When no company or industry is immune from disruptive challenge, perhaps never has the number of potential losers been so plentiful, nor the disparity between winners and losers been so vast. Rather than succumb to conventional wisdom, perhaps the only thing more important than what you put IN your portfolio is what you XOUT.
XOUT’s methodology counters traditional investment strategies. Rather than trying to pick a select few winners, XOUT flips the investment paradigm by seeking to avoid losers that are failing to adapt amid today’s environment of unprecedented technological change.
2019 has introduced myriad new varieties of yield to investors, including familiar fan-favorites such as flat and declining yields. For investors seeking a more exotic flare, markets have debuted negative and even inverted yields. However, only true aficionados will be able to savor the ultimate pairing of yield flavors, such as negative speculative yields, a true Italian masterpiece. Ciao Bella!
Stronger-than-expected U.S. economic and earnings reports – and despite increased expectations that the next rate move by the U.S. Federal Reserve bank will be a move higher – pushed the S&P 500 Index up 0.85% to an all-time high of 3093.08 while moving the 10-year U.S Treasury rate higher by 23 bps to 1.94% and strengthened the U.S. dollar by 1.2% (as measured by the DXY index).
Starting the week with strong expectations of a partial trade agreement between the U.S.- and China, U.S. stock markets and the 10-year Treasury rate both moved higher early in the week. With Wednesday’s FOMC decision to once again lower the Fed Fund’s target rate 25bps while at the same time hinting the Federal Reserve Bank would pause further rate reductions combined with a lackluster 3rd quarter GDP report, 10-year U.S Treasury rates moved off their intraweek highs while the U.S. stock markets seemed unphased. Weaker-than-expected consumer spending number and reduced expectations of a U.S.-China trade agreement partially reversed gains in U.S. stock markets and pushed the 10-year Treasury even rate lower on Thursday. Friday’s much-stronger-than-expected employment situation report -despite weaker-than-expected manufacturing data -pushed U.S. stock markets even higher and slightly increased the 10-year U.S. Treasury rate. At week’s end the S&P 500 was up almost 1.5% to 3066.91, the 10-year U.S. