Game of Thrones Saudi Style

Investors have a lot to digest this week from geo political to a potential change in fiscal policy. On the economic front, we have CPI, Retail Sales, PPI and Building Permits.


Tax Cuts and Jobs Act: Every single lobby group continues to be in lockdown, as the Senate and House versions of the tax bill have now been released. Any headlines out of the negotiations can potentially affect certain sectors. So if we hear an update on property taxes, we will likely see a reaction in home builders, which have been clobbered with the announced proposal.

13F Filings: By this Tuesday (11/14), all institutions with $100M in assets under management have to file their 9/30 ownership positions. Should some well-known investors declare new sizable positions in a certain company, we can expect that stock to have a bump higher. For example, when Berkshire Hathaway filed a position in the airlines last fall, the sector moved up over 3% the next day. If a known activist were to exit out of a stock, we could see that stock fall.

Fed Members Speak: This week, we have 2 FOMC member scheduled to speak. Not much is expected from Patrick Harker or Charles Evans but any comments hawkish or dovish on the outlook with Jerome Powell leading the Fed could move markets.

Cash Grab in Saudi Arabia: So the Game of Thrones purge in Saudi Arabia to fight terrorism looks to just be a shakedown to plug up the Saudi’s dwindling foreign reserves as the kingdom looks to be confiscating cash and assets worth approx. $800 Billion. As other prominent Saudi’s feel they can be next, they are looking to liquidate their assets and move them overseas. This shakedown (terrorist fighting) is forcing billions to be pulled from the kingdom on the fears of instability crashing the Saudi stock market. The longer this goes on, the more likely the potential to ripple into other markets including Europe and the US. It does have an adverse effect on oil which continues to hit 2 year highs on the headlines and gold goes higher.

Earnings: Earnings has its last hurrah as we have 18 S&P 500 companies scheduled to report this week. According to Thomson Reuters I/B/E/S, we have now seen 457 of the S&P 500 companies report 3rd quarter earnings. Of them, 67% reported revenue above expectations while 72% have reported earnings above expectations.

CPI: Also on Wednesday (11/15), CPI is released. Should CPI come in stronger than expected, it would signal that the consumer is able to absorb the another interest rate hike. If it comes in weaker than expected, it may give the Fed reason to pause before potentially raising rates at the last meeting of the year.

Chinese Data: This week, China will be releasing a bunch of economic data points including Industrial Production and Fixed Asset Investment. Investors will monitor the data and the Yuan’s reaction as strong data will put upward pressure on the currency, with the potential for markets to rise globally.

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