Womack Weekly Market
Commentary
The Markets
Last week, investors multi-tasked, pushing both U.S. bond
and stock markets higher.
In
March, the Federal Reserve raised the Fed funds rates for the second time in
three months. Typically, we would expect interest rates to rise and bond prices
to fall, but interest rates have been falling and bond prices have been moving
higher. Barron’s reported yields on
10-year Treasuries hit their lowest levels since the election last week.
Reuters explained there has been a shift in expectations:
“Bonds
prices have been boosted in recent weeks by reduced expectations that the
Federal Reserve will raise interest rates two more times this year, following
disappointing economic data releases. Still, Fed Vice Chair Stanley Fischer
said on Friday that two more U.S. rate increases this year remain an
appropriate plan for the Federal Reserve despite some weak recent economic
data.”
Geopolitical
anxiety continued to play a role in market performance, too, causing investors to
flee to safe havens, which contributed to bond market strength.
Geopolitics
didn’t cause U.S. stock markets to swoon, though. Barron’s reported:
“Stocks’
on-again, off-again rally was on again last week, and it took the Standard
& Poor’s 500 index to within sniffing distance of its March 1 record.
Climbing in the face of geopolitical anxiety from Paris to Pyongyang is
bullish, as is preserving the upward slope of the index’s 200-day average. But
there are signs of wavering conviction…”
That
wavering conviction is found in investors’ preference for a small group of tech
stocks, as well as more defensive sectors of the market. Through mid-April,
just 10 stocks accounted for one-half of the S&P 500’s gain during 2017.
A possible motto for 2017: Expect the unexpected.
Data as of
4/21/17
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500 (Domestic Stocks)
|
0.9%
|
4.9%
|
12.3%
|
7.9%
|
11.4%
|
4.7%
|
Dow Jones Global ex-U.S.
|
0.2
|
7.1
|
6.6
|
-1.4
|
3.1
|
-1.4
|
10-year Treasury Note (Yield Only)
|
2.2
|
NA
|
1.9
|
2.7
|
1.9
|
4.7
|
Gold (per ounce)
|
-0.2
|
10.6
|
2.6
|
-0.1
|
-4.7
|
6.4
|
Bloomberg Commodity Index
|
-2.8
|
-4.1
|
0.4
|
-15.1
|
-9.5
|
-7.0
|
DJ Equity All REIT Total
Return Index
|
0.9
|
5.4
|
11.3
|
10.9
|
11.1
|
5.0
|
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.
mobile technology: the next generation. Faster and more efficient mobile phones are on the
horizon. That’s right, 5G is almost here, according to Network World.
If
you were never quite sure what distinguished 1G from 2G, or 3G from 4G, much
less 4G from 5G, the answer depends on whom you ask (or in this case, what you
read). PC Magazine explained the
technology:
“1G
was analog cellular. 2G technologies, such as CDMA, GSM, and TDMA, were the
first generation of digital cellular technologies. 3G technologies, such as
EVDO, HSPA, and UMTS, brought speeds from 200kbps to a few megabits per second.
4G technologies, such as WiMAX and LTE, were the next incompatible leap
forward, and they are now scaling up to hundreds of megabits and even
gigabit-level speeds.”
The Economist, on the other hand, explained the benefits to users:
speed of communication. 5G is different from earlier generations of wireless
broadband because it can:
“…send
and receive signals almost instantaneously. The “latency” (i.e., the lag
between initiating an action and getting a response) that has hobbled mobile
phones will be a thing of the past. When 3G phones were the bee's knees, the
time taken for two wireless devices to communicate with one another was around
500 milliseconds. That half-second lag could make conversation frustrating. A
decade later, 4G had cut the latency to 60 milliseconds or so – not bad, but
still an age when waiting for crucial, time-sensitive data, especially from the
cloud.”
5G
mobile networks may be up and running by the time the South Korean Winter
Olympics roll around in 2018, according to The
Economist.
Weekly
Focus – Think About It
“Try putting
your iPhones down every once in a while, and look at people’s faces.”
--Amy
Poehler, Comedian
Best regards,
Womack Investment Advisers, Inc.
WOMACK
INVESTMENT ADVISERS, INC.
Oklahoma / Main Office: 1366 E. 15th Street - Edmond, OK 73013
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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/the-burt-reynolds-stock-market-1492836727?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-24-17_Barrons-The_Burt_Reynolds_Stock_Market-Footnote_3.pdf)
https://www.economist.com/news/science-and-technology/21720916-ready-or-not-5g-wireless-preparing-its-big-day-makeover-mobile-phones (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-24-17_TheEconomist-Makeover_for_Mobile_Phones-Footnote_6.pdf)
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