No More May in June
Doug Walters
With stocks down and the weather misbehaving, we are ready to be done with May. Apparently, so is Britain…
Contributed by Doug Walters , Max Berkovich ,
The month of May has been forgettable for stocks (the S&P 500 was down 4.5% on the month at its low) and for weather in the Northeast (above average rain, and below average temperatures). Let’s hope that there is no more of May in June. In Britain that looks assured, as Prime Minister Theresa May has announced her intention to step down next month after failing to reach a Brexit deal.
Headlines This Week
- The Brexit deadline has been postponed to October 31st after the UK’s Prime Minister Theresa May announced her plans to resign on June 7th. May’s decision to leave comes after a fourth failed attempt to get lawmakers on board with a Brexit deal. It will take a few weeks for the party to decide on a new Prime Minister.
- India’s stock market hit an all-time high after Prime Minister Narendra Modi won another five-year term in a landslide. The big win by his Bharatiya Janata party will empower Modi to push through with reforms to combat unemployment and rural distress. The election results give Modi a majority in the upper house of India’s parliament, which was viewed as an obstacle in his agenda in his first term.
- The price of oil was under pressure, suffering its worst week of 2019 due to worries surrounding a slowdown in global economic growth. Oil inventories in the U.S. have been climbing since September 2018, making commodity traders worry that a slowdown in oil demand could create another glut of oil supply.
- Lastly, Federal Reserve Chairman Powell was the keynote speaker at the Atlanta Fed’s Financial Markets Conference, where he declared that he did not see a “strong case” for either a cut or hike in interest rates.
The Week Ahead
With markets closed for Memorial Day on Monday, the consumer will be in focus in the shortened week.
- Economic highlights include the Q1 GDP release, Personal Consumption Expenditure (PCE) Index release, personal income, personal spending, University of Michigan Consumer Sentiment Index, and The Conference Board’s Consumer confidence survey results.
- Our Stock focus will be on the consumer with retailers William-Sonoma (WSM), DollarTree (DLTR), Costco (COST), and Ulta Beauty (ULTA) all scheduled to report earnings on Thursday.
Stock Highlights from Max
Court Report
Health Care was the top sector as it continues to bounce back from an awful April. Energy, as previously mentioned, had a rough week thanks to declining crude prices, but it was the Technology sector that finished the week in last place entirely due to…
- Qualcomm Inc. (QCOM) felt the sting of the law this week as the company lost a crucial anti-trust ruling. The ruling from the 9th Circuit Court (Northern California) sided with the Federal Trade Commission, challenging QCOM’s business model. The verdict claims the “licensing practice” strangled competition. In particular, its crucial role in 5G leads the Judge, Lucy Koh to conclude that QCOM would continue to stifle competition without intervention.
- It is interesting that this case from 2007 resolved after QCOM made a deal with Apple, which propelled the stock higher by 50%. The ruling allows companies who work with Qualcomm to demand a renegotiation of terms and prohibits QCOM from having exclusivity deals with phone makers. As a result, roughly $5 Billion of revenue is up for plucking. Also, QCOM must submit to seven years of oversight to ensure it complies with the ruling. Qualcomm immediately began the appeal process.
- In other news, TJX Companies (TJX) reported a consensus topping quarter and lifted its full-year 2020 guidance. The company had sales growth of 5% in the quarter. Another earnings report of note came from medical device maker Medtronic PLC (MDT), which also beat expectations. The company expects full-year organic revenue growth to come in a 4%, with earnings in the $5.44-$5.50 range.
About Strategic
Founded in 1979, Strategic is a leading investment and wealth management firm managing and advising on client assets of over $2 billion.
OverviewDisclosures
Strategic Financial Services, Inc. is a SEC-registered investment advisor. The term “registered” does not imply a certain level of skill or training. “Registered” means the company has filed the necessary documentation to maintain registration as an investment advisor with the Securities and Exchange Commission.
The information contained on this site is for informational purposes and should not be considered investment advice or a recommendation of any particular security, strategy or investment product. Every client situation is different. Strategic manages customized portfolios that seek to properly reflect the particular risk and return objectives of each individual client. The discussion of any investments is for illustrative purposes only and there is no assurance that the adviser will make any investments with the same or similar characteristics as any investments presented. The investments identified and described do not represent all of the investments purchased or sold for client accounts. Any representative investments discussed were selected based on a number of factors including recent company news or earnings release. The reader should not assume that an investment identified was or will be profitable. All investments contain risk and may lose value. There is no assurance that any investments identified will remain in client accounts at the time you receive this document.
Some of the material presented is based upon forward-looking statements, information and opinions, including descriptions of anticipated market changes and expectations of future activity. Strategic Financial Services believes that such statements, information, and opinions are based upon reasonable estimates and assumptions. However, forward-looking statements, information and opinions are inherently uncertain and actual events or results may differ materially from those reflected in the forward-looking statements. Therefore, undue reliance should not be placed on such forward-looking statements, information and opinions.
No content on this website is intended to provide tax or legal advice. You are advised to seek advice on these matters from separately retained professionals.
All index returns, unless otherwise noted, are presented as price returns and have been obtained from Bloomberg. Indices are unmanaged and cannot be purchased directly by investors.