TDG's Daily Brief


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February 13, 2018


Daily Brief

Futures are negative before the opening bell after the stock market had its best two-day rally since after the Brexit vote. On Monday the S&P 500 finished higher by 1.39% (36.45 pts), the Dow surged 1.70% (410.37 pts) and the Nasdaq climbed 1.56% (107.47 pts). Asian markets were mixed overnight with Japan being the main laggard. European stocks are mixed with the UK being the standout. Treasuries are stronger across the curve this morning and the yield on the 10-year note is 2.83%. The dollar continues to weaken against the majors.  Gold is up over 0.1% and WTI crude is off by -1%.

The dollar is trading at its five-month low against the yen as the greenback continues to slump. There is no single catalyst for the decline although the dollar failed to move upwards after the yield on the US 10-year hit 2.89% on Monday. The gains in the yen vs the dollar seen today could be blamed on the unwinding of positions after yesterday’s holiday in Japan. There are reports that authorities in Japan are looking at tighter leverage caps on retail FX trading as well.

A week after the VIX was thrust into the spotlight, a whistle-blower has told US regulators of a scheme to manipulate the CBOE Volatility Index. In a letter, a Washington-based lawyer said his client found a flaw that allows traders to move the VIX up or down by posting quotes on S&P options that don’t have to be traded. The buyer of the VIX options known as ‘50 Cent’ is estimated to have made nearly $200 million out of last week’s turmoil. Meanwhile, volatility-sellers are returning to the market as evidenced by options tied to the VXX and record inflows into the SVXY, which lost more than 80 percent of its value on February 6th.

Futures

Week-to-Date Index Returns

1-Year Index Returns Chart

Global Market Overview

ETF Fund Flows

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.

* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.

* All indices referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.

* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.

* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Past performance does not guarantee future results. Investing involves risk, including loss of principal.

* You cannot invest directly in an index.

* Consult your financial professional before making any investment decision.

* Stock investing involves risk including loss of principal.

Sources:

  • Factset
  • Bloomberg

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