• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Contact Us Today!
800.317.9119

Investor Resources Inc.

Portfolio Management, Wealth Management, Investment Analysis

Client Portal Login
  • Home
  • Welcome to IRI
  • Investment Process
  • Research & Strategies
    • About the RPM System
    • 401K Defense
    • Theory or Reality
    • Fiduciary
    • Concentration
    • Managing the Unexpected
    • Disciplined Flexibility
    • Modern or Aged?
    • Change or Hope?
    • Not Modern? Then What?
    • Math – Not Magic!
  • Radio Shows
  • Video
  • Investor Blog
  • Contact Us
Week In Review – October 16 2018

Week In Review – October 16 2018

October 17, 2018 by editor

Equity Markets Around the World Dropped… The U.S. markets dipped, led lower by the tech shares that had been leaders for most of the year. Asian markets fell further into correction territory.

What it means – At home, we’re dealing with higher interest rates, the possibility of election results that will be less market-friendly, trade tariffs that are cutting into exports, and the quiet period before earnings when companies put their stock buyback programs on hold.

These factors are hitting the markets just as we reached record highs. It makes sense that people are protecting some of their gains. At the same time, the Chinese are struggling with U.S. tariffs, which are crimping trade, and the Europeans are facing down weak economic growth.

The combination of factors is weighing on investors, who have turned decidedly risk-off during October. If earnings surprise to the upside or we get some movement in the trade tiff with China, things might turn around. Without such a positive catalyst, it could be a very bumpy road for the rest of this year and the start of 2019.

The Fed is creating uncertainty with higher short-term rates while it drains liquidity by reducing its bond portfolio. No one is certain what will happen because we’ve never seen anything on this scale before. Buckle up!

Prices Up 2.3% Over Last Year, Core Prices Up 2.2%… Inflation slowed a bit in September, with the headline number falling from 2.7% to 2.3% while the core reading, excluding food and energy, held steady at 2.2%.

What it means – Inflation readings over 2%, particularly at the core level, are part of the reason the Fed is raising rates and shedding bonds. If inflation remains elevated, we can expect the Fed to stay on course.

The Fed governors seem to be divided in how many rate hikes we’ll get before they take a pause, but the majority appear to favor at least three. That should stir up a lot of volatility in the markets.

Producer Price Index Up 2.6% Over Last Year, 2.5% Excluding Food and Energy… The headline number dropped from 2.8% last month, while the core reading increased from 2.3%.

What it means – Economists consider changes in producer prices to reflect inflation at the wholesale level. Eventually these prices work their way down to end consumers, pushing up inflation for everyday goods and services. With wholesale prices up more than 2%, we can expect inflation to remain elevated for months to come.

Earnings Season has begun… Starting with financial companies, American corporations will report third quarter earnings over the next three weeks.

What it means – With corporate tax reform, companies are posting earnings growth of 20% or more. The extra cash has given them the ability to invest in their businesses as well as buy back their stock. But in the two weeks leading up to their earnings reports, companies stop buying back shares so they don’t run afoul of securities laws. The drop in share repurchases could be exacerbating the recent downturn.

As for earnings, investors have enjoyed the run of big gains this year. The question is, what comes next? If companies fail to excite investors with their forward guidance, expect the markets to fall.

Pakistan Asks IMF for a Bailout… The Middle Eastern country threw in the towel on its debt and requested emergency lending from the international fund.

What it means – Watch this one closely. The Chinese made Pakistan their number one target for the One Belt, One Road Initiative, lending the country billions of dollars to build huge infrastructure projects. The Chinese loans have been shrouded in secrecy.  The IMF demands a full accounting of all loans, while the U.S., the biggest benefactor of the IMF, refuses to allow any relief tied to Chinese loans.

If these loans keep Pakistan from receiving international financial help, it could stall the Belt and Road Initiative in other countries.

San Francisco Has a Homeless Problem… In a city where the average household earns more than $100,000 and is worth more than $1 million, there are thousands of homeless people who spend their nights on the streets.

Whether by choice, city policy, or some combination, most of the homeless end up in one small section of town. The concentration has led to such problems as human waste on the streets every day and more than 100,000 used needles recovered last year. The city had to replace 300 street lamp posts that had deteriorated because of human and dog urine. “Who’d a thunk it?”

 

Data supplied by Dent Research/Delray Beach Publishing

“When the facts change, I change my mind.

What do you do, sir?” ~ John Maynard Keynes

Our plan is “the plan will change.”

What is your plan?

 

 

Relative strength measures the price performance of a stock against a market average, a selected universe of stocks or a single alternative holding. Relative strength improves if it rises faster in an uptrend, or falls less in a downtrend. It is easily applied to individual positions in your portfolio and to sectors and asset classes.

 

A copy of our form ADV Part 2 is available on line.

 

WARNING: All e-mail sent to or from this address will be received or otherwise recorded by the Investor Resources, Inc. corporate e-mail system and is subject to archival, monitoring and/or review, by and/or disclosure to, someone other than the recipient.

 

This message is intended only for the use of the person(s) (“intended recipient”) to whom it is addressed. It may contain information that is privileged and confidential. If you are not the intended recipient, please contact the sender as soon as possible and delete the message without reading it or making a copy. Any dissemination, distribution, copying, or other use of this message or any of its content by any person other than the intended recipient is strictly prohibited.  Investor Resources, Inc. has taken precautions to screen this message for viruses, but we cannot guarantee that it is virus free nor are we responsible for any damage that may be caused by this message.

 

Investor Resources, Inc. only transacts business in states where it is properly registered or notice filed, or excluded or exempted from registration requirements. Follow-up and individualized responses that involve either the effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, as the case may be, will not be made absent compliance with state investment adviser and investment adviser representative registration requirements, or an applicable exemption or exclusion.

Filed Under: Uncategorized Tagged With: earnings season, equity markets, Inflation, Pakistan, producer price index, San Francisco

Investor Resources Radio

The Investor Resources Radio Show airs on KTTH AM 770 every Saturday at 10:00 AM. Listen to Don ...

Read More

Seminars

Tired of being told that a diversified portfolio will keep your investments safe, then watching them lose ...

Read More

Webinar Registration

April Market Update Saturday, April 1st at 8:30am. Click here to register now. Change is the ...

Read More

Meet The IRI Team

We have assembled a skilled and experienced team of experts that will help you navigate any financial situation. ...

Read More

Copyright © Investor Resources Inc. All rights reserved. Investor Resources, Inc. is a registered investment adviser in the States of Washington, Arizona and Texas. The adviser may not transact business in states where it is not appropriately registered, excluded or exempted from registration. Individualized responses to persons that involve either the effecting of transaction in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption.

Compliance  |  Important Customer Disclosure  |  ADV Part 1 and 2

Terms of Service  |  Sitemap

Bellevue Office: 601 - 108th Ave. NE, Suite 1900, Bellevue, WA 98004  Phone: 425.673.5000

Port Orchard Office: 1922 Pottery Ave., Suite 110·Port Orchard, WA 98366  Phone: 360.895.9119

Login

Lost your password?

Reset Password

Log in