Investment Commentary – October 28th, 2015
Market Indices as of Market Close October 28th, 2015
Dow 17,779 (-0.31% YTD)
S&P 2,090 (1.52% YTD)
NASDAQ 5,096 (7.56% YTD)
Global Dow 2,444 (52 week low 2,203/high 2,644)
10-year Treasury 2.09 % (52 week low 1.64/high 2.50)
Gold 1,157 (52 week low $1,074/high $1,310)
Oil 45.98 (52 week low $39.22/high $81.61)

Stocks Reach a Two-Month High

U.S. stocks posted strong gains last week, hitting their highest level since mid-August.

While third quarter earnings have been roughly in line with estimates, several marquee names have been turning in better-than-expected numbers. We have also witnessed another round of mergers, with two large transactions in tech. Also, the European Central Bank indicated it may extend its current quantitative easing program.

Despite prospects for a modest acceleration in growth, monetary accommodation, both in and outside the United States, can probably carry markets through year’s end. That said, investors need to take note of a few trends.

First, investors are growing increasingly choosy. Second, the possibility of more QE from Europe may turn out to be a mixed blessing. Third, leadership among sectors is shifting. Finally, investors need to take note of falling expectations for 2016 earnings.

In this environment, we continue to be cautious on momentum names and see the best opportunities in technology and, outside of the U.S., European equities.

Fed Keeps 2015 Rate Hike on Table

The Federal Reserve on Wednesday kept short-term interest rates unchanged near zero, but it opened the door more explicitly than it has before to raising rates at a final 2015 meeting in December. Officials suggested they had become less concerned in recent weeks about turbulent financial markets and uncertain economic developments overseas.

October 28th, 1980: Yecch! One of the most hated fees in financial history is born, as the U.S. Securities and Exchange Commission adopts Rule 12b-1, permitting mutual funds to pay for the marketing expenses of selling new shares with the assets of existing shareholders.
Currently Affinity Asset Management refunds 12b-1 fees that may apply to advisory qualified accounts.

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 investment strategy.