Weekly Market
Commentary
August 14,
2017
The
Markets
North Korea
may be a little country, but it can churn up big trouble.
The possibility that verbal
hostilities between the United States and North Korea could trigger
geopolitical conflict had investors on the run last week. In the United States,
the Standard & Poor’s 500 Index fell by 1.4 percent, the Dow Jones
Industrial Average lost 1.1 percent, and the NASDAQ Composite finished 1.5
percent lower.
Financial Times explained:
“The sell-off came as U.S.
President Donald Trump escalated the war of words against the North Korean
regime’s accelerated [program] of nuclear testing. Mr. Trump tweeted on Friday,
“military solutions are now fully in place, locked and loaded, should North
Korea act unwisely.”
While major U.S. indices headed
south, the CBOE Volatility Index (VIX) – also known as Wall Street’s fear gauge
– headed north. The VIX, which has been flirting with historic lows for much of
the year, rose 44 percent in a single day, reported CNBC.
Stock markets in Europe and Asia
were also affected by the saber rattling. National indices across Europe
suffered weekly losses of 2.2 percent (Sweden) to 3.5 percent (Spain),
according to Barron’s. In the
Asia-Pacific region, India’s Sensex 30 lost 3.4 percent and South Korea’s Kospi
was down 3.2 percent for the week.
Geopolitical concerns
overshadowed some important economic news in the United States. Inflation, as
measured by the U.S. Consumer Price Index, rose very little in July. In fact,
consumer prices have been soft for five straight months, reported MarketWatch. Persistently low inflation
could affect the Federal Reserve’s plan to raise interest rates this year. The
Fed’s goal is 2 percent inflation.
Data as of 8/11/17
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard
& Poor's 500 (Domestic Stocks)
|
-1.4%
|
9.0%
|
11.7%
|
8.0%
|
11.7%
|
5.3%
|
|
Dow
Jones Global ex-U.S.
|
-1.6
|
15.1
|
12.7
|
0.5
|
4.9
|
-0.5
|
|
10-year
Treasury Note (Yield Only)
|
2.2
|
NA
|
1.6
|
2.4
|
1.7
|
4.8
|
|
Gold
(per ounce)
|
2.3
|
11.0
|
-5.1
|
-0.5
|
-4.5
|
6.8
|
|
Bloomberg
Commodity Index
|
0.5
|
-4.4
|
-0.3
|
-13.1
|
-10.0
|
-6.7
|
|
DJ
Equity All REIT Total Return Index
|
-2.1
|
3.8
|
-2.0
|
8.2
|
9.6
|
8.7
|
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.
are electric engines the tortoise competing with the
combustion engine’s hare? In the late 1800s, the Paris-Rouen race
for horseless carriages included 102 vehicles fueled by steam, petrol,
electricity, compressed air, and hydraulics, reports The Economist. Not a single electric engine made it to the starting
blocks. (The internal combustion engine won.)
Oh, how
times have changed!
The International Energy Agency’s Global EV
Outlook 2017 reported:
“New registrations of electric cars
hit a new record in 2016, with over 750 thousand sales worldwide. With a 29
percent market share, Norway has incontestably achieved the most successful
deployment of electric cars in terms of market share, globally. It is followed
by the Netherlands, with a 6.4 percent electric car market share, and Sweden
with 3.4 percent. The People’s Republic of China (hereafter, “China”), France,
and the United Kingdom all have electric car market shares close to 1.5 percent.
In 2016, China was by far the largest electric car market, accounting for more
than 40 percent of the electric cars sold in the world and more than double the
amount sold in the United States.”
Financial Times reported the UBS
analysis suggests the market may be at an inflection point as the total cost of
ownership for electric vehicles may become comparable to that of combustion
engine vehicles as early as 2018 in Europe, 2023 in China, and 2025 in the
United States.
Even though their popularity is
growing, electric cars comprise a small portion of the market today. UBS expects electric cars to account for
14 percent of the global market, and more than one-third of the European auto
market, by 2025.
Weekly
Focus – Think About It
“Though most of them sit idle, America’s
car and [truck] engines can produce ten times as much energy as its power
stations. The internal combustion engine is the mightiest motor in history.”
--The Economist, August 12, 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
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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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https://www.ft.com/content/44ce541e-5e13-365a-8918-2857025b8cb0 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-14-17_FinancialTimes-S_and_P_Clocks_Worst_Week_Since_March_Despite_Fridays_Bounce-Footnote_1.pdf)
http://www.barrons.com/mdc/public/page/9_3063-economicCalendar.html (Click on U.S. & Intl Recaps, "Geopolitical
worries deflate stocks") (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-14-17_Barrons-Global_Stock_Market_Recap-Footnote_4.pdf)
https://www.economist.com/news/leaders/21726071-it-had-good-run-end-sight-machine-changed-world-death?cid1=cust/ednew/n/bl/n/20170810n/owned/n/n/nwl/n/n/NA/54751/n (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-14-17_TheEconomist-The_Death_of_the_Internal_Combustion_Engine-Footnote_7.pdf)
https://www.ft.com/content/6e475f18-3c85-11e7-ac89-b01cc67cfeec (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-14-17_FinancialTimes-Electric_Car_Costs_Forecast_to_Hit_Parity_with_Petrol_Vehicles-Footnote_9.pdf)
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