• Domestic Markets Trade Down for the Week
• Telecommunications and Bank Stocks Decline
• Earnings Season Nearing Conclusion
• General Electric Announces Restructuring Plans Monday

Both domestic equity and fixed income markets sold off last week though relatively slightly. All three major equity indices were down less than a percent for the week; the yield on the 10-year Treasury rose just over 6 basis points. Several events contributed to the declines including the Senate version of tax reform which pushed the proposed decrease in the corporate tax rate into 2019 (the House version calls for implementation in 2018). The Senate version may have also contributed to the decline in bank stocks last week - in conjunction with concern over the flattening of the yield curve. The Financial sector declined over 1 % last week second only to the decline in Telecommunication (Telecom) stocks (down 1.39% on the week).

The Telecom sector is only one of two sectors turning in negative performance for the year – the other is Energy. The decline in Telecom year-to-date is approaching 19% and has accelerated recently because of regulatory concerns over AT&T’s proposed acquisition of Time Warner.

Over 90% of S&P 500 companies have reported earnings thus far for the third quarter. Earnings are slightly better than expectations coming into the quarter and it looks as if earnings will grow high single digits for Q3. Given a relatively high market valuation (the S&P 500 is trading at 18X forward earnings), companies that disappoint have been severely punished - this was evident last week with a couple of the retailers.

As communicated last week we placed General Electric on hold. On Monday the CEO will outline their restructuring plan for shareholders. Everything is on the table and a combination of business unit sales, layoffs and dividend cut is probable. The stock has settled around $20 a share.

Next week on the economic calendar Consumer Prices for October and Retail Sales for September are released.

Next week earnings reports are dominated by retailers as we move rapidly towards the close of Q3 earnings season.

Monday –  Tyson Foods

Tuesday – Home Depot and TJX

Wednesday – Target, NetApp, and Sally Beauty Holdings

Thursday – Wal-Mart, Best Buy, and L Brands

Friday – Abercrombie & Fitch, Foot Locker, and Post Holdings

Indices for the week and YTD are as follows:

S & P 500 down .21% for the week; YTD index return is 15.34%

NASDAQ Composite down .20% for the week; YTD index return is 25.41

Dow Jones Industrial Average down .50% for the week; YTD index return is 18.52%

Benchmark 10-year Treasury bond yield stands at 2.39% - rising 6 basis points for the week

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Chris McGee heads Caldwell’s investment committee, which draws on a team of experienced in-house professionals and carefully chosen outside analysts to make decisions for client portfolios.

A Chartered Financial Analyst (CFA) and Chartered Alternative Investment Analyst(CAIA), McGee had previously been senior investment adviser and senior vice president at PNC Wealth Management in Sarasota for nearly a decade. Prior to that he was portfolio manager for five years with U.S. Trust (formerly Bank of America) in Sarasota. Before relocating here, he had served as vice president, capital management, for Wachovia Bank in Winston-Salem, North Carolina.

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About Caldwell Trust Company

Caldwell Trust Company is an independent trust company with offices in Venice and Sarasota, Florida. Established in 1993, the firm currently has nearly $1 billion dollars in assets under management for clients throughout the United States. The company offers a full range of fiduciary services to individuals including services as trustee, custodian, investment adviser, financial manager and personal representative. Additionally, Caldwell manages 401(k) and 403(b) qualified retirement plans for employers.