Womack Investment Advisers

  A capital gains tax hike has been proposed. Another factor that influenced last week’s stock market decline was the proposed capital gains tax hike. Investors’ response was a bit surprising since the tax increase wasn’t really news. Ben Levisohn of Barron’s reported:   “President Joe Biden made no secret of his plan to raise capital-gains taxes on the very wealthy. It was a campaign pledge, one that got enough attention for Goldman Sachs to release a note looking at the historical impact of previous increases on the stock market. (The answer: not very much.)” According to Steve Goldstein of MarketWatch , the Goldman note reported the wealthiest U.S. households sold 1 percent of their equity assets prior to the 2013 capital gains tax increase. As a result, the S&P 500 Index experienced a short-lived loss six months prior to the tax hike and, six months after the tax hike, the Index was back in positive territory. While the long-term impact on stock markets may be r...

It wasn’t just the price of pork chops. Last week, as investors weighed the news, strong corporate earnings were offset by higher grocery prices and rising numbers of global coronavirus cases. Solid corporate earnings weighed favorably. So far, 25 percent of the companies in the Standard & Poor’s (S&P) 500 Index have reported first quarter earnings, and 84 percent said profits grew faster than expected, reported John Butters of FactSet . The blended earnings growth rate for the S&P 500 (which includes estimated earnings for companies that have not yet reported and actual earnings for companies that have) was 33.8 percent last week. For context, the 5-year average earnings growth rate (actual earnings) for the S&P 500 was 6.9 percent as of last week. It’s important to remember the impact of earnings is often muted as earnings expectations – good or bad – tend to be priced into the market long before they are reported. Inflation expectations weighed unfavorably....

  Strategists at investment bank behemoth Goldman Sachs recently noted that their economists expect U.S. GDP growth to remain above trend through the next few quarters; however, they caution that this will not necessarily translate to equally outsize gains in the stock market.   In the chart below, stock market gains for the following 3, 6 and 12 month periods are grouped by Institute for Supply Management (ISM) index values at the start of the periods.  What it shows clearly is that the best stock market gains come from good-but-not-spectacular ISM values, while the red-hot “greater than 60” ISM values are typically followed by low or even negative stock market returns.  The current ISM value is 65 – squarely in that red-hot category. 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. 100 - S...

  What took Microsoft 44 years, Apple 42 years, Amazon 24 years and Google 21?  The answer: achieving a trillion dollar market capitalization.  However, it took the Bitcoin cryptocurrency just 12 – the fastest ever.   At the beginning of 2021, Bitcoin had a market capitalization of $500 billion, but in just four months it has gained another $500 billion as tech CEO’s like Elon Musk and Jack Dorsey have made sizable investments, multiple exchange-traded funds are preparing to launch, the CoinBase cryptocurrency exchange has gone public, and many legacy financial institutions like PayPal, MasterCard, Visa, JP Morgan and the Bank of New York Mellon have come on board.  The only question now seems to be, “How long till the next trillion?”  As they say on the WallStreetBets Reddit message board, “To the Moon!” (Chart from visualcapitalist.com) Best regards,  Womack Investment Advisers, Inc.   WOMACK INVESTMENT ADVISERS, INC. Oklahoma / Main Office...

“Signs, signs, everywhere a sign” sang the 70’s Canadian rock group Five Man Electrical Band.  The sign that is everywhere now is “Help Wanted”!  The latest data from the Bureau of Labor Statistics shows there are over 100 million Americans who are currently out of the labor force.  But of that group, just 6.85 million people are currently looking for a job.  Why are less than 7% of available workers looking for a job?   Interviews reveal the prevailing attitude: it pays darn well to not work! The trillions of dollars in government stimulus are now incentivizing potential workers not to seek gainful employment, but to sit back and collect the next “stimmy check” for not working.  The chart below, from Bank of America’s Global Research department, plots the National Federation of Independent Business (NFIB) “Hard to Fill” job openings category.  As can be seen, the current level of 40 is the highest in the history of the index. Best regards,  ...

  Volkswagen pulled an early April Fool’s joke on the world when it announced that it was henceforth changing its name to “Voltswagen”.  Later, VW admitted it was indeed an April Fool’s joke, but it certainly succeeded in drawing attention to VWs very large ambitions in the Electric Vehicle (EV) industry.  In fact, around the globe VW has been gaining market share rather sharply, and the consulting firm Wood Mackenzie predicts that VW will become the world’s largest EV producer by the end of this decade, producing about half of the total EV unit output. (Chart from chartr.co) 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. 100 - San Diego, CA 92122 Phone (405) 340-1717 - Toll Free (877) 340-1717   Website:   www.womackadvisers.com Womack Investment Advisers, Inc. (WIA) is a regist...