Week of Sept 30 2016 Weekly Recap & The Week Ahead

“One of the rarest traits on Wall Street is patience, yet patience is one of the biggest secrets of successful investing” — R.W. McNell’s book Beating The Stock Market

1. Deutsche Bank (NYSE:DB) Slumps On Capital Concerns — Germany’s Angela Merkel ruled out any state assistance for the lender, according to a report from Focus Magazine. Merkel also declined to intervene in Deutsche’s (NYSE:DB) legal battle with the U.S. Justice Department, which earlier this month announced it may seek up to $14B from the bank to resolve investigations into crisis-era mortgage securities.
2. Wells Fargo (WFC) Launches Probe – CEO Stumpf & Tolstedt Giving Up Pay & Bonuses — independent directors are launching a probe into the bank’s practices, and the two executives, Carrie Tolstedt, the former retail banking chief and CEO John Stumpf, will forfeit some awards. Stumpf will lose about $41M in unvested equity and temporarily forgo his salary, while Tolstedt, the former retail banking chief, will leave the company without severance payments.
3. OPEC Agrees to First Oil Output Cut in Eight Years — OPEC agreed to a preliminary deal that will cut production for the first time in eight years. Oil prices gained more than 6 percent as Saudi Arabia and Iran surprised traders who expected a continuation of the pump-at-will policy the group adopted in 2014. The group agreed to drop production to a range of 32.5 to 33 million barrels per day, said Iran’s Oil Minister Bijan Namdar Zanganeh, following a meeting in Algiers. While some members of OPEC will have to cut output, Iran won’t have to freeze production.
4. India-Pakistan Tensions Escalate — tensions between India and Pakistan are escalating, with investors responding by selling assets in both countries. Following Indian “surgical strikes” on suspected militants preparing to infiltrate from Kashmir, Pakistani Defense Minister Mohammad Khwaja threatened to use “tactical” nuclear weapons to “destroy” India.
5. Sector Performance Quarter And Month To Date –courtesy of BIG, the chart below shows S&P 500 sector performance so far in Q3. Of the eleven sectors, just two are outperforming the S&P 500 (Technology and Financials).

For the month of September, the S&P 500 is down 0.5%, given that September has historically been the cruelest month for equities.

The week ahead — Economic data from Econoday.com:

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