Equities Markets: Scaling The Peak-Mischler Comment via Peruzzi’s Perch

Peruzzi’s Perch 08.04.17- All Systems Remain in “Go” Mode; Equities Markets Continue to Scale The Peak

Throughout the last several weeks more than a few strategists and commentators have been warning investors of overvalued and overbought equities markets. Calls were being made to head for the exit. Yet, for reasons known and unknown, investors kept plowing money into the market. Lack of volatility, low interest rates, cheap oil, tame inflation and favorable business policy drew investors in to US [and global] equities markets as they did not heed the warnings. To understand this, we should look at the hikers that attempt to conquer Mt Everest. Those mountaineers are well aware that peril could be met with a slight slip of foot or unforeseen storm, yet they trudge forward for the glory and euphoria of reaching the top. Likewise, investors today are presumably well aware of the risks (until they’re not!) and this week, the glory of new all-time highs as well as very good earnings and a strong jobs report made the voyage worth it.

Larry Peruzzi, Managing Director

We had another heavy earnings week. So far, this recent quarter is shaping up as the best earnings season in 7 years, with 77% of companies reporting beating estimates. Economics-wise, this week‘s June Pending home sales, June Personal spending, July ISM manufacturing and June factory orders all came in at or very close to estimates. Price deflator and personal income data was dovish. The major economic release was Friday’s July employment report. Unemployment dropped to 4.3% as expected and non-farm payrolls added a better than expected 209,000 jobs. Average hourly earnings met estimates at +.3% M/M which at a +2.5% Y/Y rate should NOT ignite any inflation fears.

The Washington/Russia/North Korea/Venezuela soap opera drama continues. The Trump administration cabinet turnover is reaching a record pace, but none of this seems to be enough to spook the markets. Possible new sanctions against Venezuela help lift oil close to $50 a barrel but many U.S refineries have been fitted, at sizeable cost, to refine Venezuela’s heavy type of crude so look for a fair amount of politicking here.

Looking ahead to next week, earning season is nearing its end with just 206 companies due to report. Also due are Consumer credit on Monday, 2Q non-farm productivity and labor cost on Wednesday, July PPI data on Thursday and July CPI data on Friday.

With the DOW at 22, 000 and the economy close to being at full employment, analysts and investors will closely monitor any type of inflationary pressure which might cause the FED to raise rates at a faster pace or possibly, amplify asset sales.  So, we will be listening to speeches by Fed  governors Bullard, Kashkari, Dudley next week ahead of the August 16^th FOMC meeting minutes.  With global growth, low inflation, low energy prices and emerging market growth investors will be cautiously move forward as we scale the peak.

Larry Peruzzi

Managing Director International Trading

Mischler Financial Group

Investment Banking | Institutional Brokerage

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