Today’s My Gut Feeling is being brought to you by a guest writer, Mrs. Scott Rothbort. Scott has been forced to take some time off from reading and writing too much because we were in an automobile accident Memorial Day Weekend. Both Scott and one of our daughters were injured in a collision in which we were rear-ended. Since then, Scott has been keeping up with the markets and transacting for clients. However, he normally writes and publishes My Gut Feeling from 11PM to 1AM but now by that time of day he is in too much pain to think, let alone write. He has also had to put aside extracurricular activities such as appearing on TV and Radio or speaking at conferences. We do not know when he will be feeling well enough to resume those media activities, but he wanted to get a My Gut Feeling out at the end of this quarter. What follows are Scott’s thoughts, as told to me:
As far as the markets go, since he last wrote, the Dow Jones Industrials (INDU) are higher by about 1%, the Standard and Poor’s 500 (SPX) is up fractionally, but the tech heavy NASDAQ 100 (NDX) which was this year’s leader, has fallen 2.16%. Since last Friday the NDX declined 2.59%. Clearly, tech stocks stepped onto the bull market elevator which is just a correction in a secular bull market
So, what else happened this past few weeks?
Amazon (AMZN) and Alphabet (GOOG / GOOGL) both broke $1,000, with the former winning the race to that round level. Scott was quoted by USA today on that subject. The article which is normally available to US Today subscribers was republished on another site. Then out of nowhere AMZN made an offer to acquire Whole Foods (WFM). He was also interviewed and quoted by USA Today on that takeover, which is available without subscription.
Scott lightened up on some Facebook (FB) and GOOG / GOOGL this week, whereas earlier in the quarter he did so for Apple (AAPL) and have done on a few occasions this year for AMZN. Did you know that the iPhone was first released by AAPL ten years ago? Since that release day, AAPL stock has surged 812%.
The US Federal Reserve Open Market Committee (FOMC) increased rates ¼%. The FOMC is trying to stay ahead of inflation. Unfortunately, Scott does not see many signs of inflation and he thinks that preemptive action was premature and a mistake.
Scott believes that European markets are beginning to experience their own version of a Taper Tantrum as the European Central Bank (ECB) and Bank of England (BOE) are signaling that they will unwind monetary stimulus and begin to tighten. He would argue that Thursday’s dramatic decline in US equity markets, was a direct result of the big sell-offs that began in European markets and a surge in the Euro (EUR) and Pound Sterling (GBP) versus the US Dollar (USD). This may be manifesting itself in the selling of USD assets, especially those of an NDX variety.
US banks published their regulatory mandated stress tests. Except for Capital One (COF), the major US banks all performed well. As a result; there were a slew of dividend and stock buyback increase announcements. I recently put some money back into the sector using the XLF and UYG exchange traded funds.
Of course, as it always seems, the markets get sold hard into the end of a quarter. The asset reallocation from tech to laggard sectors and indexes will continue and Scott expects it to run its course into the third quarter, probably until earnings are released for the sector.
All told; the quarter was still positive for US Equities and barring any massive sell-off on Friday, those gains will hold.
Next week will be a holiday shortened week. Markets are only open for a half-session on Monday and are closed on Tuesday. The A-Teamers will be off the rest of the week, leaving the B-Teamers in charge, which usually means that the markets might be flat to lower.
Have a Happy Independence Day holiday.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AMZN, DIA, DDM, FB, GOOG, GOOGL, QLD, TQQQ, SSO, SPXL, WFM, XLF & UYG — although positions can change at any time.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant, beverage and agricultural stocks. An individual subscription to the newsletter can be ordered at www.restaurantstox.com Furthermore; Scott is also a professor at the Seton Hall Stillman School of Business in South Orange, NJ.
– Read Scott’s intra-day thoughts and comments on Scutify for which he is a co-founder of its parent company Wall Street All-Stars, LLC
– You can email Scott at email@example.com
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