Stocks Up Again This Week
- Stocks higher and Dow extends impressive streak
- Mega mergers back in the news
- It’s official! The Snuggie is a blanket
Stocks continued moving higher this week, the 4th consecutive week the S&P 500 increased and the 3rd in the last four for the Dow. For the week, the Dow increased 1.7% while the S&P 500 increased 1.5%. Both indices closed at record highs again. Markets are closed Monday in observance of President’s Day.
Today marked the 89th consecutive day that the stock market hasn’t had a decline of greater than 1%. A streak this long has only happened 17 times in the last 70 years. The streak dates back to October 11th, a month before the election. I always recommend people focus on the longer-term instead of worrying about the ups/down on individual days, weeks and months. However, it’s pretty interesting to look at the daily trading over that period. It’s been a generally upward moving market, but there have been very few days that were up over 1%, only four. Most days have been up/down less than 0.5%. There’s been a lot of hyperbole and chaos politically over the last three months, so it’s interesting that the market has been behaving exactly the opposite. Steady strength rather than sharp swings up and down. I think that bodes well for the market over the coming months.
Merger news dominated headlines today with the proposed $143 billion acquisition of Unilever by Kraft-Heinz. The shares of both companies increased, as did others in the sector such as Colgate. Unilever rejected the initial offer, but stock reaction suggests a higher offer might be forthcoming. It’s always interesting to see merger activity increase when stocks rise. On some levels, you would think lower share prices would encourage buyers to make acquisitions, but it always seem that exuberance from higher stock prices gets both buyers and sellers willing to do deals. Regardless of the stock moves today, this deal seems unlikely to happen to me. Britain is navigating whether it will leave the EU or not and this type of transaction is largely driven by potential cost synergies. Cost synergies is a fancy way of saying ‘layoffs’ so it seems unlikely that the UK would approve a merger where it would see significant jobs cuts while it faces uncertainty from a potential Brexit. Read More
Many of you likely remember the Snuggie from the late night TV commercials of the blanket with sleeves. I didn’t even realize Snuggies were still a thing, but apparently they’ve been in a long legal battle about whether Snuggies are blankets or robes. You might be wondering, ‘who cares?’ It’s an important distinction because of how blankets are taxed relative to clothing. If the Snuggie had been ruled as a robe, the import tax would have been 14.9%. As a blanket, however, the Snuggie only faces an 8.5% tax. Who would have thought the difference between a blanket and a robe would add up to real money. Read More
Oil was down this week, declining 0.8% to close at $53.37/barrel. The yield on the 10-yr Treasury increased slightly, closing at 2.42%, from 2.41% a week ago. The average rate on a 30-yr mortgage ticked slightly lower to 4.15% from 4.17% last week. Average mortgage rates are now down 0.17% from the beginning of the year.
My 2017 Form ADV is now filed and available for review. The ADV is a regulatory document filed every year with state financial regulators describing me and my business model. You can find the latest version here.
|10-yr Treasury (∆ in bps)||2.42||1||(3)|