Womack Weekly Commentary
September 25, 2017
The Markets
Geopolitics,
what is it good for? Absolutely nothin'!
In January, Robert Kahn of the
Council on Foreign Relations wrote in Global Economics Monthly:
“Markets
showed impressive resilience in the face of a range of geopolitical shocks in
2016, but recent market moves suggest this year could be different…It should be
the year that global geopolitical risks provide the volatility in markets that
I, and many other economists, have been predicting for some time.”
Kahn may share the bemusement
of bond market prognosticators who have anticipated the end of the bull market
in bonds for years and have yet to see their predictions prove out.
So far in 2017, investor
confidence has remained impervious to geopolitical threats. Bloomberg reported, while diplomats at
the United Nations stress over North Korea’s threat to drop a hydrogen bomb,
Russia’s provocations along the borders of Eastern Europe, rising Middle East
tensions, and conflict between the United States and China in the South China
Sea, investors remain relatively sanguine.
The CBOE Volatility Index, or
VIX, which measures market expectations for near-term volatility in the
Standard & Poor’s 500 Index (S&P 500), finished below 10 on Friday. Historically,
the VIX has finished below 10 on just a few days in its history. While the very
low level of the VIX doesn’t tell us much about the future, Barron’s reports it indicates investors
are not too concerned about “what’s happening now and what has happened.”
That contention appears to be
supported by U.S. stock market performance. Despite hostile rhetoric between
the United States and North Korea last week, the S&P 500 and Dow Jones
Industrial Average both finished slightly higher.
Data as of
9/22/17
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard &
Poor's 500 (Domestic Stocks)
|
0.1%
|
11.8%
|
14.9%
|
87.9%
|
11.4%
|
5.1%
|
|
Dow Jones Global
ex-U.S.
|
0.4
|
19.4
|
15.7
|
2.0
|
4.7
|
-0.6
|
|
10-year Treasury
Note (Yield Only)
|
2.3
|
NA
|
1.6
|
2.6
|
1.7
|
4.6
|
|
Gold (per ounce)
|
-2.1
|
11.7
|
-3.3
|
2.2
|
-6.0
|
5.9
|
|
Bloomberg Commodity Index
|
-0.4
|
-3.0
|
-0.8
|
-10.6
|
-10.3
|
-7.1
|
|
DJ Equity All REIT Total Return Index
|
-2.5
|
5.4
|
0.5
|
9.8
|
9.6
|
5.9
|
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg
Commodity Index returns exclude reinvested dividends (gold does not pay a
dividend) and the three-, five-, and 10-year returns are annualized; the DJ
Equity All REIT Total Return Index does include reinvested dividends and the
three-, five-, and 10-year returns are annualized; and the 10-year Treasury
Note is simply the yield at the close of the day on each of the historical time
periods.
Sources: Yahoo! Finance, Barron’s, djindexes.com,
London Bullion Market Association.
Past performance is no guarantee of future results.
Indices are unmanaged and cannot be invested into directly. N/A means not
applicable.
it’s the ig nobel awards! On September 14, the 27th First Annual Ig Nobel Prize
Ceremony kicked off with a flight of paper airplanes.
The
winners were chosen by the publishers of the Annals of Improbable Research, which reviews, “Real research, about
anything and everything, from everywhere. Research that's maybe good or bad,
important or trivial, valuable or worthless.” The most important characteristic
of the works published is they make people laugh and think.
The
evening’s entertainment included ceremonial bows from returning Ig winners John
Culvenor, who received the 2003 Physics Prize for analyzing the forces required
to drag sheep across various surfaces, and Deborah Anderson, who received the
2008 Chemistry Prize for testing whether a dark cola is an effective
spermicide.
This
year’s winning research explored diverse and improbable ideas, including
studies entitled:
- Didgeridoo Playing as Alternative Treatment for Obstructive Sleep Apnoea Syndrome: Randomised Controlled Trial, which discovered that, “Regular didgeridoo playing is an effective treatment alternative well accepted by patients with moderate obstructive sleep apnoea syndrome.”
- Never Smile at a Crocodile: Betting on Electronic Gaming Machines is Intensified by Reptile-Induced Arousal, which showed that, “At-risk gamblers with few self-reported negative emotions placed higher average bets at the EGM after having held the crocodile when compared to the control.”
