Market Strategy Radar Screen Weekly March 27, 2017

 You Can’t Always Get What You Want

After setback, the Trump Administration likely will turn to less contentious issues

Perhaps the market has thus far digested Washington’s dysfunction because it’s been pretty clear from the start that issues surrounding health care and immigration are among the most contentious and have enough “hair on them” to stall a commercial lawnmower to say nothing of a standard pair of barber’s shears.

With its first and second attempts at traversing the hurdles around immigration and the ACA having pretty much failed, the administration may find it now more practical to move on to less contentious (if not easy to solve) agenda items where bipartisan (perhaps even “tripartisan”) cooperation might be found to be if not “readily achievable” at least negotiable.

We refer to agenda items pertaining to tax reform (particularly corporate tax reform), infrastructure spending and revisiting the need for a reduction in onerous regulation that has been unfriendly to businesses from mom and pop operations to US multinationals.

For all the noise that came from market bears and skeptics last week as markets gave back some gains from the start of the year, the Dow Industrials, the S&P 500, the S&P 400 (mid caps) the Russell 2000 (the broadest index of US small caps) and the NASDAQ Composite (in large part technology driven) last week respectively shed 1.52%, 1.44%, 2.12%, 2.65% and 1.22%.

That’s not exactly a “rout” in our book considering that those same indices are up respectively in the past 12 months through last Friday: 17.68%, 15.09%, 19.99% 25.93% and 22.22%. It would appear to us that the markets stateside have enough “cushion” from the past 12 months to afford some profit-taking and time to pause and ponder if needed without disengaging from the bull market mode.

For now the current economic expansion stateside continues to evidence sustainability to the visible horizon while economies in the international realm from Europe to Asia and Latin America provide signs of a global economic recovery in process which augurs well for international equities.

Corporate earnings in the S&P 500 have grown nicely over the past two quarterly reporting seasons and could well surprise to the upside when first quarter earnings are reported in a few weeks.

As we prepared to go to press with this week’s edition of the Market Strategy Radar Screen stocks showed some weakness in Asia and futures markets were indicating Europe and the US markets could open lower.

We remind investors to keep their shopping lists updated and consider the value of looking for “babies that got thrown out with the bathwater” in previous interludes of uncertainty and transition.

The Federal Reserve as of last week continued to signal that it had a favorable view of the economy stateside and appeared committed to a process of interest rate normalization at a moderate pace which in our view will likely continue to favor equities.

For the complete report, please contact your Oppenheimer Financial Advisor.

Other Disclosures

This report is issued and approved by Oppenheimer & Co. Inc., a member of all Principal Exchanges, and SIPC. This report is distributed by Oppenheimer & Co. Inc., for informational purposes only, to its institutional and retail investor clients. This report does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such offer or solicitation would be prohibited. The securities mentioned in this report may not be suitable for all types of investors. This report does not take into account the investment objectives, financial situation or specific needs of any particular client of Oppenheimer & Co. Inc. Recipients should consider this report as only a single factor in making an investment decision and should not rely solely on investment recommendations contained herein, if any, as a substitution for the exercise of independent judgment of the merits and risks of investments. The strategist writing this report is not a person or company with actual, implied or apparent authority to act on behalf of any issuer mentioned in the report. Before making an investment decision with respect to any security discussed in this report, the recipient should consider whether such investment is appropriate given the recipient's particular investment needs, objectives and financial circumstances. We recommend that investors independently evaluate particular investments and strategies, and encourage investors to seek the advice of a financial advisor. Oppenheimer & Co. Inc. will not treat non-client recipients as its clients solely by virtue of their receiving this report. Past performance is not a guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance of any security mentioned in this report. The price of the securities mentioned in this report and the income they produce may fluctuate and/or be adversely affected by exchange rates, and investors may realize losses on investments in such securities, including the loss of investment principal.

 

Oppenheimer & Co. Inc. accepts no liability for any loss arising from the use of information contained in this report. All information, opinions and statistical data contained in this report were obtained or derived from public sources believed to be reliable, but Oppenheimer & Co. Inc. does not represent that any such information, opinion or statistical data is accurate or complete and they should not be relied upon as such. All estimates and opinions expressed herein constitute judgments as of the date of this report and are subject to change without notice. Nothing in this report constitutes legal, accounting or tax advice. Since the levels and bases of taxation can change, any reference in this report to the impact of taxation

 

INVESTMENT STRATEGY

should not be construed as offering tax advice on the tax consequences of investments. As with any investment having potential tax implications, clients should consult with their own independent tax adviser.

 

This report may provide addresses of, or contain hyperlinks to, Internet web sites. Oppenheimer & Co. Inc. has not reviewed the linked Internet web site of any third party and takes no responsibility for the contents thereof. Each such address or hyperlink is provided solely for the recipient's convenience and information, and the content of linked third party web sites is not in any way incorporated into this document. Recipients who choose to access such third-party web sites or follow such hyperlinks do so at their own risk. The S&P 500 Index is an unmanaged value-weighted index of 500 common stocks that is generally considered representative of the U.S. stock market. The S&P 500 index figures do not reflect any fees, expenses or taxes. This research is distributed in the UK and elsewhere throughout Europe, as third party research by Oppenheimer Europe Ltd, which is authorized and regulated by the Financial Conduct Authority (FCA). This research is for information purposes only and is not to be construed as a solicitation or an offer to purchase or sell investments or related financial instruments. This report is for distribution only to persons who are eligible counterparties or professional clients and is exempt from the general restrictions in section 21 of the Financial Services and Markets Act 2000 on the communication of invitations or inducements to engage in investment activity on the grounds that it is being distributed in the UK only to persons of a kind described in Article 19(5) (Investment Professionals) and 49(2) High Net Worth companies, unincorporated associations etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended). It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. In particular, this material is not for distribution to, and should not be relied upon by, retail clients, as defined under the rules of the FCA. Neither the FCA’s protection rules nor compensation scheme may be applied. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Oppenheimer & Co. Inc. Copyright © Oppenheimer & Co. Inc. 2015.