Browsing articles tagged with "Global Equities Market Commentary Archives - Mischler Financial Group"
Equities Markets Action Defy Many Experts-So Be It?
September 2017      Equities Market Commentary   

Peruzzi’s Perch 09.01.17- Equities Markets Action Defy Experts-“Houston, we don’t see a problem..”?

The U.S markets finished August with the NASDAQ comp at all-time highs, the S&P 500 on a 5 day and DOW on a 4 day winning streak.  In fact, both the DOW and S&P 500 were within ½ of 1 % of their all times highs set on August 8th.  We find this to be somewhat remarkable given the headwinds the market has had to face recently.

larry-peruzzi-mischler-equitiies

Larry Peruzzi, Managing Director

We have seen the market repeatedly recover from events such as North Korea missile launches, Presidential cabinet turnover, failed heath care bills, and Hurricane Harvey’s destruction and near shut down of Houston’s oil refining capacity.  This market may be overvalued, it may be “long in the tooth” and it may even be a thorn in the FED’s side. All true, but it also proving to be very resilient.

Another surprising aspect is the lack of surprise in the economic releases. Perhaps it’s a function of better forecasting, but we rarely see surprises in the numbers. This week Wholesales inventories, Dallas Fed, jobless claims, income, spending, Q2 GDP adjustment all came in as expected. July pending sales however did pull back a bit. We closed out the week with August employment report and while the headline number of 156K versus 180K estimates looked light, the bulk of that was in lower government hiring. The participation rate remained at a healthy 62.9%.  The biggest story of the week was the massive flooding caused by hurricane Harvey. The storm looks like it will be the costliest in U.S history, and the human and personal toll is difficult to comprehend. Gasoline has spiked to multi year highs, but with oil maintaining a $47.25 a barrel price, we expect gasoline prices to ease on refining capacity and pipelines return to service. The one silver lining from this storm was the drastic improvement in response time that we experienced during the Katrina Hurricane 12 years ago.

With markets closed for Monday’s Labor Day holiday we expect to see volumes slowly return more toward normal as the week progresses. Economically, we get July factory and durable goods orders on Tuesday, July trade balance and Fed Beige book on Wednesday, productivity, jobless claims and labor cost on Thursday, followed by July’s final read of wholesale inventories.

The most closely watched items will be the beige book as well as damage cost out of Houston ($70 to $90B estimate). While escalating numbers will continue to put pressure on the insurers, eventually an economic boom will be realized in construction, material and transportation stocks as the Houston area begins the rebuild process. Hurricane Irma is making its way across the Atlantic and we will be watching the storms progress.

The North Korea threat will most likely not go away, but the government and market has recently been better at handling the situation. The pending debt ceiling and tax reform debate in Washington could have some market moving effect. The EU and UK will continue to negotiate Brexit terms. Friday GM reported nice sale gains. We will be watching auto sales going forward to see if the industry has turned a corner.

While many are touting the regulatory reform as being the prime market driver the earning growth, modest job growth, and non-inflationary pressures (next FED hike now pushed out to December) are all helping to diminish investors’ concerns of a September correction. Historically, September has not been kind to equity markets. But as we know, this is a totally different market. Enjoy the ride and enjoy the long weekend. It’s back to work on Tuesday.

 

Larry Peruzzi

Managing Director International Trading

Mischler Financial Group

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 September 01, 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.

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Equities Market Forecast: Partial Clouds, Mostly Blue Skies; A Summer-Long Groundhog Day?
June 2017      Equities Market Commentary   

Peruzzi’s Perch June 23, 2017–We are finishing up a mixed bag week, with a Russell rebalance on Friday that is adding some trading volume and keeping us within striking distance of fresh all-time highs. Dow and S&P 500 index hit record closes on Monday before pulling back on Tuesday and trading mostly sideways the balance of the week.  The equities market forecast would seem to indicate ‘partial clouds, but mostly blue skies.” In turn, the continued lack of equities market volatility in the US and most other major markets is contributing to rising concerns voiced by contrarians,  “we remain in a state of continued complasence.” For those manning equities trading desks (and without the luxury of summer homes to escape to), this summer portends to be a scene from the Bill Murray film, Groundog Day.

larry-peruzzi-mischler-equitiies

Larry Peruzzi, Managing Director

Economic data was light, with decent May existing home sales numbers on Wednesday, mostly in line PMI on Friday, as well as better May new home sales.  The mid-month spike in the VIX index is also subsiding as we close out the week at the 10 level, down 13% over the last two weeks. So, after some political drama, Fed rate hikes and lower oil prices, the markets continued their pace of a flat yield curve, slowly rising equities and low inflationary pressures. Some investors, such as Fundstrat Global’s Thomas Lee are starting to question the market rally duration as he cut his 2017 and 2018 S&P 500 earnings outlook.

