Womack
Weekly Commentary
July 2,
2018
The
Markets
There’s a bear in
China – and it’s not a panda.
The Shanghai Stock Exchange (SSE) Composite
Index, which reflects the performance of all shares that trade on the Shanghai
Stock Exchange, dropped into bear market territory last week, reported CNBC. The Index has fallen more than 20
percent from its previous high. It appears some investors saw an opportunity and
bought the dip since the SSE Index bounced higher last Friday, gaining more
than 2 percent.
Slower economic growth and rising trade
tensions were responsible for much of the red ink in China, reported Barron’s, but the Chinese government may
be playing a role, too:
“What’s got global market watchers worried is
that China’s stocks are sliding in tandem with its currency, the renminbi or
yuan…That suggests China is using the exchange rate as a weapon. ‘The most
effective way for China to retaliate [against] rising U.S. tariffs is to weaken
the yuan,’ according to the July Bank Credit Analyst. That could roil financial
markets, however. The dual declines in China’s equity market and currency are
raising concerns of a repeat of 2015. Treasury strategists at NatWest Markets
recall that the drop in the yuan that summer sparked severe equity market
losses, including a 10.5 percent correction in the S&P 500.”
That may explain, in part, why U.S. Treasury
bills were so popular last week, although it probably didn’t hurt the yield on
short-term Treasuries was roughly equivalent to the dividends paid by the
Standard & Poor’s 500 Index.
The coming weeks may
deliver more excitement than Fourth of July fireworks.
Data as of 6/29/18
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic Stocks)
|
-1.3%
|
1.7%
|
12.3%
|
9.7%
|
11.0%
|
7.8%
|
|
Dow Jones Global ex-U.S.
|
-1.1
|
-4.9
|
4.9
|
2.9
|
3.8
|
0.5
|
|
10-year Treasury Note (Yield Only)
|
2.9
|
NA
|
2.3
|
2.3
|
2.5
|
4.0
|
|
Gold (per ounce)
|
-1.5
|
-3.6
|
0.6
|
2.1
|
0.1
|
3.0
|
|
Bloomberg Commodity Index
|
0.1
|
-0.9
|
7.5
|
-4.6
|
-7.0
|
-9.3
|
|
DJ Equity All REIT Total Return Index
|
0.9
|
1.3
|
4.9
|
9.4
|
9.0
|
8.3
|
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.
from asia with love. Sometimes the hottest
trends in other regions of the world are similar to those in the United States
and sometimes they’re very different. Here are three recent chapters in the
book of Asian cultural trends.
Improving
your future wife’s ROI. Single men in the Land of the Rising Sun are trying to
increase their value on the marriage market by taking parenting classes. The lessons
include developing empathy for future spouses by wearing pregnancy suits. The Atlantic reported, “The man in the
traditional kimono is having difficulty…The weight of the belly strains his
back. Simply walking around the room – a party room in a Tokyo condo building –
is more like lumbering. Lying down and getting up again is a struggle. The rest
of the men in the Ikumen class laugh as he tries to adjust to the new reality.”
Shopaholics
rejoice. ‘Shopstreaming’ is a little bit e-commerce and a little bit live
streaming, reports Trendwatching
Quarterly. “Asians are social shoppers – they rely on social media
recommendations for their purchase decisions. For many, the ability to talk to
sellers and buyers can build trust and allay fears about counterfeit goods. In
Southeast Asia, 30 percent of e-commerce sales are started on social media and
completed in messaging apps…”
It’s
not just puppy love. Newly minted middle classes in developing nations are
turning to pets for comfort and companionship. In emerging markets in the Asia
Pacific region, Spire Research
reports, “Changes in consumer lifestyles and rising disposable income are
driving acceptance for pets and boosting the entire pet-related industry along
the way.”
Trends are entertaining. As in any industry,
they also can help business owners unearth expansion opportunities and help asset
managers discover companies with potential.
Weekly
Focus – Think About It
“I learned to
make my mind large, as the universe is large, so that there is room for
contradictions.”
--Maxine Hong Kingston, Chinese American
author
Best regards,
Womack
Investment Advisers, Inc.
WOMACK INVESTMENT ADVISERS,
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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:
https://www.barrons.com/articles/why-stocks-are-losing-out-to-cash-1530316991 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-02-18_Barrons-Why_Stocks_are_Losing_Out_to_Cash-Footnote_3.pdf
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