Broker Check

April 14, 2017 - Market Commentary

| April 14, 2017
Share |

The Markets

U.S. stock markets are sending mixed signals.

If you look at the performance of the CBOE Volatility Index (a.k.a. the VIX or fear gauge), which is a measure of market expectations for volatility in the near future, it appears all is well and investors expect no unexpected events. Barron’s explained:

“…which brings us back to a central fact: the absence of volatility. The first quarter was historic for the CBOE Volatility Index...It ranged from 10.6 to 13.1, and its average level was 11.69, the lowest in an initial quarter since the VIX was born in 1990 and the second-lowest quarterly average since the 11.3 of 2006’s final three months...”

The VIX remained stubbornly low last week, too, despite weaker than expected employment news, wage news, and generally flat economic data.

If you turn your eyes to the number of companies whose shares have reached new highs, you might form a different opinion about the steadiness of stock markets. Barron’s wrote:

“…the squadron of stocks pushing 52-week highs at the New York Stock Exchange has shrunk from 338 on March 1 to 72 late last week…But, if the planet really is enjoying a synchronized economic recovery, why are we lunging at these stocks as if they were the only game in town?”

It’s difficult to know how to factor in last week’s air strikes against Syria, which registered as a tiny blip on the U.S. stock market radar. Some analysts say that’s as it should be. The real drivers of market performance in 2017 will be tax reform and global monetary policy. Others are concerned involvement in Syria could lead to a reshuffling of political priorities and delay progress on domestic legislation.

In times like these, diversification is critical.

GPS STRATEGIES: Valuations are at such a disparity with the emerging markets roughly 50% undervalued to US equities, Europe and international developed markets roughly 15-20% undervalued to US equities. We are considering adding to our emerging market, European, and international equity positions. On the fixed income side, we continue to favor active managers versus passive ETF’s as our active managers such as the Pimco Income Fund as they continue to outperform the overall bond market measurably according to Morningstar. The US stock markets seem to be at an inflection point between the animal spirits of the election and having a tug-of-war with valuations which are at an extreme high as we pointed out last week. This is why we are being more tactical in our investment selection by targeting good stock and bond pickers as well as investing in certain sectors such as infrastructure, defense stocks, rising rate friendly fixed income, emerging markets, technology, international securities and more. As we enter into the typical seasonal challenging time for stocks (May-October) GPS remains nimble and ready to take advantage of dislocations in the investment world.

PULLING INK OUT OF THE AIR. Air pollution is one of the biggest environmental and human health threats in the world, according to a 2016 World Health Organization report:

“To date, air pollution – both ambient (outdoor) and household (indoor) – is the biggest environmental risk to health, carrying responsibility for about one in every nine deaths annually. Ambient (outdoor) air pollution alone kills around 3 million people each year…Air pollution continues to rise at an alarming rate and affects economies and people’s quality of life; it is a public health emergency.”

Engineer Anirudh Sharma was familiar with the problem. The MIT Media Lab student was walking down a street in Mumbai, reported MSN.com, when he noticed that diesel exhaust from passing buses and cars was staining his clothes black.

The experience sparked an idea: Was it possible to recycle air pollution and use it to make something useful? Like ink?

During the past few years, Sharma has developed technology to create the world’s first line of art supplies derived from air pollution. He and his team have built an exhaust filter that captures carbon soot as it is emitted from cars, generators, and ferries. Once pollution has been gathered, impurities are removed. The remaining soot is ground into pigment and mixed with vegetable oil to create inks, markers, and paints.

One artist commented, “I don’t know if it’s the pollution, but the quality of the ink is really special…It’s pitch black, really thick and dries incredibly quickly.”

Last month, the first Clean Air Gallery opened in London. It features work by artists from London, Glasgow, Leeds, Southampton, and Nottingham – some of the most polluted cities in the United Kingdom – using Sharma’s ink. Other exhibitions are expected to open in Berlin, Singapore, and New York.

Weekly Focus – Think About It

“A mind which really lays hold of a subject is not easily detached from it.”

--Ida Tarbell, Investigative journalism pioneer

Best regards,

The Jim Goodland Team at GPS

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 e-mail with their e-mail address and we will ask for their permission to be added.

* 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. 

Sources:

http://www.cboe.com/micro/vix/pdf/cboe30c7-volindex_qrg.pdf http://www.barrons.com/articles/low-vix-may-mask-stock-risks-1491625249?mod=BOL_hp_we_columns (or go to https://s3-uswest-2.amazonaws.com/peakcontent/+Peak+Commentary/04-10-17_Barrons-Low_VIX_may_Mask_Stock_Risks-Footnote_2.pdf) http://www.barrons.com/mdc/public/page/9_3063-economicCalendar.html (click on U.S. & Intl Recaps and select "The job madness of March") (or go to https://s3-us-west- 2.amazonaws.com/peakcontent/+Peak+Commentary/04-10-17_Barrons-The_Job_Madness_of_March-Footnote_3.pdf) http://www.barrons.com/articles/are-stocks-finally-topping-out-1491627050?mod=BOL_hp_we_columns (or go to https://s3-uswest-2.amazonaws.com/peakcontent/+Peak+Commentary/04-10-17_Barrons-Are_Stocks_Finally_Topping_Out-Footnote_4.pdf) http://www.barrons.com/articles/do-airstrikes-signal-new-priorities-for-trump-1491627084?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-10-17_BarronsDo_Airstrikes_Signal_New_Priorities_for_Trump-Footnote_5.pdf) http://apps.who.int/iris/bitstream/10665/250141/1/9789241511353-eng.pdf?ua=1 (or go to https://s3-us-west- 2.amazonaws.com/peakcontent/+Peak+Commentary/04-10-17_WorldHealthOrganization-Report-Ambient_Air_PollutionFootnote_6.pdf) https://www.msn.com/en-ca/news/offbeat/magic-black-air-ink-the-art-supplies-made-from-vehicle-pollution/ar-BBzuyky https://press.economist.com/stories/10701-the-worlds-first-clean-air-gallery-opens-in-london http://www.famousquotesandauthors.com/authors/ida_tarbell_quotes.html


Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Spire Wealth Management, LLC), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.

Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from Spire Wealth Management, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Spire Wealth Management, LLC is neither a law firm nor a certified public accounting firm and no portion of the website content should be construed as legal or accounting advice. A copy of the Spire Wealth Management, LLC’s current written disclosure statement discussing our advisory services and fees is available upon request.

Share |