Monday June 26, 2017

This is Brian Hamilton filling in for Mark Vickery while he is on vacation.

Overnight several international news items were reported; In Germany, the Munich-based Ifo institute’s business climate index jumped up to a record high of 115.1 in June – the fifth consecutive increase.  An unexpected pickup in manufacturing was the major driver.  This was positive news for Angela Merkel ahead of the September election.  In Italy, the government announced that they have committed about $19 billion (17 billion euros) to two banks, Banca Popolare di Vicenza SpA and Veneto Banca SpA, which the European Central Bank (ECB) said that were failing or were likely to fail.  Lastly, Third Point hedge fund, led by Dan Leob, disclosed that they have purchased about 40 million shares of Europe’s largest company Nestle SA.  Mr. Leob is now attempting to get the board of directors to increase share repurchases, adopt a profitability forecast, and sell its stake in cosmetics maker L’Oreal SA.  

Before the opening bell, the Commerce department reported that orders for durable goods, items designed to last more than three years, fell for the second consecutive month in May, dropping by -1.1% from April.  The biggest drag was orders for large airplanes which fell by -12%, and if you took out transportation, orders for durable goods would have increased by +0.1% (this reading has risen 4 out of the last 5 months).  Also, capital-goods orders, a key measure of business investment, declined by -0.2% in May, the first drop in 2017.

This week we will hear from 5 of the Federal Reserve policy makers with Janet’s Yellen’s speech tomorrow being the most highly anticipated.  Further, the European Central Bank (ECB) will hear from both ECB President Mario Draghi, and former U.S. Federal Reserve Chairman Ben Bernanke at the ECB central forum in Portugal Spain.  The ECB is expected to discuss stimulus cuts and economic growth.  

Brian Hamilton

Investor Research Coordinator