MACRO NEWS

 

Tax reform back on Washington’s radar?
According to media reports, senior Trump administration officials and congressional leadership have agreed on an outline for significant reform of the US tax code. The framework includes lowering individual and corporate income tax rates while phasing out or doing away with popular deductions for things such as mortgage interest payments and state and local taxes. Equity markets rallied early in the week on the reports. However, late Thursday afternoon reports surfaced that congressional leaders do not expect to release a joint tax plan with the White House in September. Trump's chief economic advisor, Gary Cohn, told the Financial Times on Friday that starting next week the president’s calendar will revolve around tax reform. One criticism of Trump during the health care debate was that he did not “sell” the policy to the public. It looks as though he will seek to do so on tax reform.

 

US sanctions firms in China and Russia over North Korea
The US Department of the Treasury levied fresh economic sanctions on several Chinese firms and a Russian firm, as well as Chinese and Russian individuals, for helping supply materials to North Korea’s nuclear and ballistic missile programs. The United States seeks to interrupt the flow of hard currency that allows North Korea to acquire components from abroad.

 

Global recovery maintains strength
The synchronized global economic recovery that began about a year ago continues apace, with global purchasing managers’ indices showing that growth is holding firm in most major economies. Europe showed a strong rise in manufacturing-sector output while in the US the service sector led the way.

 

No major policy shifts expected at Fed gathering
Several historic monetary policy moves have been unveiled at the annual gathering of central bankers hosted by the Federal Reserve Bank of Kansas City in Jackson Hole, Wyoming. But this year looks to be less momentous, with the European Central Bank going out of its way to tamp down anticipation of an announcement from ECB president Mario Draghi on tapering the bank's asset purchase program. US Federal Reserve chair Janet Yellen spoke on financial stability matters, but did not touch on monetary policy.

 

Gulf Coast refineries batten down hatches ahead of Harvey
Hurricane Harvey is heading for the US Gulf coast, an area that is home to numerous refineries and offshore drilling rigs. Weather-related disruptions are typically short-term in nature, barring significant storm damage, but forecasts call for as much as 30 inches of rain and a storm surge of between 6 and 12 feet in what is expected to be the first major hurricane to hit the US mainland since 2005. Oil and gasoline markets are little changed ahead of the storm's landfall.

 

Report says US considering ban on Venezuelan debt trading
According to the Wall Street Journal, the US government is considering a ban on the trading of some Venezuelan debt by US-regulated financial institutions. Bonds issued by the Venezuelan government and the state-owned oil giant PDVSA could be subject to the freeze, the report says.

 

EARNINGS NEWS

 

With 475 of the 500 members of the S&P 500 Index having reported, second quarter earnings are expected to increase 12% compared with the year-ago quarter. Stripping out the energy sector, earnings growth is seen at 9.4%. Revenues overall are expected to increase 5.1%, 4.2% excluding energy.

 

THE WEEK AHEAD

 

Date

Country/Area

Release/Event

Mon, 28 Aug

United Kingdom

Markets closed for late summer bank holiday

Mon, 28 Aug

United States

Wholesale inventories

Tue, 29 Aug

US

Case-Shiller home price index

Wed, 30 Aug

eurozone

Economic sentiment index

Wed, 30 Aug

US

Gross domestic product

Thu, 31 Aug

Japan

Industrial production

Thu, 31 Aug

China

Purchasing managers' indices

Thu, 31 Aug

eurozone

Unemployment rate, consumer price index

Thu, 31 Aug

US

Personal income/spending, core Personal Consumption  Expenditures index

Fri, 1 Sep

global

Manufacturing PMI

Fri, 1 Sep

US

Employment report

 

 

 

 

Stay focused and diversified
In any market environment, we strongly believe that investors should stay diversified across a variety of asset classes. By working closely with your financial advisor, you can help ensure that your portfolio is properly diversified and that your financial plan supports your long-term goals, time horizon and tolerance for risk. Diversification does not guarantee a profit or protect against loss.

 

The information included above as well as individual companies and/or securities mentioned should not be construed as investment advice, a recommendation to buy or sell or an indication of trading intent on behalf of any MFS product.

 

Securities discussed may or may not be holdings in any of the MFS funds. For a complete list of holdings for any MFS portfolio, please see the most recent annual, semiannual or quarterly report. Full holdings are also available on the individual Fund Summary tab in the Products section of mfs.com.

 

Past performance is no guarantee of future results.

 

Sources: MFS research; The Wall Street Journal; The Wall Street Journal Online; Bloomberg New; Financial Times; Forbes.com; CNNMoney.com; NBCNews.com.

 

This content is directed at investment professionals only.


37162.34