Weekly Market
Commentary
July 24,
2017
The Markets
Do we have central banks to thank?
Low
interest rates, accommodative monetary policy, and improving economic growth
have helped stock markets around the world reach record highs, reports Barron’s:
“…a
look around the globe shows the surge of the U.S. market to new peaks to be
anything but unique. Major [markets] in Europe and Asia also have been setting
records. Even in South Korea, the Kospi closed at a new peak and is up 25
percent from its 52-week low last year, as the global technology rally has
proved to be more powerful than the threat of a nuclear-missile launch from
North Korea. Last week also saw a record close in the S&P BSE Sensex in
India. Japan’s Nikkei is up 25 percent from last August and near a 52-week high
(albeit still down 48 percent from its 1989 bubble peak). The Shanghai
Composite is a relative laggard, with a 9.6 percent gain from its August lows,
bolstered by a 3.7 percent jump over the past five weeks.”
Eventually,
central banks are expected to tighten monetary policy by raising interest rates
and reducing the size of their balance sheets and that could affect markets. The
U.S. Federal Reserve released its Policy
Normalization Principles and Plans back in 2014. Last month, Chair Janet
Yellen indicated the Fed currently intends to begin normalizing policy during
2017.
U.S. monetary policy isn’t the only phenomenon investors
may want to keep an eye on.
Fiscal
policy (the steps a government takes to influence its country’s economy) deserves
some attention, too. The United States will, once again, hit its legal spending
limit (the debt ceiling) this fall. U.S.
News reported, “Were the United States to hit its borrowing limit – and
thus have to start missing payments and stiffing creditors – there's no telling
the exact consequences, but they wouldn't be good.”
The
bond market does not appear to be confident fiscal policy will proceed
smoothly. Barron’s reported, “Yields
on T-bills that mature in mid-to-late October jumped relative to surrounding
maturities, a sign that the money market saw a risk – however slight – of not
getting paid on time.”
Data as of
7/21/17
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic Stocks)
|
0.5%
|
10.4%
|
14.2%
|
7.8%
|
12.9%
|
4.8%
|
|
Dow Jones Global ex-U.S.
|
0.8
|
16.0
|
17.2
|
0.1
|
6.5
|
-1.2
|
|
10-year Treasury Note (Yield Only)
|
2.2
|
NA
|
1.6
|
2.5
|
1.4
|
5.0
|
|
Gold (per ounce)
|
1.5
|
7.7
|
-5.5
|
-1.6
|
-4.5
|
6.2
|
|
Bloomberg Commodity Index
|
0.4
|
-5.2
|
-2.3
|
-13.8
|
-10.4
|
-6.9
|
|
DJ Equity All REIT Total
Return Index
|
0.7
|
5.9
|
-1.4
|
8.7
|
10.1
|
6.4
|
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.
So, here’s another college conundrum:
College is a hot topic. College is a
hot topic. In recent years, pundits have debated whether students should attend
college or skip it and start their own companies. The Thiel Fellowship, founded
by tech entrepreneur Peter Thiel, offers students $100,000 to do just that.
For
students who choose college, much has been made about which degrees will pay
off. Some argue liberal arts degrees lack value, and technical instruction is
the real ticket to success. Meanwhile, technology company leaders have reported
liberal arts are essential because “they train students to thrive in
subjectivity and ambiguity, a necessary skill in the tech world where few
things are black and white.”
College
is also known for changing the way students think. A new survey indicates it
may alter their culinary perspectives. The
Economist commissioned a poll to see if residence, income, education, or
political affiliation has an effect on food preferences and, guess what?
College and post graduate work may expand students’ gustatory preferences and
change their eating habits! No, they don’t develop an unhealthy obsession with
ramen noodles, boxed mac and cheese, or free food (usually). The survey found:
·
People with post graduate
degrees dine out more frequently – often weekly – than people with high school
diplomas.
·
Post grads also
tend to eat Indian foods, like curries, more often than people with high school
diplomas.
·
College grads are
more likely than non-college grads to have eaten sushi within the past year.
·
College grads are
also more likely than non-college grads to know what prosciutto is and to have
eaten it recently.
As
it turns out, the great equalizer was Mexican food. A majority of Americans
have eaten Mexican food during the past year, regardless of educational
attainment.
Weekly
Focus – Think About It
“Peanut
butter and jelly in the same jar. I don't understand that. I mean, I'm lazy but
I'd like to meet the guy that needs that. This guy must be thinking, "I
could go for a sandwich, but I'm not gonna open TWO jars. I can't be opening
and closing all kinds of jars and cleaning WHO KNOWS how many knives.”
--Brian Regan, American comedian
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:
http://www.barrons.com/articles/t-bill-yields-edge-up-on-debt-ceiling-anxieties-1500703751 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-24-17_Barrons-T-Bill_Yields_Edge_Up_on_Debt-Ceiling_Anxieties-Footnote_1.pdf)
https://www.economist.com/blogs/graphicdetail/2017/07/daily-chart-12 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-24-17_TheEconomist-In_America_You_are_What_You_Eat-Footnote_8.pdf)
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