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Weekly Market Update for November 17, 2017

by JM Hanley

The Dow was down on Friday, falling 100 points to close at 23,358. For the week, the Dow fell 0.27% (S&P 500 -0.13%) and year-to-date is now up 18.2% (S&P 500 +15.2%). Major indexes retreated slightly after weeks of gains. The consumer goods and telecom sectors performed well. Energy and industrial firms were mixed. Progress on tax reform continued, albeit slowly. The yield on the 10-year Treasury fell six basis points, closing at 2.34%.

Economic data this week brought few surprises. Inflation rose 0.1% in October, which was about as expected. Prices climbed twice as fast excluding food and energy. Inflation moved up 1.8% from October of 2016 – the fastest pace since April. The producer price index, which also measures inflation, showed a similar gain. Pharmaceutical costs rose steeply, partially offset by lower gasoline prices.

In other news, retail sales rose more than expected in September. Vehicles, home furnishings, and electronics proved particularly strong. This augurs well for the Christmas shopping season. The National Association of Homebuilders’ housing index climbed again last month. Though it is now close to a post-recession high, a limited supply of housing lots and a shortage of construction labor continue to weigh on homebuilders. Finally, industrial production rose by a percent in October, nearly twice as fast as economists had expected.

The price of crude oil was flat this week above $56 a barrel – up 6% YTD. US crude stockpiles showed a surprise build – of 1.9m barrels – while product inventories of gasoline were relatively flat. Oil prices initially sold off this week given the disappointing US inventory data, a reduced demand forecast by one of the three leading prognosticators, and an about-face by Kurdistan in its quest for independence. Then on Friday, crude regained all its lost ground after Saudi Arabia soothed market concerns by saying that Russia should be onboard for further extensions of the output cut.

While it is likely we will experience heightened volatility heading into and out of the OPEC meeting at the end of November, the market has been working down excess barrels and we see a strong set-up for oil in the coming quarters.

*The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Clients or prospective clients should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All clients are strongly urged to consult with their tax advisors regarding any potential investment. Past performance does not guarantee future results; there is always a possibility of loss


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