Market Digest \u2013 Week Ending 06\/09\/2017\r\nStocks, bonds and currencies were choppy, but finished the week little changed. As expected, the Fed raised the short-term interest rate target by 0.25% and suggested the plan includes one more hike later this year. It also started to lay out plans to slowly reduce its $4.5 trillion balance sheet. Jeff Immelt stepped down as CEO of GE and Amazon announced it will purchase Whole Foods, igniting a storm of speculation on what it may mean long term for the grocery business and retail overall.\r\n\r\nWeekly Returns:\r\nS&P 500: 2,433 (+0.1%)\r\nFTSE All-World ex-US: (+0.1%)\r\nUS 10 Year Treasury Yield: 2.15% (-0.05%)\r\nGold: $1,253 (-1.1%)\r\nEUR\/USD: $1.120 (-0.0%)\r\n\r\nMajor Events:\r\n\r\n \tMonday \u2013 GE CEO Jeff Immelt announced he would step down and will be replaced by the company\u2019s healthcare chief, John Flannery\r\n \tMonday \u2013 Online lender SoFi submitted an application for a bank charter\r\n \tTuesday \u2013 Saudi Arabia said it would cut exports to the United States to try to reduce a global oil glut\r\n \tWednesday \u2013 The Fed raised short-term interest rates by 0.25%\r\n \tThursday \u2013 Nestle was said to be looking to sell its U.S. candy business\r\n \tFriday \u2013 Amazon said it would acquire Whole Foods for $13.7 billion. The move spurred an immediate drop in share prices for other grocers\r\n \tFriday \u2013 President Trump said he will \u201ccancel\u201d Obama\u2019s more open stance on Cuba, including returning to a ban on individually planned travel\r\n\r\nOur Take\r\nAs expected, the Fed raised rates for the third time in the last nine months. The federal funds target rate is now 1% to 1.25%. This is good for many banks who will likely start to make more money on deposits. More of them may choose to start paying their customers interest, but they will be slow to do so.\r\n\r\nWhile there is much focus on the short end of the interest rate yield curve, it is interesting to note that rates on the long end of the curve are down this year. The 10-year Treasury yield is just 2.15%, making the overall yield curve quite flat. Historically, this has been a bearish signal as banks have less incentive to lend when short rates are similar to or higher than long rates. This behavior has historically favored growth stocks that tend to raise capital with stock rather than debt. It is possible this helps explain why growth stocks have fared better this year, but yields for corporate debt remain very low, which is good for value stocks as long as they stay that way.\r\n\r\nRegarding Amazon\u2019s purchase of Whole Foods, we think the market\u2019s immediate reaction to sell companies like Wal-Mart, Costco and CVS will likely prove overblown. No doubt Amazon has big plans for its biggest (by a lot) ever acquisition, and the deal will boost its already superior logistics operations. But at least for the next several years, it is hard to see a big impact on traditional grocers since Whole Foods has always been a niche market. More so than other stores, part of the point of shopping at Whole Foods is actually going to Whole Foods. Investors are extremely dour on most everything retail related except Amazon these days, so the natural reaction was to sell. Time will tell if sentiment has become too extreme \u2013 it will be interesting.