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Weekly Market Recap Sep 17, 2017

Courtesy of Blain.

A sharp rally Monday was followed by 4 relatively quiet days as gains were efficiently consolidated.   After a brief respite, bears are back on the run again.  No real catalyst Monday other than “less damage than expected from Irma” and no weekend hijinks from the North Koreans.  For the week the S&P 500 gained 1.6% and the NASDAQ 1.4%.

Katie Stockton is giddy:

“The U.S. stock market is exhibiting positive short- and long-term momentum, and breadth has expanded enough to lift the S&P 500 to a new all-time high,” said Katie Stockton, chief technical strategist at BTIG Research.  “Short-term overbought conditions have returned for the S&P 500, but they tend to be managed well when associated with breakouts, which are abundant,” Stockton said.

On the economic front, household incomes have finally reached (inflation adjusted) levels once seen in the NASDAQ bubble; it took nearly 2 decades for that to happen!

Median household income last year was $59,039, up an inflation-adjusted 3.2% from 2015, the Census Bureau said Tuesday. It was a new high for the figure, surpassing the previous peak for household income reached in 1999.

A reading on consumer prices, known as the consumer-price index, showed an increase of 0.4% in August, beating consensus estimates for a rise of 0.3%.  U.S. industrial output fell 0.9% in August, its first drop in seven months. The Federal Reserve said the decline was mostly due to the recent impact of Hurricane Harvey.    A Commerce Department report on Friday showed retail sales fell 0.2% in August, bucking economists’ expectations for a gain, following a 0.3% increase in July. Both July and June retail sales were revised lower.

Remember all that talk about reducing deficits and such during the last election (like ALL elections)??  Yeah not so much:

The U.S. officially hit $20 trillion in debt, with about half of that added over the past decade or so.

Mastercard (MA) is up quietly nearly 40% for the year.

Here is the 5 day weekly “intraday” chart of the S&P 500 .. via Jill Mislinski.

Waiting for a 20% correction?  Not if this Fed has anything to say about it – also per Jill Mislinksi:  there have only been two 10%+ corrections in the past 6 years!

More about the scary automation trend which I think is going to be one of the biggest – if not the biggest stories – of the coming decade.

Technology threatens jobs in many industries, but one bank chief is already predicting that “a lot of people” in his industry will see their roles taken by automation in the next five to 10 years.   With all of that change on the horizon, it’s “very hard to say” just how many jobs will be lost, Deutsche Bank CEO John Cryan said, emphasizing that he wasn’t just trying to avoid the question.  “It’s difficult to say where the market moves,” he said, “but for the whole sector, it will be a lot of people over the next five to 10 years.”

The week ahead…

The Federal Reserve will meet this week with Yellen set to speak Wednesday:

The Fed gathering set for Tuesday and Wednesday comes against the backdrop of a host of recent events that market participants are anticipating will factor in policy maker’s decision making: The economic impact of Hurricanes Irma and Harvey, sluggish inflation, the outlook for fiscal stimulus out of Washington, may be a just a few of the topics that are broached. (That is not even to mention the incalculable risks out of the Korean Peninsula).

Although Janet Yellen’s Fed isn’t expected to make any change to interest rates, it is anticipated that it will lay the groundwork for unwinding its $4.5 trillion balance sheet, if not announce its start. The coming asset-portfolio reduction has been an important focus for markets because of the unprecedented nature of unraveling a nearly decade long initiative of monetary stimulus

The plan is to shrink by only $10 billion a month, with the pace increasing by $10 billion every quarter, up to a maximum of $50 billion a month.

Index charts:

Short term: After breaking a downtrend the prior week, indexes continued their rally last week.  The S&P 500 breached to new highs while the NASDAQ is at the cusp.

The Russell 2000 is back out of the “big yellow range” it has been stuck in almost all of 2017.  As observed in July, it will be interesting to see if it can escape the gravitational pull of that range for any extended period of time.

The NYSE McClellan Oscillator remains in all systems go territory.

Long term: Back to the 5 year charts – it’s been all unicorns and butterflies for bulls obviously for a long while.

Charts of interest / Big Movers:

Equifax (EFX) has another rough week plunging both Monday and Wednesday.    A music major as head of IT?  Interesting.

Equifax “Chief Security Officer” Susan Mauldin has a bachelor’s degree and a master of fine arts degree in music composition from the University of Georgia. Her LinkedIn professional profile lists no education related to technology or security.  To play devil’s advocate, Mauldin does at least have 14 years’ private-sector experience since getting her degrees. Music, to stretch the point as far as possible, is an academic subject that can be highly mathematical.

This was bound to happen in the brick & mortar retail space with the deluge of bad news the past few years.  Nordstrom (JWN) rallied 6% Wednesday after a report late Tuesday that the retailer is taking steps to go private.

Late Tuesday, CNBC reported that Nordstrom family members were close to choosing private-equity firm Leonard Green & Partners to help fund about $1 billion for a buyout. At the close, Nordstrom had a market cap of $7.49 billion. The Nordstrom family is reportedly talking to banks to secure up to $8 billion to finance the deal.

It’s getting so wacky out there Nordstrom is going to open stores with no merchandise.  Seriously.

Nordstrom Local will have eight dressing rooms where shoppers may try on clothes, but stores won’t actually keep inventory for purchase in stock.  Nordstrom Local shops will also have “bars” in stores, where thirsty shoppers can order juices or wine, the company said.  Other experiences at Nordstrom Local locations will include manicures and on-site tailoring.

U.S. drugmaker Halozyme Therapeutics (HALO) said on Thursday it would license its drug delivery technology to Bristol-Myers Squibb and Swiss drugmaker Roche in separate collaborations.  The company now expects full-year revenue of $245 million to $260 million, compared with an earlier forecast of $115 million to $130 million.

Oracle (ORCL) fell 7.7% Friday after the software giant’s outlook late Thursday came in below Wall Street’s expectations.

Have a great week and we’ll see you back here Sunday!

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