Equities Markets: Should I Stay or Should I Go? Peruzzi’s Perch
July 28, 2017   //   by Mischler MarCom   //   Equities Market Commentary  

Peruzzi’s Perch 07.28.17  As Bull Market Seems Long in Tooth, Equities Markets Institutional Investors Ponder : Should I Stay or Should I Go?

Watching the equities markets this week, one can’t help but think of the song from The Clash: Should I Stay or Should I Go.  Earnings, economic data, Fed speak and cash flows all signal a market that has inflation under control and is growing a moderate pace.

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Larry Peruzzi, Managing Director

We have been seeing a decent amount of shorts being squeezed and retail investors, who have been on the sidelines, are putting more money to work as they try to “catch up”. These points, as well as an S&P P/E ratio of 21.4 tend to be overbought signals and bears will try to make sell arguments. Given all this, it is still difficult to sell this market as low rates, low inflation and low oil prices ($50 oil) look to be with us for a while. While investors are starting to be cautious, we really don’t see any market correction event on the horizon. Friday’s inline 2Q GDP data further confirmed this.

The week in review saw in-line existing home sales on Monday, dovish Fed comments and no rate hike [as expected] on Wednesday, and decent Earning growth on a heavy earnings Thursday. In fact, looking at the S&P 500 earnings scorecard, it shows 10.7% earnings growth on 4.9% rise in revenues. London dealers also announced the 50-year old borrowing benchmark LIBOR will be replaced by 2021. Amazon CEO Jeff Bezos passed Bill Gates as the world’s richest person. The transformation of the retail industry continues and the value of an Amazon distribution can make a huge difference as we have seen recent life lines thrown to Whole Foods and Sears.  But, even Amazon (NASDAQ:AMZN) proved they are not invincible after issuing a profit warning on Friday.  Twitter (NASDAQ:TWTR) continues to be an enigma as the firm announced its first every decline in quarterly revenues and the stock closed below its 200 day moving average on Thursday. The S&P 500, NASDAQ and Dow Industrials hit all-time highs on Wednesday. Thursday started out well but some mid-day profit taking turned the day into a reversal day. Tobacco stocks were burned down on Friday after U.S. regulators proposed cutting nicotine levels in cigarettes. U.S dollar continues to be weak, as the U.S dollar index hit its lowest levels since April 2016.

Looking ahead to next week, the Washington soap opera will be front and center. Thursday night the Senate failed to overturn the Affordable Care Act, causing many to question the ability of the Trump agenda to move forward. Also not helping the case is the continued White House staff infighting and personnel turnover as former Wall Streeter Anthony “Mooch” Scaramucci became Trump’s latest “senior communications director”.

Monday should be a quiet month end as July often is. Also due: June pending home sales on Monday, July ISM data on Tuesday, Factory orders and durable goods on Thursday and July employment payrolls data on Friday. 113 companies will report earnings next week, with the bulk doing so after the market closes on Tuesday and Wednesday.

Investors will be best served by being cautious, as some strategist are calling the markets “expensive”, “overbought” and/or “ready for a correction.” Notwithstanding the market naysers, the data is showing us continued growth and low volatility and inflation. Although we are late in the bull’s run, we continue to see opportunities in sector rotation, as well as in old fashion stock picking. See Twitter up 3.37% YTD while Facebook is up 50.42% YTD.

The take-away? Be cautious, wear your sunscreen so you don’t get burnt, and add the Clash to your playlist.

Larry Peruzzi

Managing Director International Trading

Mischler Financial Group

Investment Banking | Institutional Brokerage

Ph:   1-617-420-8472 | Cell: 1-617-997-6318

Larry Peruzzi is a 20 yr global trading markets veteran and brings a unique perspective to global equities market commentary via Mischler Financial Group, the securities industry’s oldest minority broker-dealer owned and operated by service-disabled veterans.  Larry’s experience  and best execution perspective stems from his sitting on ‘both sides of the aisle.’  For more than half of Larry’s career, he ran buy-side trading desks for Standish Mellon and thereafter, The Boston Company. In both of those roles, Larry was responsible for implementing and managing international equities trade execution. Larry’s perspectives are frequently cited by the leading financial news publishers, including The Wall Street Journal, Bloomberg LP and Reuters

Mischler End of Week Equities Market Commentary via Peruzzi’s Perch July 28, 2017 end-of-week edition is distributed via email to institutional investment managers and Fortune Treasury clients of veteran-owned broker-dealer Mischler Financial Group, the investment industry’s oldest  minority broker-dealer owned and operated by Service-Disabled Veterans.

Peruzzi’s Perch is a weekly synopsis of Everything Equities as seen from the perch of Mischler Financial Group’s International Equities Desk. Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”, Peruzzi’s Perch is one of four distinctive content pieces produced by Mischler Financial Group

Equities Markets: Should I Stay or Should I Go? Peruzzi’s Perch via Mischler Financial Group