The Week Ahead – Cornucopia

Welcome to “The Week Ahead” where we take a moment to provide our thoughts on what we can expect in markets and the economy during the upcoming week.

With Thanksgiving coming up there is always much to be thankful for: family, friends, and health are a few that come to mind. Growing up I was always tasked with putting together a cornucopia as the center piece for Thanksgiving dinner. The Merriam-Webster dictionary defines Cornucopia as: 

1. A curved, hollow goat’s horn or similarly shaped receptacle that is overflowing with fruit and vegetables and that is used as a decorative motif emblematic of abundance – called also horn of plenty.
2. An inexhaustible store
3. A receptacle shaped as a horn or cone

The investment markets in 2017 so far have been a cornucopia filled with returns. If someone had told me that the 10-year U.S. Treasury note would be roughly at the same level that it started the year, gold up 10%, and oil remaining flat I would have guessed that the global equity markets may have been modestly up in the low single-digits based on continued earnings growth. Other than broad commodities, almost every single asset class is in positive territory this year. The Bloomberg Barclays Aggregate Bond Index is up 3.26% while the S&P 500 Index has increased 16.58% (as of 11/15/17). This is almost a flashback of 2012, when the Bloomberg Barclays Aggregate bond Index increased 4.21% while the S&P 500 Index gained 16%. Similar to this year, 2012 saw Hurricane Sandy occur, yet it also saw large events such as the fiscal cliff debate, the Eurozone debt crisis (who remembers that May when the Dow dropped 1,000 points), and the Fed launching QE 3. There was much more uncertainty as well with constant fears of a double-dip recession. Volatility remained quite high with the S&P 500 Index at one point giving back all of the gains of the year during the summer months. All said and done, those that were invested have much to be thankful for.

The week ahead we will have three major events: the release of the FOMC minutes, Thanksgiving, and Black Friday. With the market already heavily pricing in a December rate hike, the key take away will be to see if further posturing for 2018 can be decoded. Black Friday has lost a little of its luster as technology has changed the way people shop. I, for one, no longer miss being dragged out of my Thanksgiving food coma to line up to start shopping at midnight! These days we have Amazon Prime day, a mini-black Friday in itself, and over in China, Singles Day by Alibaba. To put the disruption in perspective, Alibaba’s sales hit $1 billion in just 2 minutes, $10 billion after one hour and six minutes, and hit $25 billion after 24 hours.

This year I’ll be instituting my colleague Steve Mill’s “Fed Diet”, cutting back on desserts from three to two (sorry sweet potato soufflé, pumpkin pie and pecan won out this year). Wishing you and yours a wonderful Thanksgiving!

Data deck for November 18 – November 24: