Womack Investment Advisers Blog

By Greg Womack 18 Mar, 2024
Here’s the tea on stock markets and presidential elections. Last week, a slew of headlines mentioned stock market bubbles and frothy valuations. The implication was that markets might be headed lower because they’ve risen so high. Last Wednesday, Lewis Krauskopf of Reuters reported: “Some market participants believe the relentless U.S. stock rally is poised for a breather, even if it remains unclear whether equities are in a bubble or a strong bull run. The benchmark S&P 500…is up over 25% in the last five months, a phenomenon that has occurred just 10 times since the 1930s, according to BofA Global Research…the S&P has already made 16 record highs this year, the most in any first quarter since 1945, CFRA Research data showed.” By the end of last week, we’d seen 17 record highs for the Standard & Poor’s (S&P) 500 Index. If there is a market downturn this year, election sentiment is likely to be one of the reasons for the move. “Market moves during election years do tend to follow a similar pattern—declines leading up to early November, then a surge through year end once the winner is revealed.” While past performance does not guarantee future results, the S&P 500 has typically finished presidential election years higher, reported Nicholas Jasinski of Barron’s. Despite the historic record, election rhetoric can make it difficult to remember that markets are efficient and adjust to changing risks. While election sentiment may sway stock markets over the shorter term, global economic growth, company fundamentals, central bank policies, and other factors, such as “the implications of the artificial intelligence [AI] boom on corporate earnings” are likely to matter more over the longer term, reported Jasinski. No matter how emotional the election becomes, remember that your portfolio was built to meet your financial goals. If your longer-term goals and risk tolerance have not changed, making significant portfolio changes because of worries about the election outcome is not a sound idea. That said, if you’re uneasy about the election and its potential effect on your savings and investments, please get in touch. We want to hear about your concerns and will help you identify potential solutions. Is your portfolio positioned to take advantage of the trends? Please click here for your free risk assessment. This questionnaire will allow of us to find a way that best fits your needs! We will be in touch to review with you. For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com Greg Womack 1366 E. 15 th Street Edmond, OK 73013 Phone: (405) 340-1717 www.womackadvisers.com
By Greg Womack 11 Mar, 2024
The week got off to a good start... In testimony before House and Senate committees, Federal Reserve (Fed) Chair Jerome Powell noted that prices had been falling and unemployment rates remained quite low. As a result, he expected the Fed to begin lowering the federal funds rate in 2024. “I think we’re in the right place,” he said. “We’re waiting to become more confident that inflation is moving sustainably at two percent. When we do get that confidence—and we’re not far from it—it’ll be appropriate to begin to dial back the level of restriction so that we don’t drive the economy into recession rather than normalizing policy as the economy gets back to normal.” After Powell’s comments, the likelihood of a June rate cut rose, and so did U.S. stock indices. The bond market rallied, too, with yields across all maturities of U.S. Treasuries dropping lower through Thursday. On Friday, a mixed bag of employment data arrived. It showed that: Hiring was stronger than expected in February. Employers added 275,000 new jobs over the month – 75,000 more than expected – although gains in December and January were revised lower. Wage growth was slower than expected, rising 4.3 percent year-over-year in February when economists had predicted a 4.5 percent annual increase, according to Meghan Leonhardt of Barron’s. The unemployment rate rose, increasing from 3.7 percent to 3.9 percent. (The unemployment rate is derived from a separate and smaller survey of households.) The data suggested that the labor market was strong but cooling, and bolstered hopes that a soft landing might be ahead. While that was positive news, it was overshadowed by weakness in technology stocks. Sarah Hansen of Morningstar reported, “The stock market started 2024 with a blistering rally…But the relentless pace of gains has some watchers worried about soaring valuations on stock prices and frothy trading.” On Friday, major U.S. stock indices finished the week lower. However, U.S. Treasury bonds rallied as yields declined over the week. Is your portfolio positioned to take advantage of the trends? Please click here for your free risk assessment. This questionnaire will allow of us to find a way that best fits your needs! We will be in touch to review with you. For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com Greg Womack  1366 E. 15 th Street Edmond, OK 73013 Phone: (405) 340-1717 www.womackadvisers.com
