banking, insurance, and energy companies likely to see the most upside. 


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