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    Markets "In a Nutshell" for January 16, 2018

    Jan 16, 2018

    Investment Week at a Glance

    Stocks marched forward last week. The Dow Jones Industrial average was up 2.1%, the S&P 500 rose 1.6%, the New York Stock Exchange Composite (2,000 stocks) gained 1.5%. The “average investor’s index” (Value Line index) rose 1.8%. Foreign stocks (DJ Global ex U.S.) were up 0.9% and bond prices (Barclays Aggregate Bond index) dropped in value last week as the 10 year Treasury yield ended at 2.55%. (Data sources: Barron’s Financial, Wall Street Journal)

     

    Stock market to triple this year?

    In his 1/13 column Barron’s Ben Levisohn comments that if the pace of stock market gains for the first two weeks of 2018 continues the stock market will triple in value this year. While Levisohn acknowledges that type of gain is not really likely, there are plenty of stock analysts that see outsized gains again in 2018. RBC Capital Markets strategist Lori Calvasina says that with the benefit of tax reform, the S&P 500 could see gains of 12% for 2018. Julian Emanuel, chief equity and derivatives strategist at BTIG, published an upside case that could see the S&P 500 hit 3400 by year end, a 22% gain.

     

    Energy stocks take off

    We wrote a number of times in 2017 of the bargain prices many energy stocks carried. After a vicious 4 year bear market which saw some energy related stocks fall 70% or more in value, energy stocks have started 2018 on a positive note. Morningstar’s top two performing sectors so far this year are Equity Energy up 7.3% and Energy Limited Partnerships up 6.4%. We look for continued gains throughout the year in energy stocks.

     

     

    The Swiss get rich and make more money than Apple  

    In the past few years the Swiss National Bank- SNB- (Switzerland’s central bank version of the U.S.’s Federal Reserve Bank) has printed billions of dollars and gobbled up stocks and bonds with the proceeds. This was done in an effort to keep its currency from getting too strong. The SNB’s $800 billion portfolio (just 10 years ago the SNB had assets not much over $100 billion) contains many U.S. stocks and owns 19 million shares of Apple. Besides being one of Apple’s largest shareholders, the SNB also out earned Apple in 2017 with profits of $55 billion which was the equivalent of the Federal Reserve generating a return $1.5 trillion on its portfolio of assets (the Fed has generated about $100 billion in profits in recent years).

     

    Quiz:

    According to a CNBC study which of the following cities was ranked as the top city for retirement? a. Providence b. Denver c. Los Angeles d. Miami e. Pittsburgh... Answer is below…

     

    Have a good week!

     

     

     

    Answer to quiz:

    e. Pittsburgh