August 21, 2017
The Markets
Here, there, and everywhere…
Markets around the world appear to be benefiting from
global economic recovery.
After
pointing out the United States’ economy is the heart of the global financial
system, Barron’s reported:
“The
Standard & Poor’s 500 index has tirelessly amassed 30 record closes this
year, but is up just 1.2 percent since March 1. Meanwhile, nearly every foreign
stock market has sprinted ahead…We wrote on March 25 about how a global
recovery should goose smaller, fresher bull markets abroad. By now, it is firmly
becoming the consensus view – metals are rallying, with copper up 18 percent
this year; the MSCI All Worlds Index has risen for eight straight months.”
Emerging
markets haven’t performed too shabbily either. Through the end of last week, the
MSCI Emerging Markets Index was up 22.88 percent year-to-date. Franklin Templeton’s Mark Mobius wrote
improved performance in emerging markets is the result of “…encouraging
economic data in China, investor inflows, and corporate earnings growth.”
So, global stock markets have been delivering relatively
robust performance this year.
What have bonds been up to? They’ve gained value
year-to-date, too.
Bond
markets continue to tell a different story than stock markets. The Federal
Reserve raised its benchmark interest rate for the third time in June. In
theory, interest rates should be moving higher, yet the yield on 10-year
Treasury bonds was lower (2.19 percent) at the end of last week than it was at
the start of the year (2.45 percent).
Data as of
8/18/17
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic Stocks)
|
-0.7%
|
8.3%
|
10.9%
|
7.2%
|
11.3%
|
5.3%
|
|
Dow Jones Global ex-U.S.
|
0.3
|
15.4
|
12.5
|
0.2
|
4.8
|
-0.1
|
|
10-year Treasury Note (Yield Only)
|
2.2
|
NA
|
1.5
|
2.4
|
1.8
|
4.6
|
|
Gold (per ounce)
|
0.8
|
11.8
|
-4.0
|
0.0
|
-4.3
|
7.0
|
|
Bloomberg Commodity Index
|
-0.6
|
-4.9
|
-4.1
|
-12.7
|
-10.4
|
-6.4
|
|
DJ Equity All REIT Total
Return Index
|
0.3
|
4.1
|
-0.8
|
7.6
|
9.5
|
6.5
|
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.
Have you tried taco mode? In March, the Harvard
Business Review (HBR) offered some ideas about innovation in America. It’s
a topic that deserves some attention as “…recent data suggests that innovation is getting harder and the pace of
growth is slowing down. A major challenge in business and policy spheres is to
understand the environments that are most conducive to innovation.”
One place to look for examples of innovation is
the sharing economy where innovations
often echo the late 1800s. Back then, according to HBR, innovation
primarily occurred outside of companies. In contrast, today, the majority of
patents go to inventors who are associated with companies.
Let’s take a look at a couple
recent ideas that may or may not gain traction:
·
Taco Mode. Ridesharing
– arranging for a ride via an app – has changed transportation and become one
of the industry’s fastest growing market segments, according to data from Statista reported by TechCrunch.com.
The latest rideshare innovation is Taco
Mode. Hungry passengers can request rides that include stops at a fast food
chain drive-throughs. One company executive described the option as ‘inverse
delivery.’ The hungry are delivered to the food rather than vice versa.
·
Just-in-time watch rentals. The demand for Swiss watches has fallen off in the
United States. The Federation of the Swiss Watch Industry reported exports to
the United States dropped steadily (-9.6 percent) between 2015 and June 2017.
Could the culprit be luxury watch rentals?
Barron’s Penta reported luxury watch
rentals are a relatively recent sharing-economy innovation. For a monthly
membership fee of $149 to $999, watch lovers have opportunities to “…access
experiences and embark on journeys otherwise unattainable – without having to
spend a major chunk of their savings.”
·
Neighborhood networks. It’s a straightforward concept: A social network that
connects neighbors so they can share tools, leftovers, playgroups, and more. It’s
big in Brazil, according to Forbes. One
company has more than 140,000 registered users across 3,800 cities.
But, anyone who has ever watched Homer
Simpson borrow Ned Flanders’ tools and not return them understands why some
aspects of this idea may not catch on.
What innovations would you like to see in the sharing
economy?
Weekly
Focus – Think About It
“One
word sums up our country’s achievements: miraculous. From a standing start 240
years ago – a span of time less than triple my days on earth – Americans have
combined human ingenuity, a market system, a tide of talented and ambitious
immigrants, and the rule of law to deliver abundance beyond any dreams of our
forefathers.”
--Warren Buffett, Oracle of Omaha
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 email with their email 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 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.
*
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:
http://www.barrons.com/articles/investors-chasing-faster-growth-look-abroad-1503109144 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-21-17_Barrons-Investors_Chasing_Faster_Growth_Look_Abroad-Footnote_1.pdf)
https://www.msci.com/end-of-day-data-search (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-21-17_MSCI-End_of_Day_Index_Data_Search-Footnote_2.pdf)
Comments
Post a Comment