- Is That Me or My Twin? Lack of Self-Face Recognition Advantage in Identical Twins concluded that, “identical twins cannot tell themselves apart, visually.”
- On the Rheology of Cats, which explored whether a cat can be both a solid and a liquid and determined, “much more work remains ahead, but cats are proving to be a rich model system for rheological research.”
Each
of the 10 Ig Nobel winners was given 60 seconds to explain themselves before being
awarded a bust replica of a human head with a question mark on top of it, a
certificate signed by a Nobel Laureate, and one trillion Zimbabweans.
Russian-born
physicist Andre Geim was the first scientist to win both awards. He received a
2000 Ig Nobel Prize for his work using magnets to levitate frogs, and a 2010 Nobel
Prize for discovering graphene (a new form of carbon).
Weekly
Focus – Think About It
“Like a welcome summer rain, humor
may suddenly cleanse and cool the earth, the air, and you.”
--Langston Hughes,
American poet
Best regards,
Womack
Investment Advisers, Inc.
WOMACK INVESTMENT ADVISERS, INC.
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Phone (405) 340-1717 - Toll Free (877) 340-1717
Website: www.womackadvisers.com
Are you prepared for
the eventual market volatility?
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*
These views are those of Carson Group Coaching, and not the presenting
Representative or the Representative’s Broker/Dealer, and should not be
construed as investment advice.
*
This newsletter was prepared by Carson Group Coaching. Carson Group Coaching is
not affiliated with the named broker/dealer.
*
Government bonds and Treasury Bills are guaranteed by the U.S. government as to
the timely payment of principal and interest and, if held to maturity, offer a
fixed rate of return and fixed principal value.
However, the value of fund shares is not guaranteed and will fluctuate.
*
Corporate bonds are considered higher risk than government bonds but normally
offer a higher yield and are subject to market, interest rate and credit risk
as well as additional risks based on the quality of issuer coupon rate, price,
yield, maturity, and redemption features.
*
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities
considered to be representative of the stock market in general. You cannot
invest directly in this index.
*
All indexes referenced are unmanaged. Unmanaged index returns do not reflect
fees, expenses, or sales charges. Index performance is not indicative of the
performance of any investment.
*
The Dow Jones Global ex-U.S. Index covers approximately 95% of the market
capitalization of the 45 developed and emerging countries included in the
Index.
*
The 10-year Treasury Note represents debt owed by the United States Treasury to
the public. Since the U.S. Government is seen as a risk-free borrower,
investors use the 10-year Treasury Note as a benchmark for the long-term bond
market.
*
Gold represents the afternoon gold price as reported by the London Bullion
Market Association. The gold price is set twice daily by the London Gold Fixing
Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy
ounce.
*
The Bloomberg Commodity Index is designed to be a highly liquid and diversified
benchmark for the commodity futures market. The Index is composed of futures
contracts on 19 physical commodities and was launched on July 14, 1998.
*
The DJ Equity All REIT Total Return Index measures the total return performance
of the equity subcategory of the Real Estate Investment Trust (REIT) industry
as calculated by Dow Jones.
*
Yahoo! Finance is the source for any reference to the performance of an index
between two specific periods.
*
Opinions expressed are subject to change without notice and are not intended as
investment advice or to predict future performance.
*
Economic forecasts set forth may not develop as predicted and there can be no
guarantee that strategies promoted will be successful.
*
Past performance does not guarantee future results. Investing involves risk,
including loss of principal.
*
You cannot invest directly in an index.
*
Stock investing involves risk including loss of principal.
*
Consult your financial professional before making any investment decision.
*
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Sources:
http://www.barrons.com/articles/the-pros-and-cons-of-vix-the-markets-fear-gauge-1505942074
(or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/09-25-17_Barrons-The_Pros_and_Cons_of_VIX-the_Markets_Fear_Gauge-Footnote_6.pdf)
http://www.barrons.com/mdc/public/page/9_3063-economicCalendar.html?mod=BOL_Nav_MAR_other
(Click on U.S. & Intl Recaps, then "The Fed and BoJ do the
expected") (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/09-25-17_Barrons-Global_Stock_Market_Recap-Footnote_7.pdf)
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