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Halloween is Frightfully Lucrative
Who says retail is dead? According to the National Retail Federation, more than 179 million Americans will celebrate Halloween this year, with seven out of ten consumers planning to hand out candy. Total spending in 2017 will reach $9.1 billion (up from the record $8.4 billion last year), with the average consumer planning to spend $86.13 on decorations, candy, costumes and more.
No matter what candy you choose to hand out, make it the King Size variety and you're guaranteed to be the best house on the block!
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US Equities continued their winning streak last week on the strength of corporate earnings. Stronger than expected results from blue chips like IBM and Johnson and Johnson, as well as strength from financial sector firms, helped provide the lift. The Senate's passage of a budget resolution late in the week also boosted sentiment and kept the rally going.
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> Equity Valuations:
We've spent a fair amount of space in our Market Digest newsletters discussing equity valuations and the different ways of measuring them. The chart below puts them all together in a compelling visual.
The most widely followed measure of valuation is the P/E (or Price to Earnings ratio) of the S&P 500. Price is always the current price, but analysts point to different P/E numbers depending on what "E" is used as the denominator. There is the trailing P/E, where E equals the sum of each Earning Per Share (EPS) for the past four quarters, the forward P/E which references the sum of the EPS projections for the next four quarters, and the Cyclically Adjusted P/E (CAPE) which utilizes the average of 10 years of earnings, adjusted for inflation.
Regardless of the measure used, the chart below tells the story; valuations are high.
> The Federal Reserve:
The Fed has the potential to significantly impact markets next week, but not because of a change in monetary policy. Rather, it's because Donald Trump is expected to announce a decision on who he will appoint as chair of the Federal Reserve. A second term for Fed Chairwoman Janet Yellen would likely extend this year's record stock rally, while economist John Taylor would likely bolster the flagging US dollar. The current favorite (according to website PredictIt) is Jerome Powell. As a current governor, Powell would be a logical choice for chair if the president wants to preserve continuity but also wants to make his own nomination.
> Japan:
Although many investors associate Japan with years of recession, deflation and poor stock returns, there are growing reasons to be optimistic toward the country. Pessimism toward the Japanese equity market may be overdone and their valuations are quite a bit cheaper than the US, and also cheaper than Europe. On a forward price-to-earnings ratio basis, the PE for Japan is 14.2 compared with 17.9 in the US and 15.1 for Europe, despite comparable expected earnings growth in Japan.
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Halloween Tricks
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Jimmy Kimmel Live Candy Challenge
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When trick-or-treating first became popular in the United States in the 1800's, more children played mischievous pranks than asked for candy.
One late night TV host has taken pranks to a whole new level with his annual
YouTube Challenge: I Told My Kids I Ate All Their Halloween Candy.
If you've never seen this compilation, you're in for a slightly evil treat.
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New Market Wealth Management offers modern investment solutions backed by extensive research and experience serving the needs of wealthy families. Through our strategic partnership with
Cliffwater LLC
, we have access to institutional-quality research, investment due diligence and asset allocation tools. We believe this level of experience and unique access to in-depth, sophisticated research are essential for success in today's complex world markets.
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