Oil remained weak, with WTI crude down about 7% the last 2 weeks. Oil’s decline in the past would have pressured markets, but weighting adjustments are allowing us to look past it. Currently the Energy sector weighting in the S&P 500 is down to 5.86%, so oil price weakness is somewhat insulated.

Some [latecomers?] have started to question the Trump agenda, as well as current valuations and earnings expectations. But, in spite of this we continue to see new money slowly enter the market.

Retail investors seem to be fearful of missing out on the rally. We will continue to watch the option markets to see if this sentiment changes.  The MSCI created some noise on Wednesday, when it approved a small weighting of Chinese A shares into the emerging market index, but it did not upgrade Argentina from frontier status to emerging status. The unexpected news in Argentina caused the Buenos Aires exchange to lose 4.8% on Wednesday, but by week’s end it had recouped 1.6% of that loss.

As we enter the final week of Q2, we expect to see some modest sector rotation and cash level adjustments. Next week we have a handful of Fed speakers out and about; Yellen, Williams, Harker and Kashkarei on Tuesday and Bullard on Thursday.

Economic highlights for the coming week are:

  • Monday              Durable goods and Dallas Fed
  • Tuesday              S&P Case Shiller home prices and  consumer confidence
  • Wednesday        Trade balance, pending home sales and wholesale inventories
  • Thursday            Q1 GDP and jobless claims
  • Friday                 Personal income and spending,  Michigan sentiment and Chicago Purchasing managers

It is increasingly feeling as though this market is dealing with 2 fears; (i) valuations are stretched beyond the earnings justifications and (ii) the lack of inflationary pressures will keep real rates low for the foreseeable future. Digging a little deeper, it looks like the latter is winning. Fed Funds are pricing in a 0% chance of a rate hike in late July and only a 16% probability of a hike in September. This could be setting us up for a Ground Hogs Day movie type of summer, same thing day after day. Rinse, Repeat, Rinse Repeat.

We do see some market reactions, such as sector rotation with Energy and Retail lagging and techs, financials and health care gaining. We have also seen some increased equity risk tolerance as money flows enter the more politically stable emerging markets.

So, as investors head to the beach they will keep one eye on the sky for approaching storms and one eye on the markets for the same, but the current picture seems to be blue skies for both.

 

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 June 23 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

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Senate Hearings, UK Politics and Tech Sector Fuel VIX-Peruzzi’s Perch
June 2017      Equities Market Commentary   

Peruzzi’s Perch June 09 2017-Comey Senate Hearings, Brexit Breakdown and Tech Turn-Down

larry-peruzzi-mischler-equitiies

Larry Peruzzi, Managing Director

This week investors were largely on the sidelines awaiting for Thursday’s big three events. Thursday came and the ECB left rates and asset purchase target unchanged and omitted any forward guidance. The Comey Senate testimony while dramatic did not offer a smoking gun and did little to affect markets. U.S. stocks ended Thursday little changed, while Treasuries fell and the dollar advanced as equity indices swung between gain and losses.  Trading volumes returned to their ADV on Thursday after spending the first half of the week down about 15% from their ADV. Volatility, as measured by the VIX index, creeped up going into Thursday, but by week’s end was back below 10 to all-time lows. The bulk of volatility seems to be confined to the Foreign exchange and oil markets. Oil closed out the week down 4% and the U.S dollar rose 1%. The Pond sterling lost 2% on Friday after the U.K’s ruling conservative party failed to secure a 326 seat ruling majority. While investors waited for Thursday, we saw mostly in-line April Factory and durable goods orders on Monday. Wednesday we saw a rise in mortgage applications. The Fed is in a quiet period ahead of their next meeting on Wednesday 6/14. So overall we saw a quiet state to the week, an interesting Thursday and then a return to recent trading patterns on Friday as Comey, the ECB and the U.K election did little to deter the markets slow but steady rise. The DOW, S&P 500 and NASDAQ all were trading at all-time highs early on Friday with Tesla and NVIDIA both had good weeks (+10.5% and +14.5% respectfully) as analyst raised targets on the stocks.  Nordstrom gained 7% for the week on speculation of a management buyout.  Then Tech experience a reversal that we have not seen in quite some time. Apple, Facebook, Amazon.com, NVIDIA and high-flying chip shares stocks plunged amid a Goldman note that warned about underestimating risks in large-cap tech and after Citron Research warned about“frenzied casino action” in Nvidia trading. The Philadelphia Semiconductor Index declined as much as 3.6% after reaching an almost 17-year high on Thursday. Just as we thought we had the market understood stretched valuations and analyst warnings caused a complete technical reversal. The VIX index rose 20% from its all-time low volume increased and profit takers lined up.

Next week’s big event comes on Wednesday with the FED’s June meeting and rate decision. A 25 bps hike from 1% to 1.25% is widely expected. In fact markets and Fed fund futures have priced in a 95% probability of a 25 bps hike as of Friday.  So with the hike already priced in investors will comb through the accompanying statements but even there, as on past statements, we have seen little in market moving comments. We do not expect to see any irrational exuberance statements coming from the Fed any time soon.

The dilemma is that many now expect this to be the last hike for several months.  Recent inflation indicators seem to be showing an easing of inflation. The Fed has also kept the level of asset purchases mostly static. Analyst expect the Fed’s current pace of unwinding its balance sheet, together with low overnight rates, will act in maintaining the relatively flat yield curve through the summer.  In addition to the FOMC meeting on Wednesday, we get May PPI data on Tuesday, May CPI data and Retail sales on Wednesday, May import/export prices, industrial production/capacity utilization on Thursday, and May housing starts/building permits and Michigan sentiment on Friday. We currently do not expect any of this data to show any inflationary pressures.  

Also on the slate is a bevy of broker conferences: JPMorgan 7th Annual Cloud & Beyond Conference, 6/13, in NY ·Morgan Stanley Financials Conference, 6/13-6/14, in NY ·Citigroup Industrials Conference, 6/13-6/14, in Boston · Goldman Sach’s 38th Annual Global Healthcare Conference, 6/13-6/14, in CA ·Piper 37th Annual Consumer Conference, 6/13-6/14, in NY ·William Blair Annual Growth Stock Conference, 6/13-6/15, in Chicago. We should be seeing some company specific news trickle out of these conferences. Trading wise we have seen little in major risk on/risk off trades up until mid-day Friday. Most volume was from moderate position/portfolio maintenance trading coupled with the occasional fundamental trigger trade. The Tech reversal on Friday started a sector reversal as investors sold high flying tech and growth stock and started to buy energy financial stocks. These type of reversals and sell offs always cause some concerns when they occur on Fridays as investors tend to return on weekends and sell on Mondays.

What politics, elections, and senate testimonies could not do, a couple of notes highlighting stretched valuations did.  Stay tune on Monday as what was looking like a tame week now takes on added importance.

 

 

 

Larry Peruzzi

Managing Director International Trading

Mischler Financial Group

Investment Banking | Institutional Brokerage

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

745 Atlantic Ave, Suite 902, Boston MA 02111

www.mischlerfinancial.com

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 June 09 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

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Equity Market Drivers: Sentiment, Spending and Politics; Peruzzi’s Perch
March 2017      Equities Market Commentary   

What’s Next for Stocks? Equity Market Drivers-It’s all about Sentiment, Spending and Politics…

larry-peruzzi-mischler-equitiies

Larry Peruzzi

U.S and global markets experienced a classic risk reversal trade on Tuesday as investors re-priced the probability of a reduction in taxes. Investors took profits and reduced their risk exposure by knocking the Dow down 1.14% and the S&P 500 by 1.24% on Tuesday.  The S&P 500 and Dow Jones Industrials ended their historic streak of 110 sessions without a 1% decline. Crude oil continued its decline with WTI crude down 3.1% over the first 4 days of the week. Energy, the worst-performing sector this year, has fallen by about 8% year to date. The economic front was largely void of any market moving numbers.

The housing sector did release some contradictory numbers as Wednesday’s existing home sales in February registered a 3.7% decline, but Thursday new home sales surged 6.1%. Who wants used when you can have new?  As the week came to an end, more uncertainty was created as the House GOP leaders looked to vote on Friday on their health-care bill, while not knowing for sure they have enough votes to pass it. As we have learned time and time again, markets greatly despise uncertainty.

Further evidence of the risk reversal trade can be seen in Gold’s trading action, as the precious metal is up 3.25% over the last 2 weeks. The week will also be remembered for what might have been the beginning stages of an end to an era when Sears Holdings had its worst decline in 2 years. Sears said there was “substantial doubt” about its future. Sears was once the world’s largest retailer over its 131 year history. With the Fed’s rate hike behind us and the next meeting not until May 3rd and 1Q earnings still a few weeks’ away, investors will continue to ponder their risk tolerance in these highly partisan political times.  Friday was an active day for Fed governors with Bullard, Dudley, Williams and Evans speaking.

