Weekly Market
Commentary
February 6,
2017
The Markets
U.S. stock markets were unsettled last week.
President
Trump's executive order banning travel from seven predominantly Muslim
countries to the United States for 90 days, in tandem with some disappointing
earnings reports, inspired turmoil and uncertainty that helped push U.S. stock markets
lower early in the week. The Dow Jones Industrial Average dropped below 20,000.
Mid-week,
markets remained sanguine after the Federal Reserve left interest rates
unchanged. An economist cited by Barron’s
said:
“[The
Federal Reserve] left open the door to hike rates further should the trend in
inflation accelerate while also maintaining the option to hold rates steady for
an extended period. I expect the minutes to be released in a few weeks will
show a more wide ranging debate than that indicated by the policy statement,
but the clear lack of visibility on key trade, tax, spending, and regulatory
initiatives argued for a well-scrubbed statement.”
Late
in the week, markets rallied when the Bureau of Labor Statistics delivered a
reasonably strong jobs report. The Boston
Globe wrote, “…employers added a healthy 227,000 workers to their payrolls
in January. But, despite a surge of local minimum-wage increases in states
across the country, wage growth was meager.”
Financial
shares gained on Friday. The Washington
Post reported market optimism returned after The Wall Street Journal published an interview with Gary Cohn,
White House Economic Council Director. Cohn indicated President Trump planned
to sign executive orders preparing the way to dismantle Dodd-Frank reforms and
limit other regulations affecting the financial industry.
The Dow finished the week just above 20,000.
Data as of
2/3/17
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic Stocks)
|
0.1%
|
2.6%
|
20.1%
|
9.7%
|
11.3%
|
4.7%
|
|
Dow Jones Global ex-U.S.
|
0.3
|
4.3
|
15.3
|
-0.1
|
1.8
|
-1.0
|
|
10-year Treasury Note (Yield Only)
|
2.5
|
NA
|
1.9
|
2.6
|
2.0
|
4.8
|
|
Gold (per ounce)
|
2.6
|
4.8
|
7.4
|
-1.3
|
-6.9
|
6.5
|
|
Bloomberg Commodity Index
|
-0.1
|
0.5
|
15.3
|
-11.4
|
-9.6
|
-6.1
|
|
DJ Equity All REIT Total
Return Index
|
0.8
|
0.7
|
13.4
|
12.5
|
10.2
|
4.2
|
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.
does college open doors? A new study examined how college affects Americans’
social mobility by cross-referencing data from the Department of Education (from
1999-2013) with 30 million tax returns. The researchers looked at the earnings
of graduates from various colleges and how graduates’ earnings varied relative
to parental income. The Economist
described some of the findings:
“…some
colleges do a better job of boosting poor students up the income ladder than
others. Previously, the best data available showed only average earnings by
college. For the first time, the entire earnings distribution of a college’s
graduates – and how that relates to parental income – is now known.
These
data show that graduates of elite universities with single-digit admissions
rates and billion-dollar endowments are still the most likely to join the top 1
percent (though having wealthy parents improves the odds). And despite recent
efforts to change, their student bodies are still overwhelmingly wealthy…
…legacy
admissions, which give preferential treatment to family members of alumni,
exacerbate the imbalance. Of Harvard’s most recently admitted class, 27 percent
of students had a relative who also attended. There’s evidence that this system
favors the already wealthy. MIT and the California Institute of Technology, two
elite schools with no legacy preferences, have much fewer students who hail
from the ranks of the super-rich.”
The
top colleges by mobility rate (students moving from the bottom to the top 20
percent) included: Cal State University-Los Angeles, Pace University-New York,
SUNY-Stony Brook, Technical Career Institutes, University of Texas-Pan
American, CUNY System, Glendale Community College, South Texas College, Cal
State Polytechnic-Pomona, and University of Texas-El Paso.
The
top colleges by upper-tail mobility rate (students moving from the bottom 20
percent to the top 1 percent) were: University of California-Berkeley, Columbia
University, MIT, Stanford University, Swarthmore College, Johns Hopkins
University, New York University, University of Pennsylvania, Cornell University,
and University of Chicago.
Weekly Focus – Think About It
“Oh give me a
home where the buffalo roam,
Where the deer and the
antelope play,
Where seldom is heard a
discouraging word,
And the skies are not cloudy
all day.”
--Lyrics
to Home on the Range
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
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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:
http://www.barrons.com/articles/dow-holds-on-to-20-000by-the-skin-of-its-teeth-1486188910?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-06-17_Barrons-Dow_Holds_on_to_20000-By_the_Skin_of_Its_Teeth-Footnote_2.pdf)
http://www.economist.com/news/united-states/21715735-new-data-show-joining-1-remains-unsettlingly-hereditary-skipping-class (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-06-17_TheEconomist-Skipping_Class-Footnote_7.pdf)
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