By Greg Womack 04 Mar, 2024
The bull market is alive and well. “We know what investors are thinking,” reported Jacob Sonenshine of Barron’s. “The gains can keep coming, driven by an economy that is neither too hot nor too cold…The economy is growing, but only moderately, and the Federal Reserve can keep thinking about when it can start cutting interest rates…This dynamic is why nobody wants to miss out on the rally—and why they think it can keep going. A recent survey from Investors Intelligence shows the number of bulls outnumbered their bearish counterparts by the widest margin since late 2021.” Recent market performance owes much to: Solid earnings growth and strong corporate profits. Last week, 97 percent of the companies in the Standard & Poor’s 500 Index had shared how well they performed in the fourth quarter of 2023. Overall, blended earnings for companies in the Index grew 4 percent year-over-year, exceeding expectations. Blended net profits were stable at 11.2 percent year-over-year, reported John Butters of FactSet. Slowing Inflation. Last week, one of the Fed’s favorite inflation gauges, the personal consumption expenditures (PCE) price index, showed inflation moved lower year-over-year. Prices rose 2.6 percent over the 12 months through December 2023 and 2.4 percent over the 12 months through January 2024. While inflation trended lower over the longer period, it increased month-to-month. In December 2023, prices rose 0.1 percent, and in January 2024, prices rose 0.3 percent. Enthusiasm for artificial intelligence (AI). Investors expect AI to boost productivity and corporate earnings. “Innovations in electricity and personal computers unleashed investment booms of as much as 2% of U.S. GDP as the technologies were adopted into the broader economy. Now, investment in artificial intelligence is ramping up quickly and could eventually have an even bigger impact on [economic growth],” reported Goldman Sachs. Last week, the Standard & Poor’s 500 and Nasdaq Composite Indices closed at record highs, while the Dow Jones Industrial Average retreated. All three indices finished February with gains, reported Chuck Mikolajczak of Reuters. The U.S. Treasury market rallied with yields falling for all but the shortest maturity of Treasuries. Is your portfolio positioned to take advantage of the trends? Please click here for your free risk assessment. This questionnaire will allow of us to find a way that best fits your needs! We will be in touch to review with you. For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com Greg Womack  1366 E. 15 th Street Edmond, OK 73013 Phone: (405) 340-1717 www.womackadvisers.com
By Greg Womack 01 Mar, 2024
Optimism abounds! Enthusiasm for everything related to artificial intelligence (AI) drove a global stock market rally last week. Equity markets in the United States, Europe, and Japan hit all-time highs after a leading chipmaker reported better-than-expected earnings and an extraordinary surge in demand for its artificial intelligence-targeted processors, wrote Rita Nazareth of Bloomberg. Investors took the news “as evidence that the generative AI boom is both real and spreading. [The company’s] spectacular earnings report and forward guidance are spurring investors to buy shares of almost any company with a stake in the AI race—everything from computer and networking hardware providers to cloud computing plays to enterprise application software,” reported Eric J. Savitz of Barron’s. Investors weren’t the only ones feeling optimistic last week. Economists who participated in a February Bloomberg survey expect the U.S. economy to grow this year and next year, although a significant minority say that a recession is possible in 2025, reported Augusta Saraiva and Kyungjin Yoo of Bloomberg. They cited a source who stated: “The U.S. economy remains the envy of the world…Both real economic growth and employment growth remain strong while inflation rates and interest rates are falling.” Chief executive officers (CEOs) are feeling optimistic, too. The Conference Board Measure of CEO Confidence™ survey found that CEOs are feeling much better than they did at the end of last year. 32% said economic conditions were better than they were six months ago (up from 18% in the fourth quarter). 