Market News – Week of May 15th, 2017

CALM:

The markets did not move much last week. The S&P 500 had five days of up 0.00004%, down 0.10%, up 0.11%, down 0.22% and down 0.15%. So far in 2017 there have been only three days where the S&P 500 has been up or down 1% or more, or 3.5% of the time. In 2016, we experienced 1% swings 19% of the time, and in 2015 that statistic was 29%. For this past week, the S&P 500* decreased 0.35% (up 6.79% for the year). The MSCI All Country X US* increased 0.12% (up 12.81% for the year). The Barclays Global Aggregate Bond Index* decreased 0.21% (up 2.56% for the year). The HFRX Global Hedge Fund Index* increased 0.01% (up 2.26% for the year).

IT LOOKS LIKE EUROPE WILL SURVIVE, BUT IT IS STILL STRUGGLING:

About a year ago, the U.K. bailed out of the European Union, and a lot of panic set in. A week ago, France voted to stay in by voting in a President who ran on support for the EU. In about a month, Germany will vote and most likely agree to support the EU and the Euro. This is all being done in the context of slow growth, lingering high levels of unemployment, trade deficits, and immigration issues. A lot of this sounds familiar as we in the U.S.A. are currently in a lot of the same soup, but we are much farther along in our recovery with higher GDP growth numbers (about two times) and much better employment numbers (about three times better). For the time being, it looks like the panic was overblown, although we will still need to watch metrics for economic health very closely.

RETAIL SALES UP A BIT:

Retail sales in April rose 0.4%, the largest gain in three months. This report came in juxtaposed to earnings reports from traditional retailers such as Macy’s, Kohl’s, Nordstrom and J.C. Penney which are all struggling. Households appear to be spending, just not as much in those places. For example, in April, online retail sales rose 1.4% from March. Sales at department stores rose just 0.2%.

THE VIX IS IN:

Everyone knows about the New York Stock Exchange, but less are familiar with the Chicago Board Options Exchange (CBOE). The CBOE was created in 1973, and is an exchange for buying and selling options contracts. It is the largest such exchange in the world. An option is an agreement between two parties to facilitate the future sale of a stock, or some other security, at a preset price. For example, I have a stock that is worth $50. I sell (and make money by doing so) an option to a buyer who obtains the right to buy my stock for $55 for a certain amount of time into the future. If the stock goes to $60, he made a sweet deal. If it does not move above $55 during the term of the contract, I get to keep the premium and the stock. In 1993 the CBOE created the VIX which is the symbol for the CBOE volatility index. It is designed to show the market’s expectation for volatility for the next thirty days. That is why it is often called “the fear index”. Now that the French election is over, a major market overhang has been removed. Investors, according to the VIX, are feeling confident that stocks are unlikely to face a big selloff anytime soon. On Monday, the VIX moved to its lowest level since December 27, 1993. The record high for the index was achieved, no surprise, in November 2008.

BE SMART AND GET MORE DONE:

According to an article by Travis Bradberry, co-author of Emotional Intelligence 2.0, smart people do the following on weekends to get more done while working less:

Disconnect electronically
Minimize chores
Exercise
Reflect
Pursue a passion (other than work)
Spend quality time with family
Schedule micro-adventures (concerts, plays, hiking, try something you have not done before)
Wake up at the same time on weekends as during the week days
Designate mornings as “me” time
Prepare for the upcoming week, as little as 30 minutes

References:

BE SMART AND GET MORE DONE: http://www.huffingtonpost.com/entry/how-smart-people-work-less-and-get-more-done_us_58e66a83e4b06671a472f08d
THE VIX IS IN: http://www.investopedia.com/terms/v/vix.asp; http://www.investopedia.com/terms/c/cboe.asp; http://www.investopedia.com/terms/o/optionscontract.asp; https://www.wsj.com/articles/markets-fear-gauge-nears-1993-low-1494263976
CALM: https://www.nytimes.com/2017/05/09/upshot/the-stock-market-is-weirdly-calm-heres-a-theory-of-why.html
RETAIL SALES UP A BIT: https://www.wsj.com/articles/u-s-retail-sales-rose-0-4-in-april-1494592793