Week in Brief: Week of June 9

June 12, 2017

Major U.S. indexes dropped on Friday like textbooks on the final day of school. As technology, which had led the charge higher, proved no less adamant about leading the way down. Ending what had been -- aside from Friday's fireworks -- a relatively serene week. As the market appeared to care little about D.C.'s ongoing shenanigans.
Remember, politics is the art of the possible. Which makes winning elections more important than defending principles.
Five names accounted for 75 percent of the Nasdaq's decline. Which fell 2.1 percent since June 7th. Apple, Microsoft, Google, Facebook and Netflix. Each dropping five percent or more. And once the decline began, the herd started running. Pulling chips from the table. Or simply running in a panic-induced frenzy. Because that's what herds do.
Yet, Friday's action was followed by further selling on Monday. Lending the appearance of a more garden-variety correction than the start of a new bear market. Doesn't mean a correction couldn't be steep. Declining 10-15 percent or more. But eventually, the trend line will continue higher.
Roughly half of the S&P 500's 2017 performance has come from six stocks. Marking a narrow range of market leadership. Sector rotation could be the order of the day. So keep an eye on the lagging energy stocks. And perhaps the banking stocks. Both sectors could benefit by coming deregulation efforts. As this market, having seen the tech sector do yeoman's work of late, craves new leadership.
Friday's selloff brought out an abundance of sellers. Can't much blame them. With the blathering punditocracy constantly forecasting the next black-swan event. Or the toppling of the U.S. president. Or the coming environmental crisis. Or [FILL IN THE BLANK]. No wonder the investing electorate remains jittery.
Don't confuse a bull market for brains. Nor take investment advice from the media. Both paths lead to destitution.
Last week's fear reveals the legs of this bull market. As market tops are not comprised of fear but of greed. So, until we have concrete evidence of a redirection in trend lines, we're holders -- and occasional buyers -- of growth-oriented equities. Foreign and domestic.
Economically, there's been talk of the economy's slowing pace. Which is bunk. Fact is, there are so many economic indicators available today that my third-grade son, given the time, could make a reasonable argument for a near-term recession.
The indicators that matter -- personal income, manufacturing and trade sales, monthly GDP and industrial production -- remain in upswings. While going nowhere fast. A sign of economic strengthening.
One of the economy's problems remains its inability to place skilled workers into high-paying technical and trade positions. Jobs paying $30, $50 or more per hour that remain vacant because we've nobody capable of doing them.
Why? For starters, many young Americans redirected their efforts years ago from trades to bachelors degrees. Which have become as uselessly ubiquitous as a Kardashian selfie.
Consequently, we have thousands of unemployed sociology majors. And tens of thousands of unfilled trade positions.
The administration has launched an "apprentice" program meant to intensify the quality and quantity of training opportunities for such jobs. But this will take time. Till then, some of America's future welders and master mechanics will be stuck serving vanilla, skim, no-fat, iced latte Frappuccinos to their well-educated- yet-unemployed peers.
The biggest near-term problem facing the nation is not economic. But the intransigence emanating from the nation's capital. Both party's refusals to work together. Worrisome because our biggest long-term problems require a bi-partisan approach. The ever-growing national debt. Russia. North Korea.
If our two-party oligopoly can't behave like adults instead of hair-pulling playground brats, then the problem is not theirs, but ours. As the dual standard has been well established. The way D.C. governs itself versus the way D.C. governs the rest. And when the music stops, don't think it will be any of D.C.'s denizens left without a chair. It will be your relatives, friends and neighbors.
Waiting for Washington D.C. to fix all of our problems is not something that sophisticated, proactive people should do. No more than attending the ballet in Tijuana. Which is why we counsel clients to pay down debt. And advance their portfolio management efforts beyond Wall Street's traditional formula: stocks, bonds and cash. Only low-correlation alternative investments can provide the ballast required to fortify against such storms as the tech bubble collapse. And the Credit Crisis.
Old dog, new tricks, right?
Former FBI Director James Comey testified before the Senate last week. Given all of the buzz leading up to Friday's testimony, we assumed some game-changing revelations were afoot. Though none came. Just more leaks. And aspersions of political mismanagement cast towards both sides of D.C.'s political duopoly.
Alas, we do best to ignore D.C.'s never-ending din. Politics be damned, the stock market is a universe unto itself. And therein shall we plant our flag.
Weekly Results
Major indices finished lower last week. The DJIA gained 0.31%. The S&P 500 dropped 0.39%. The Nasdaq fell 1.55%. 10-year Treasury bond yields rose 2.18%. And gold futures lost 0.80%.

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