Womack Weekly Commentary
February
21, 2017
The Markets
Up!
Four
major U.S. benchmark stock indices closed at record highs for four consecutive
days during Valentine’s Day week, reported Financial
Times (FT).
To
date, positive corporate earnings and robust investor confidence have offset
fiscal and political uncertainty and helped push U.S. stock markets higher,
said sources cited by FT. With 82 percent of companies in the Standard & Poor’s
500 Index reporting, corporate earnings are up 4.6 percent for the fourth
quarter of 2016, and the Investors Intelligence Advisors Sentiment
survey showed bullishness at a 12-year high last week, according to CNBC.com.
While
bullish performance is welcome by stock investors, a Barron’s article titled, ‘Memo to Investors: What Goes Up Must Come
Down,’ listed the responses of traders at a firm whose chief market strategist
asked:
“In
order to stay long U.S. equities, you have to believe...what? Here are some
answers: Trump’s recent troubles are just the typical pains of any new
administration. The Federal Reserve hikes rates twice, not three times, in
2017, and the yield on 10-year Treasuries stays at or below 3 percent. Oil
prices remain stable. The Street, for once, is too pessimistic on earnings, but
since analysts already forecast profit growth of 10.5 percent in 2017 and 11.7
percent in 2018, lower taxes must goose growth.
To
this list, [the chief strategist] added the following: Trump doesn’t introduce
overtly protectionist policies. U.S. growth stays in the 2 percent to 3 percent
range until Trump’s economic agenda passes Congress. And no geopolitical event
either increases global energy prices or dampens U.S. consumer confidence.”
Stock
markets may be highly valued, but the Conference
Board Leading Economic Index, which was designed to determine highs and
lows in the business cycle, indicates the U.S. economy is doing well. The index
increased for three consecutive months (November through January). The
Conference Board’s director of business cycles and growth research, Ataman
Ozyildirim, said, “The January gain was broad based among the leading
indicators. If this trend continues, the U.S. economy may even accelerate in
the near term.”
Data as of 2/17/17
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500
(Domestic Stocks)
|
1.5%
|
5.0%
|
22.0%
|
8.5%
|
11.6%
|
4.9%
|
Dow Jones Global ex-U.S.
|
0.8
|
5.6
|
17.4
|
-1.4
|
1.9
|
-1.1
|
10-year Treasury Note (Yield
Only)
|
2.4
|
NA
|
1.8
|
2.7
|
2.0
|
4.7
|
Gold (per ounce)
|
0.7
|
6.8
|
2.3
|
-2.3
|
-6.4
|
6.3
|
Bloomberg Commodity Index
|
-1.4
|
0.7
|
15.9
|
-12.8
|
-9.6
|
-6.2
|
DJ Equity All REIT Total
Return Index
|
0.2
|
2.1
|
19.6
|
11.0
|
10.9
|
4.1
|
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.
things you didn’t know your cat wanted. Cat wine didn’t win the first Pet Care Innovation
Prize – that went to a dishwasher-safe bowl that connects to the pet owner’s
phone and Wi-Fi – but the product has been in the news. Hostilities appear to have
broken out between competing start-up companies that make faux wine for cats
(and a few faux wines for discriminating dogs). The New York Times reported:
“But
already the company that brought its products to market first…‘the original cat
winery’ – is accusing its newer competitor…of being a copycat…Both have come up
with clever names for their products: For $11.95, people can buy Fluffy an
8-ounce bottle of Catbernet or Pinot Meow…Or for $14.95, they can pour 12
ounces of Meow & Chandon…Since alcohol can harm cats, these products are
essentially catnip water, which can make a cat loopy and an owner happy. But
based on a wine tasting I conducted at a local cat cafe-slash-adoption center,
the products are primarily catnip for the owners: The shelter cats did not like
wines from either company – only two of them indulged – but the people visiting
the tastings loved the concept.”
The
challenge for companies that want cats to enjoy their wines, according to data
from National Geographic, is the
active ingredient in catnip – the oil found on catnip’s stems and leaves – functions
as a pheromone. While humans have ingested catnip for years in teas that assist
digestion or reduce tension, cats prefer to smell the stuff. That could make
the bouquet of cat wine quite important. Next on the docket for the cat wine
start-ups: products for the next generation – kittens.
If
cat wine sounds over-the-top to you, ponder this: One of the cat wine start-ups
sold half of a million dollars worth of pet wines last year.
Weekly Focus – Think About It
“Stories
matter. Many stories matter. Stories have been used to dispossess and to
malign, but stories can also be used to empower and to humanize. Stories can
break the dignity of a people, but stories can also repair that broken dignity.
--Chimamanda
Ngozi Adichie, Nigerian novelist
Best regards,
Womack Investment Advisers,
Inc.
WOMACK
INVESTMENT ADVISERS, INC.
Oklahoma / Main Office: 1366 E. 15th Street - Edmond, OK 73013
California Office: 4660 La Jolla Village Dr., Ste. 500 - San Diego, CA 92122
Phone (405) 340-1717 - Toll Free (877) 340-1717
Oklahoma / Main Office: 1366 E. 15th Street - Edmond, OK 73013
California Office: 4660 La Jolla Village Dr., Ste. 500 - San Diego, CA 92122
Phone (405) 340-1717 - Toll Free (877) 340-1717
Website: www.womackadvisers.com
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*
These views are those of Peak Advisor Alliance, and not the presenting
Representative or the Representative’s Broker/Dealer, and should not be
construed as investment advice.
*
This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance 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 indices 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.
*
Consult your financial professional before making any investment decision.
*
Stock investing involves risk including loss of principal.
*
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Sources:
https://www.ft.com/content/1bb7875e-f488-11e6-95ee-f14e55513608 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-21-17_FinancialTimes-US_Economy_Props_Wall_Street_Rally_as_Investors_Wait_on_Trump_Policies-Footnote_1.pdf)
http://www.barrons.com/articles/memo-to-investors-what-goes-up-must-come-down-1487399135?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-21-17_Barrons-Memo_to_Investors-What_Goes_Up_Must_Come_Down-Footnote_4.pdf)
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