Global synchronous recovery seems to be the financial community’s mantra for 2017, used to ward off evil spirits associated with tightening monetary policy, particularly in the US. Although Balkanization across the globe and climate change pose great long-term threats, their symptoms (Charlottesville, Catalonia and the severity of Hurricanes Hugo and Irma) resulted in only short-term market volatility and, thus far, prospects for tax cuts has certainly trumped (pun intended) the threat of a nuclear strike from North Korea. Economic data released during the quarter was mixed. The third estimate of Second Quarter GDP growth came in at 3.1%, compared to 1.2% for First Quarter 2017 and average GDP growth of 1.9% and 1.6% in 2015 and 2016, respectively. According to

Amazon’s (AMZN) announcement on the morning of June 16, 2017 that it had entered into an agreement to acquire Whole Foods Market (WFM) for $42 per share in an all-cash transaction valued at $13.7 billion was positively received by shareholders of both companies. WFM shares ended the day up 29.1% (above the acquisition price in anticipation of a competing/higher offer) with AMZN shares closing 2.4% higher as the market cheered the e-commerce giant’s aggressive and decisive action. Remarkably, Amazon’s market capitalization increased by over $11 billion on the announcement, nearly as much as the entire price tag for Whole Foods Market whose acquisition boosted AMZN shares in the first place! Share prices have retreated a bit since then, with WFM

If the dual mandate of the FOMC is full employment and stable price (i.e. fighting inflation) and the FOMC’s preferred measure of inflation, the core personal consumption expenditures price index (“PCE”) is tipping downward by their own admission, why is the FOMC continuing on their tightening path? Well, the FOMC’s Philips Curve models say so. Named after a British economist named A.W. Philips, the Philips Curve suggests that there is an inverse relationship between unemployment and inflation. As we approach what the FOMC considers full employment, the members expect that inflation will start to pick up. In anticipation, the FOMC has embarked on a path of reducing monetary accommodation. The Committee has raised the target range for the federal funds

Politics provided plenty of entertainment during the quarter but looking back on the past three months, nothing much has really happened and the effect of politics on the financial markets have been ephemeral. President Trump firing FBI director Comey might have created a media firestorm and a sharp one-day drawdown in the equity markets but it may end up being a big fat “nothing burger” for the financial markets. Ditto for “Trumpcare” as the Senate’s version, fomented in secret, may not have enough Republican votes to pass and the President’s tax plan, detailed in all of one page. Economic data released during the quarter was somewhat weak, headlined by an “advance” estimate for First Quarter 2017 GDP growth of just

Last Friday, e-commerce juggernaut Amazon announced an agreement to acquire Whole Foods Market in an all-cash transaction valued at $13.7 billion. Whole Foods Market generated sales of nearly $16 billion in 2016 across more than 460 stores in the U.S., Canada and the U.K., which represents an estimated 2.5% share of the entire grocery industry. Share prices of competing grocers and retailers selling grocery items unsurprisingly fell on this news, given Amazon’s disruptive nature and willingness to forgo immediate risk-adjusted profits in its indomitable quest for growth and greater market share; the world’s largest grocery retailer Kroger was down 9.2%, which follows the prior day’s 18.9% decline on lower guidance. A bit more surprising was the negative market reaction by