Womack Weekly Commentary
May 29,
2018
The
Markets
Geopolitical uncertainty didn’t dent U.S. stocks last
week.
Geopolitics
is the intersection of geography, economics, and politics. Last week, there
were some fine examples of the ways geopolitical events can create uncertainty.
Barron’s reported:
“President
Donald Trump began the week suggesting that a trade war with China was on hold,
before later ordering his administration to explore penalties on imported
automobiles. The president also canceled talks with North Korea. Italy’s bond
market melted down following the emergence of a Euroskeptic government, while Turkey’s
lira tumbled over concerns that President Tayyip Erdogan would take control of
its central bank, raising concerns about emerging markets.”
Uncertainty
caused major indices across Europe to finish lower last week. A majority of
Asian-Pacific indices moved south, too, as did Canadian and Mexican indices.
Despite pessimism elsewhere, investors in the United States remained unfazed and
major U.S. stock market indices finished the week higher. The Standard &
Poor’s (S&P) 500 Index was up 0.3 percent.
The
strong performance of U.S. markets last week was remarkable because the S&P
500 moved higher on news that would seem to inspire uncertainty. It was also
remarkable because U.S. stocks gained less when S&P 500 companies reported
first quarter profits were better than expected.
First
quarter’s earnings season – when companies report how profitable they were
during the first quarter – is almost over. A majority of S&P 500 companies did
better than expected, according to FactSet.
However, companies with stronger than expected earnings saw share prices
increase 0.2 percent on average, less than share prices increased last week.
During
the past five years, companies with higher-than-expected profits have realized
share price gains of 1.1 percent.
Data as of
5/25/18
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500 (Domestic Stocks)
|
0.3%
|
1.8%
|
12.7%
|
9.0%
|
10.4%
|
7.0%
|
Dow Jones Global ex-U.S.
|
-1.1
|
-1.6
|
8.9
|
2.5
|
3.5
|
0.0
|
10-year Treasury Note (Yield Only)
|
2.9
|
NA
|
2.3
|
2.1
|
2.1
|
3.9
|
Gold (per ounce)
|
1.2
|
0.5
|
3.7
|
3.2
|
-1.1
|
3.7
|
Bloomberg Commodity Index
|
0.6
|
3.1
|
8.6
|
-4.0
|
-7.2
|
-8.3
|
DJ Equity All REIT Total
Return Index
|
2.4
|
-4.3
|
0.1
|
5.7
|
6.3
|
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.
working out the bugs. There was a lot of news about new inventions last
week. Some devices appear to have potential while others have been delivering
unexpected results. Take a look at recent innovation news:
·
Droning on. Remember
the vehicles Galactic storm troopers rode into battle against the Ewoks in Star
Wars? They’re now available on Earth. Hover bikes look a lot like a super-sized
drone that can carry a person. They can travel up to 13 miles or 20 minutes, at
speeds up to 43 miles an hour, before recharging is needed.
·
Shhh. It’s listening. Smart speakers made the news last week after it was
widely reported that one had recorded a family’s conversation and sent it to someone
on their contact list. A writer for MIT
Technology Review investigated further, checking her smart speaker history.
She found:
“…in
the past several months it has also tuned in, frequently several times a day,
for no obvious reason. It’s heard me complain to my dad about something
work-related, chide my toddler about eating dinner, and talk to my husband – the
kinds of normal, everyday things you say at home when you think no one else is
listening.”
·
Diagnosed by math. There’s a new algorithm in town. The U.S. Food and Drug Administration
(FDA) just gave the thumbs-up to artificial intelligence that helps surgeons
detect wrist fractures, reported MIT
Technology Review. In fact, the FDA is “writing new rules to speed up
approvals for AI-based devices and tools.”
·
Folding wingtips. It seems like poor design, but some planes’ wingspans are too wide for
standard airport gates. Instead of asking airports to build special gates, the
Federal Aviation Administration approved folding wingtips on Friday.
We know change is constant. Adapting to change is the
challenge.
Weekly
Focus – Think About It
“Our
flag does not fly because the wind moves it. It flies with the last breath of
each soldier who died protecting it.”
--Unknown
Best
regards,
Womack Investment Advisers, Inc.
WOMACK INVESTMENT ADVISERS, INC.
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Phone (405) 340-1717 - Toll Free (877) 340-1717
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*
These views are those of Carson Group Coaching, and not the presenting
Representative or the Representative’s Broker/Dealer, and should not be
construed as investment advice.
*
This newsletter was prepared by Carson Group Coaching. Carson Group Coaching 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 indexes 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.
*
Stock investing involves risk including loss of principal.
*
Consult your financial professional before making any investment decision.
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Sources:
https://www.barrons.com/articles/dow-ticks-higher-but-beware-a-summer-storm-1527292801 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/05-29-18_Barrons-Dow_Ticks_Higher_but_Beware_a_Summer_Storm-Footnote_1.pdf
http://www.barrons.com/mdc/public/page/9_3063-economicCalendar.html (Click on U.S. & Intl Recaps, then click on "Shadows
over the financial markets") (or
go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/05-29-18_Barrons-Global_Stock_Market_Recap-Footnote_2.pdf
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