Most S&P 500 sectors finished last week in positive territory, with less-risky, countercyclical groups — including consumer staples (+3.2%), utilities (+2.5%), and telecom services (+3.7%) — leading the charge.
The top-weighted technology sector underperformed, shedding 0.2%, but remains 2018’s top-performing group with a year-to-date gain of 15.6%.
This week will be a light economic calendar. The real news this week will be the FOMC minutes that will be released in Wednesday and Chairman Powell’s speech on Friday morning.
The WSJ, last week reported that the U.S. and China will meet this week on trade, helping the market end on a positive note this week. Nothing fundamentally changed by this news, and the market did not make new highs. Progress on this front should support the market.
The Finance Minister of Turkey held a conference call with international investors last week and the net result was catious optimism. Even with the initial relief, there was no pledge for them to do one thing that would help calm the markets. There are two crisis in Turkey, one political and on economical. First, Turkey still refuses to release the American pastor that is being held because his travel ban has not been lifted. Second, the Lira is down 50% over the past 12 months. This is due to the central bank becoming a political arm of the government. To stop the lira from falling, the Central Bank will have to raise interest rates to a point that will not let the government stay in power. So the Lira will continue to fall regardless of the pastor being held or not.
Global Spotlight
Turkey Turbulence. The Turkish lira recovered slightly toward the end of the week, but more trouble could be around the corner.
U.S. and China Come Back to the Negotiating Table. After a two-month hiatus, the United States has invited China for another round of trade talks Aug. 22-23 to see if enough common ground can be found to avoid a more extreme trade war scenario.
Russia’s Sales Pitch to Europe and the United States. U.S. National Security Adviser John Bolton will travel to Geneva next week to hold a meeting with Russia’s Security Council Secretary Nikolai Patrushev.
Merkel Tours the Caucasus. German Chancellor Angela Merkel will also tour the Caucasus next week, visiting Georgia, Armenia, and Azerbaijan from Aug. 23-25.
Stratfor.com
Weekly Important Read
Going forward I will be adding an interesting read that relates to our work here at the Options Edge. For our inagural selection, please see Marc Gerstein’s Post on small cap value stocks.
Value investing works. It always worked in the past. It works now. It will always work in the future. To suggest otherwise would be to deny human nature, the tendency to buy something at a lower price and to bypass an offer from one who sells the exact same product or service at a higher price. A rational buyer will pay a higher price for something only if there is a particular reason to do so (better service, more convenient method of shopping, better buying experience, better warranty, not knowing of a cheaper alternative, etc.).
And ends with how to screen for these types of stocks.
Economic Calendar
Here isa a list of the U.S. economic events happening this week.
Briefing.com
Review Last weeks numbers here.
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