October 30,
2017
The Markets
The last
full week of October was a box full of surprises.
First, U.S. economic growth
exceeded expectations. The devastation wrought by Hurricanes Harvey, Irma, and
Maria was widely expected to stifle U.S. quarterly growth, according to NPR. The Atlanta Federal Reserve predicted 2.5 percent gross domestic
product (GDP)* growth for third quarter, down from 3.1 percent the previous
quarter. Instead, U.S. GDP grew by 3.0 percent.
In fact,
productivity has been flourishing around the globe. The Financial Times reported:
“…activity has again broken upwards
in recent weeks, with growth in the advanced economies close to the highest
rates seen since before the Great Financial Crash (GFC), apart from in the
immediate recovery phase in 2010. Furthermore, world trade volume has now
joined the recovery, and corporate expenditure on jobs and machinery is picking
up. Overall, it seems that some of the symptoms of “secular stagnation” are
beginning to fade…”
Tech companies were a sensation last
week, too. Several of the biggest firms beat earnings estimates by wide
margins, pushing share values higher, reported CNBC. Despite tech’s strong performance, the Standard & Poor’s
500 Index (S&P 500) has delivered third quarter earnings growth of 4.7
percent with more than half of companies reporting.
Earnings are lower than they
would have been without the hurricanes, according to FactSet. With insurance industry earnings excluded, the S&P
500’s earnings growth pops from 4.7 percent to 7.4 percent.
The final surprise for the week was
the doldrums. October is supposed to be the most volatile month of the year,
according to Barron’s. Instead, we’ve
experienced the calmest October since 1928.
The S&P
500 and the NASDAQ both finished last week at new all-time highs.
*GDP is the value of all goods
and services produced in a region.
Data as of 10/27/17
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard
& Poor's 500 (Domestic Stocks)
|
0.2%
|
15.3%
|
21.0%
|
9.6%
|
12.8%
|
5.3%
|
|
Dow
Jones Global ex-U.S.
|
-0.2
|
20.5
|
20.2
|
4.4
|
5.2
|
-1.2
|
|
10-year
Treasury Note (Yield Only)
|
2.4
|
NA
|
1.8
|
2.3
|
1.7
|
4.4
|
|
Gold
(per ounce)
|
-1.2
|
9.3
|
0.0
|
1.0
|
-5.8
|
4.9
|
|
Bloomberg
Commodity Index
|
0.7
|
-1.9
|
-0.4
|
-9.8
|
-9.6
|
-7.2
|
|
DJ
Equity All REIT Total Return Index
|
-1.4
|
5.8
|
9.8
|
7.5
|
10.0
|
6.2
|
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.
And the leader in biometric identification is India!
Remembering passwords, especially if you follow best practices and have unique 12-
to15-character passwords for each account, can be challenging.
Even when you follow best
practices, which many people do not, passwords are vulnerable to data breaches.
The Harvard Business Review recently
reported password insecurity is one reason businesses have been opting for
biometric technology such as:
·
Fingerprint
readers
·
Eye scanners
·
Voice recognition
systems
·
Hand geometry
For instance, in Hangzhou,
China, a “health-food concept restaurant” belonging to an American fast food
chain, relies on facial recognition software to allow diners to pay with a
smile, according to c|net.com. It’s a
lot to digest.
India is a leader in the new
technology. Ninety-nine percent of adults in the country have been enrolled in
Aadhaar, a biometric identification program that has collected the fingerprints
and iris scans of more than a billion people since 2010, according to The Economist.
When given permission, Indian government
bodies and private businesses can match the fingerprints or irises of individuals
to their unique 12-digit numbers, facilitating purchases, payments, and other
processes. The system has some glitches, though:
“Unlike reading an ID card,
checking someone’s identity through Aadhaar requires an internet connection
and, often, electricity. Ration-shop owners in out-of-the-way places are known
to march their customers to the top of a hill, roof, or tree – wherever a phone
signal can be found – to check their identity. Even then, samples seem to show
that roughly a third of authentications come back negative, an extraordinarily
high failure rate for a technology that people rely on for necessities.”
Regardless, Morgan Stanley believes “digitizing its predominantly cash-based
economy and reforming its archaic tax system” will help put India on the
economic fast track. “The country was already on a strong trajectory, but
digitization puts India's nominal GDP growth on track to compound annually by
more than 10 percent in U.S. dollar terms over the coming decade.”
Weekly
Focus – Think About It
“There is probably no pleasure
equal to the pleasure of climbing a dangerous Alp; but it is a pleasure which
is confined strictly to people who can find pleasure in it.”
--Mark
Twain, American novelist
Best regards,
Womack
Investment Advisers, Inc.
WOMACK INVESTMENT ADVISERS, INC.
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Website: www.womackadvisers.com
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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.w
*
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:
https://www.ft.com/content/fef37a88-69b3-334a-a48b-c8e691c53a8e (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/10-30-17_FinancialTimes-World_Economy_may_be_Healthier_than_the_IMF_Thinks-Footnote_3.pdf)
http://www.barrons.com/articles/stocks-surge-to-highs-as-tech-roars-again-1509158124 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/10-30-17_Barrons-Stocks_Surge_to_Highs_as_Tech_Roars_Again-Footnote_6.pdf)
https://www.economist.com/news/asia/21720609-long-they-have-mobile-signal-indias-id-system-reshaping-ties-between-state-and-citizens (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/10-30-17_TheEconomist-Indias_ID_System_is_Reshaping_Ties_Between_State_and_Citizens-Footnote_7.pdf)
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