Investment Commentary –February 28th, 2017

Market Indices as of Market Close February 28th, 2017
• Dow 20,812 (5.31% YTD)
• S&P 2,363 (5.59% YTD)
• NASDAQ 5,825 (8.22% YTD)
• Gold $1,250 (52 Week Low $1,127 High $1,387)
• OIL $53.99 (52 Week Low $40.97 High $56.92)
• US 10Y Treasury 2.39 (52 Week Low 1.32 High 2.64)
• Barclay Bond Aggregate (0.82% YTD)

Wall Street’s ‘fear gauge’ touches highest level in 2 months ahead of Trump address
Wall Street’s “fear gauge” on Tuesday hit its highest level in about two months, ahead of a highly anticipated address from President Donald Trump. The CBOE Volatility Index VIX, +6.29% which tracks implied volatility 30 days in the future, touched an intraday high of 12.94, which is its highest level since Dec. 30 when the so-called fear gauge was at 14.04. Its jump, up about 6% on the session, marks the largest climb for the index, which traders use to bet on swings in the S&P 500 index SPX, -0.26% since Feb. 15, according to FactSet data. Wall Street has been experiencing a protracted period of quiescence in the equity markets and a slight buildup of anxiety ahead of Trump’s speech is natural. The VIX tends to rise when stocks retreat. On Tuesday, the Dow DJIA, -0.12% closed off 0.1% at 20,812, the S&P 500 ended down 0.3% at 2,363, while the Nasdaq Composite Index COMP, -0.62% finished off 0.6% at 5,825. Equity benchmarks have been mostly climbing to new records on the back of Trump’s promises to boost the economy through a raft of fiscal stimulus. Investors will be looking for details on his plans during his joint address in front of Congress Tuesday at 9 p.m. Eastern Time.

The past weeks leaders include utilities, healthcare and construction while laggards include basic materials and industrial metals and minerals.

U.S. economy slowed in fourth quarter despite robust consumer spending
The U.S. economy expanded at a slower pace in the fourth quarter, as previously reported, and appeared to remain on a moderate growth path as President Donald Trump took office with a promise to reinvigorate manufacturing and protect jobs.
Trump has pledged to boost annual economic growth to 4 percent through a mix of infrastructure spending, sweeping tax cuts and deregulation. He is expected to outline part of his program in a speech to Congress on Tuesday night.
Gross domestic product rose at a 1.9 percent annual rate in the fourth quarter, the Commerce Department said in its second estimate, as downward revisions to business and government investment offset robust consumer spending.

The estimate matched what was published last month. Output increased at a 3.5 percent rate in the third quarter.
The economy grew 1.6 percent for all of 2016, its worst performance since 2011, after expanding 2.6 percent in 2015.
“The overall size and composition of the Trump economic stimulus is yet unknown. However, it is likely to contribute to further economic strength for the balance of this year and beyond,” said Sung Won Sohn, an economics professor at California State University Channel Islands in Camarillo.
Trump, who made his 4 percent GDP growth pledge during last year’s election campaign, has promised a “phenomenal” tax plan that the White House said would include tax cuts for businesses and individuals.

THIS DAY IN FINANCIAL HISTORY: February 28, 1878 Silver Makes Way into United States Currency
On this day in 1878 congress passed the Bland-Allison Act. This bill called for silver coinage in limited doses.

On tap for the rest of the week:

Wednesday: Vehicle sales, U.S. Department of Commerce; construction spending, U.S. Census Bureau; personal income and consumer spending, U.S. Bureau of Economic Analysis; Institute for Supply Management’s manufacturing index

The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investments.