Weekly Market Commentary September 11, 2017

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Markets couldn’t overcome concerns over North Korea’s test of a hydrogen bomb and the risks of Irma last week. While stocks rose on the news of a temporary debt-ceiling deal, for the week, the S&P 500 still slid 0.6%. The MSCI ACWI was essentially unchanged and the Bloomberg BarCap U.S. Aggregate Bond Index rose up 0.5%.

Global central banks remain a key focus of investors. Some Fed governors publically stated concerns about raising rates again this year in the face of weak inflation data and the declining odds of additional infrastructure spending. The European Central Bank is beginning to look for ways to slow its stimulus and, in a surprise move, Canada raised its benchmark interest rate.


Key bullet points for the week

  • As predicted, the debt ceiling increase was attached to the hurricane bill and extends debt ceiling until December
  • Irma on top of Harvey has increased insurance risk and raised risk of defaults on mortgages in the affected areas
  • S. stocks dropped last week while global stocks held firm and bonds rose

Equifax: The Not so Fun Story of the Week

143 million American consumers were affected by the data breach at Equifax, one of the nation’s three major credit reporting agencies. To learn more about Equifax’s cyber security incident, including whether your personal information was potentially impacted, click here.

What are we reading?

Below are some areas of the market we paid particularly close attention to this week. For further information, we encourage our readers to follow the links:

The Debt Ceiling: Why We Have It, and What Would Happen if It Died

On Thursday, the Senate approved a package of bills, including about $22 billion for FEMA’s disaster relief fund, $15.25 billion of which is new, emergency funds, and another $6.7 billion was already slated to be in the spending measure that funds the government. The emergency funding would raise the debt ceiling and keep the government open for three months.

Why Hurricane Irma Could Hurt, a Lot: Much Lies in Harm’s Way

Economic devastation from storms is becoming more common. In inflation-adjusted terms, the United States averaged fewer than three billion-dollar natural disasters per year from 1980 to 1990. Since 2010, it has averaged more than 10 per year. Changing climate is one of the reasons cited for the severity of the recent storms.

European Central Bank Signals End of Cheap Money Era is coming

The European Central Bank is working on ways to wind down its massive quantitative easing program. The goal of the policy was to promote growth and inflation in the Eurozone after the financial crisis in 2008. Improved economic performance in Europe has helped push the euro higher against the dollar.


Fun Story of the Week

Keep It between the Lines

While Braintree, MA has a history of brave rebels (John Adams), the conflict between the juniors and seniors of Braintree High School left both sides on the losing end. It seems the juniors had been parking in the senior parking lot. To teach them a lesson, the seniors deliberately parked exactly opposite the lines so as to reduce the parking spots available. While effective at stymying the juniors, the stunt did not humor the Braintree police department. They issued 65 parking tickets and some remedial lessons in parking that were posted on its Facebook page.


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Market Commentary: S&P 500 Rallies 6.5%, Lifting Market Above Bear Level

The S&P 500 spent only a short time below the 20%-decline threshold, before jumping back above it last week. U.S. large-cap stocks rallied 6.5% based on optimism that inflationary pressures are starting to respond to higher interest rates.

Market Commentary: Fed Raises Rates by 0.75%, Market Moves Into Bear Territory

The S&P 500 dropped 5.7% last week and is now 22.3% off its peak. This decline pushed the index of large-cap U.S. stocks into a bear market, which is defined as a 20% or greater drop from its peak. Volatility remained elevated, and the S&P 500 has now moved by 1% or more 60 times …

Special Market Commentary: S&P 500 Slips Into a Bear Market. Now What?

Fueled by inflation readings that have remained stubbornly elevated, the stock market, measured as the S&P 500 Index, entered bear market territory at market close on June 13, 2022.  A bear market represents a decline in equity values by more than 20%.

Market Commentary: Inflation Pressures Remain High, S&P Dips Again

The S&P 500 dropped 5.1% last week as investors digested new inflation data released on Friday. May’s Consumer Price Index (CPI) report showed a reacceleration of inflation after a brief reprieve in April. Headline CPI increased 8.6%, which is the fastest pace since December 1981. The p …
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