Weekly Market Commentary
June 26, 2017
The Markets
It
has been a very good year, so far.
Through
the end of last week, the Standard & Poor’s 500 Index posted 24 record
highs and delivered returns in the high single digits. The MSCI World ex USA
Index was up more than 11 percent, and the MSCI Emerging Markets Index gained
more than 17 percent.
After
reading those numbers, many people would assume bond markets are down for the
year. After all, stock and bond markets tend to move in different directions. Zacks explained,
“Stock and bond prices usually move in opposite
directions. When the stock market is not doing well and becomes risky for
investors, investors withdraw their money and put it into bonds, which they
consider safer. This increased demand raises bond prices. When stocks rally and
the risk seems justified, investors may move out of bonds and into stocks,
driving stock prices up further.”
That hasn’t been the case recently. Bonds have been
delivering attractive returns, too. The Bloomberg Barclay’s U.S. Aggregate Bond
Index is up 2.9 percent year-to-date, while its Global Aggregate Bond Index is
up 4.7 percent, and its Emerging Markets Aggregate Bond Index is up 5.5 percent.
So, why are stock and bond markets both showing attractive
gains for the year?
There are a number of possibilities. Zacks described one of the most
straightforward. “When stocks are doing well but investors remain skeptical
about how long they will do well, stock and bond prices can rise together. This
is because investors continue to put money in stocks but also put money into
bonds just in case the stock market drops.”
There is nothing wrong with a little skepticism.
Data as of
6/23/17
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic Stocks)
|
0.2%
|
8.9%
|
15.4%
|
7.5%
|
13.2%
|
5.0%
|
|
Dow Jones Global ex-U.S.
|
0.1
|
12.8
|
14.2
|
-1.0
|
6.1
|
-1.1
|
|
10-year Treasury Note (Yield Only)
|
2.1
|
NA
|
1.7
|
2.6
|
1.6
|
5.1
|
|
Gold (per ounce)
|
0.0
|
8.3
|
-0.5
|
-1.5
|
-4.4
|
6.8
|
|
Bloomberg Commodity Index
|
-2.0
|
-9.0
|
-9.9
|
-16.4
|
-9.4
|
-7.3
|
|
DJ Equity All REIT Total Return
Index
|
0.0
|
6.0
|
4.7
|
9.5
|
11.2
|
6.4
|
S&P 500, Dow Jones Global
ex-U.S., 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.
If you live in Norway, Denmark, Iceland, Switzerland,
or Finland, then you’re among the happiest people in the world. On the
other hand, if you reside in Sierra Leone, Bulgaria, Egypt, Palestinian
Territories, or Tunisia, you’re among the least happy, according to the United
Nation’s World Happiness Report 2017.
The
report relies on six measurements to “explain happiness differences among countries and through time.” These
include:
·
Income (GDP per capita)
·
Healthy life expectancy (Relative to other nations)
·
Social support (Having someone to count on in times of
trouble)
·
Generosity (Charitable donations)
·
Freedom (To make life choices)
·
Trust (Defined as the absence of corruption in business
and government)
While
measuring ‘happiness’ or ‘satisfaction with life’ may seem frivolous to some,
others believe it should be a cornerstone of governance. The report’s authors
explained, “Happiness is increasingly considered to be the proper measure of
social progress and the goal of public policy.”
For instance, Norway,
which is an oil-rich nation, is the happiest country in the world even though
oil prices are relatively low. The World Happiness Report 2017 suggests the country
“achieves and maintains its high happiness not because of its oil wealth, but
in spite of it. By choosing to produce its oil slowly, and investing the
proceeds for the future rather than spending them in the present, Norway has
insulated itself from the boom and bust cycle of many other resource-rich
economies.”
The United States ranks 14th in the world.
While our country’s income and healthy life expectancy remain high, keeping us
at the top of the list, other factors have caused Americans’ happiness to
deteriorate. The study found “less social support, less sense of personal
freedom, lower donations, and more perceived corruption of government and
business.” America’s issues, the report opines, are social, rather than
economic.
Weekly
Focus – Think About It
“Brigadier General Wilma Vaught
spearheaded…the Women in Military Service for America Memorial, a museum-style
memorial on the outskirts of Arlington National Cemetery…There are the
thigh-high black leather boots worn by enlisted women to protect their legs
from mosquitos before they were allowed to wear pants. The cape of a nurse
working at a frontline casualty cleaning station in World War I. Army-issue
glasses painted with red nail polish worn by the only African-American WAC unit
dispatched overseas in World War II—sent to sort letters under the motto ‘No
Mail, Low Morale.’”
-- National
Geographic, May 2017
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
P.S. Please feel free to forward this commentary
to family, friends, or colleagues. If you would like us to add them to the
list, please reply to this e-mail with their e-mail address and we will ask for
their permission to be added.
* 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 the 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.
*
To unsubscribe from the Womack Weekly Commentary please reply to this e-mail
with “Unsubscribe” in the subject line, or write us at megan@womackadvisers.com
Sources:
or go here:
https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/Fn+1.pdf
[3] https://www.msci.com/end-of-day-data-search or go here:
https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/Fn+3.pdf
[4] http://finance.zacks.com/stocks-bonds-up-same-time-7209.html (or go to: https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/When+Do+Stocks+%26+Bonds+Go+Up+at+the+Same+Time_+_+Finance+-+Zacks.pdf)
[5] https://www.bloombergindices.com/bloomberg-barclays-indices/#/ (or go to: https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/Fn+5.pdf)
Comments
Post a Comment