31% said conditions in their industries were better than they were six months ago (up from 27% in the fourth quarter). 36% expect economic conditions to improve over the next six months (up from 19% in the fourth quarter). Last week, major U.S. stock indices moved higher, yields on longer maturities of U.S. Treasuries moved lower. Is your portfolio positioned to take advantage of the trends? Please click here for your free risk assessment. This questionnaire will allow of us to find a way that best fits your needs! We will be in touch to review with you. For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com Greg Womack  1366 E. 15 th Street Edmond, OK 73013 Phone: (405) 340-1717 www.womackadvisers.com
By Greg Womack 14 Feb, 2024
Have you ever wondered which brands are the most valued worldwide? At the beginning of 2024, the world’s most valuable brand was Apple, valued at $517 billion, which marked a 73.6% increase year-on-year. Apple wasn’t the only American brand exhibiting strong demand. Six out of the top 10, and 51 out of the top 100, most valuable brands were from the United States. Brand Finance's annual rankings for 2024 listed the most valuable brands by country in the visual below. The data used is related to the value of a specific brand, as opposed to general measures of value such as market cap. Outside of the U.S., South Korea’s Samsung took second place with a value of $99 billion. In recent years, Asian brands attained notable value worldwide. TikTok, originating from China (and its domestic equivalent, Douyin), became recognizable around the world and gained a value of $84 billion. Additionally, Japan's Toyota and Saudi Arabia's Saudi Aramco held brand values of $53 billion and $42 billion, respectively. In Europe, Germany's Deutsche Telekom is Europe's most valuable brand at $73 billion. Is your portfolio positioned to take advantage of the trends? Please click here for your free risk assessment. This questionnaire will allow of us to find a way that best fits your needs! We will be in touch to review with you. For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com Greg Womack 1366 E. 15 th Street Edmond, OK 73013 Phone: (405) 340-1717 www.womackadvisers.com
By Greg Womack 13 Feb, 2024
For decades, China was among the fastest-growing economies in the world. Its real gross domestic product, which is the value of all goods and services it produces, grew by about nine percent a year, on average, from 1978 through 2022, according to The World Bank. However, the pace of economic growth in China slowed over the last decade and dropped sharply during the pandemic. Many investors expected China to rebound quickly in 2023 after its Zero Covid policy ended, but that hasn’t happened. Instead, “Exports weakened and deflation deepened, but the big letdown was consumer spending, which slumped as young people struggled to find jobs and the long-awaited reckoning for the housing market finally arrived,” reported Allen Wan of Bloomberg. China’s stock market performance reflected its economic malaise. “The market value of China’s and Hong Kong’s shares is down by nearly $7 [trillion] since its peak in 2021. That is a fall of around 35%, even as [the market value] of America’s stocks has risen by 14%, and India’s by 60%,” reported The Economist via X. In recent months, investors have been pulling money out of China. “Much of that cash is now heading for India, with Wall Street giants…endorsing the South Asian nation as the prime investment destination for the next decade. That momentum is triggering a gold rush…The euphoria has made Indian equities among the most expensive in the world,” reported Srinivasan Sivabalan, Chiranjivi Chakraborty, and Subhadip Sircar of Bloomberg. The Chinese government has been trying to stimulate growth and reassure investors. In late January, “the People’s Bank of China announced a larger-than-expected cut in banks’ required reserve ratio…But sentiment remains about as downbeat as can be, despite reports that authorities are considering a package to bolster the stock market totaling some two trillion yuan (almost $280 billion). That’s not just among Chinese domestic investors—that negativity is shared around the world,” reported Randall Forsyth of Barron’s. In contrast, U.S. investors have been bullish. Last week, the Standard & Poor’s 500 Index closed above 5,000 for the first time. The U.S. Treasury bond market remained relatively steady as yields on many maturities of Treasuries finished the week about where they started it. 
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