Big week for market momentum
It will be a big week with corporate earnings and political conventions kicking off. We will see 90 companies report their earning for the last quarter. This will be a large cross section of the markets with large manufacturers and consumer product companies. There will qualitative as well as quantitative information for the markets to digest.
How earnings could keep the momentum going
There will be a lot of information about what has happened this past quarter and what is going to happen with major companies in the future. In the S&P 500 we are expecting earnings to grow. What we are looking for is for earnings to beat expectations. A good trend would be for earnings to rise above 60%. This would help keep the market momentum going by filling in some holes where the market has been over extended and over priced.
The drag on market momentum
There has been several dragging issues on market momentum. Low oil prices have hit the energy sector. Low interest rates and merger and acquisition activity have hurt the financial industry. Both have made it hard to keep the market momentum going.
Brexit leads to company cutbacks
Several companies have already started discussion about how they will respond to the Brexit vote. A major airline has said they will most likely cut their flights back to the UK and several food companies are talking about cutting back sales to Britain as well.
How important is the Republican convention?
Now that the Republican convention has started, much attention will be given to Donald Trump’s policies. While there will be a lot of grand standing, this will be the first time Donald Trump has the podium all to himself with great number of viewers and a lot of time. Hopefully we will hear more details about his policies which could make the markets more or less skittish on the possibility of a Trump presidency. Historically, these conventions do not affect the markets because the policy positions of the candidates are already known. There is more unknown this time than in any other time in presidential election history. Donald Trump’s policies may not cause the markets to react in the short term, but they will lay the ground work for how it reacts in the future.
This weeks’ theme
This weeks theme will be “Can this market momentum keep going?” We’ve had a lot of great economic numbers come out in the past few weeks in consumer confidence, retail sales, jobs numbers, industrial production, and small business confidence. Can we keep this market momentum? We will be watching very closely and we will keep you updated.
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Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
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