Tuesday, August 2, 2016


July public markets finished on a strong note, with both domestic and international indices up for the month. The last couple of years have seen substantial volatility with modest gain.

The Dow Jones Industrial Average finished the month at 18,432, an all-time high, and its highest close since May 2015.  This compares to a closing price of 17,425 on December 31, 2015, and 17,823 on December 31, 2014.  The Dow is up 1007 points, or 5.8% YTD, and up 609 points over the last nineteen months, for an annualized return, net of dividends, of 2.13%.  Dividends have added about 2.4% annually to this return.

The S&P 500 finished the month at 2173, an all-time high, and its highest close since May 2015.  This compares to a closing price of 2043 on December 31, 2015, and 2058 on December 31, 2014.  The S&P 500 is up 130 points, or 6.4% YTD, and up 115 points, for an annualized return of 3.45%, over the last nineteen months.  Dividends have added about 2.4% annually to this return.  Aggregate second quarter earnings for the S&P 500 companies are expected to fall 3.7%, compared to the previous quarter.

The NASDAQ Composite finished the month at 5162, up 155 points, or 3% YTD.  Over the last nineteen months, the NASDAQ is up 426 points, for an annualized return of 5.5%.

Bonds have had an excellent year so far. Measured by short term and intermediate/long term bond proxies, BSV and BLV, short term bonds are up 2%, while intermediate/long bonds are up more than 16% YTD.  A large part of the reason?  Investors from all over the world are pouring money into U.S. markets, $41 billion just in May, and almost all of it is going into U.S. Treasuries. 

You've probably noticed that the world doesn't feel especially safe at the moment.  When there is uncertainty and chaos, many citizens from around the world send their money and their families to America.  These citizens continue to vote with their pocketbook and their feet about the relative strength and safety of the U.S.

On the earnings front, DuPont and Verizon both reported earnings that exceeded forecasts. United Technologies, UTX, reported earnings and sales ahead of expectations, and said it is on track to meet its growth targets for 2020.

Under Armour, Exxon, and McDonald's all recorded a year over year drop in quarterly profits. 

Speaking of oil, John D. Rockefeller put together, and controlled, what became the Standard Oil Trust, until its demise in 1911, when Teddy Roosevelt put teeth into the Sherman Anti-Trust Act. (This act was named after Ohio senator John Sherman, a brother of William Tecumseh Sherman).  This wasn't the demise of the controlling shareholders of the trust, nor their wealth, just the breakup of the trust.

The names of the oil companies, past and present, which were a part of the Standard Oil Trust include Esso, Exxon, Mobil, Chevron, Amoco, Sohio, BP, and Marathon.  A useful flow chart can be found at http://www.dividend.com/how-to-invest/the-complete-visual-history-of-standard-oil/

At one point, Yahoo had a market cap of $125 billion, as big in its time as Facebook and Google are today.  Last week, Verizon announced the acquisition of Yahoo for $4.8 billion in cash, ending the independence of one of Silicon Valley's pioneering companies. You can read more about Yahoo and the acquisition at http://www.forbes.com/sites/briansolomon/2016/07/25/yahoo-sells-to-verizon-for-5-billion-marissa-mayer/#65b7251971b4.

The Atlanta Regional Commission's Livable Centers Initiative has produced a 92 page report detailing plans for Turner Field post-braves.  Plans include a Georgia State football stadium and baseball field, housing, and more.

Once again, Hartsfield-Jackson tops ACI's list of the busiest airport in the world.  If you travel through Hartsfield much, this won't surprise you.  It's typically not too difficult to navigate Hartsfield, though I'd suggest that the TSA outsource some of their interpersonal skills training to Chick-Fil-A.  At least after they rummage through your bag, looking for contraband that usually isn't there, they could say "my pleasure".

Quotes of the week:

"Beginning today, treat everyone you meet as if they were going to be dead by midnight.  Extend them all the care, kindness, and understanding you can muster.  Your life will never be the same again."
                                                                     Og Mandino

"As I grow older, I pay less attention to what men say.  I just watch what they do."

                                                                      Andrew Carnegie

Centurion Advisory Group


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