Next week will be equally active for the Fed, with 12 speeches by governors, culminating with Chair Yellen speaking on Tuesday.  With the market drivers changing over the last couple of weeks, I think what the market and investors will be concentrating on is sentiment, spending and politics. Tuesday’s March Conference Board consumer confidence and Friday’s March Michigan sentiment readings should give us a good idea how the public views the economy, while Wednesday’s February pending home sales and Thursday 4Q personal consumption, followed by Friday’s February Personal Spending will be a good indication of how much the recent market rally has buoyed the consumption and spending.

The political front remains divided by party lines and reforms in taxes, healthcare, immigration and a Supreme Court nominee are at risk. As we watch a few key economic numbers and Fed speeches, we will be closely monitoring the shenanigans out of Washington. Quarter-end on Friday is normally “meet with portfolio managers” who will be making some last minute adjustments to portfolio holding and cash levels. I would expect trading volumes to increase as the week progresses.

There is a lot to digest for a market that looks like it is being stymied by a fork in the road.

Larry Peruzzi

Managing Director International Trading

Mischler Financial Group

Investment Banking | Institutional Brokerage

Ph:   1-617-420-8472

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 March 09 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.
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Trump’s Tweet-Driven Policy Approach Propels Stock Prices; Can This Continue?
January 2017      Equities Market Commentary   

Peruzzi’s Perch – Jan 26 2017- Forget About Fed Policy and Rates- Equities Markets Are All About Trump Tweets (Still?!)

larry-peruzzi-mischler-equitiies

Larry Peruzzi

U.S. equity markets close the week in record territory, as the Dow Jones finally crosses the 20,000 Maginot line on Wednesday. Fueled by business friendly policy and rhetoric out of Washington, relatively inexpensive energy, improving corporate earnings and low rates the Dow recorded 2nd fastest 1,000-point move in history (42 days). What was a FED/rate driven market, which was preceded by the Oil driven market, has been replaced by a Presidential policy/tweet-driven market.

This week we saw rallies in cement and steel stocks when President Trump signaled he was forging on with his boarder wall as well as rallies in energy stocks when the Keystone and Dakota XL pipelines were reopened. Across the border Mexican stocks even lost 1.4% on Thursday after Mexican President Enrique Peña Nieto canceled a scheduled meeting at the White House. Fed watching has been replaced by Tweet watching and so far, the equity markets like what it is seeing. Historically when markets cross into record territory we normally see a brief pause while analyst access valuations. Additional positive news was received after the close on Thursday as earning from Microsoft, Intel and Alphabet beat estimates. As of Thursday 161 of the S&P 500 names have reported with 120 (74.5%) reporting a positive surprise and 38 (23.6%) reporting a negative surprise.

Next week 24 S&P 500 companies are scheduled to report earnings. The reporting firms are dominated by retailers.  It will also be an important week economically with Dallas Fed activity on Monday, Chicago Purchasing managers on Tuesday, a FOMC rate decision on Wednesday (no change expected), productivity and labor cost on Wednesday and the ever important January employment report closing out the week on Friday. The FED Funds rate, despite Chairwoman Yellen calls for increased magnitudes of rate increases, is not expected to change. Fed funds are only pricing a 14.5% probability of a rate hike for Wednesday’s FOMC meeting. Friday’s employment reported should see a lot of attention. A positive report is sure to be met by the suddenly customary round of tweets and promotion.  It may however be a tad bit early to put much emphasis on the report. The April, May and June reports should be much better harbinger of the effectiveness of the Trump agenda toward job creation. With the Dow Jones now over the 20,000 level, after 6 failed attempts in December and January, we will be looking for signals on the strength and sustainability of the bullish sentiment. There are some concerns over Trump’s protectionism and the recent decline in the U.S dollar has made some foreign investors nervous. Global markets are in rally mode but with European referendums this spring, trade agreements being rewritten and rising political tension there is uneasiness about it.

Asian Markets are expected to be quite as the Lunar New Year holiday commences Friday. Chinese markets will remain closed until next Friday. 2017 is the year of the Rooster. The Rooster is almost the epitome of fidelity and punctuality. Investors would be well served by being loyal to facts and details on their trades and in being punctual, as we have entered a market environment never seen before.

Larry Peruzzi

Managing Director International Trading

Mischler Financial Group

Investment Banking | Institutional Brokerage

Ph:   1-617-420-8472

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 January 26 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 and largest 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.

To receive Peruzzi’s Perch, please contact Larry Peruzzi, Managing Director, International Equities via email: lperuzzi@mischlerfinancial.com or via phone.

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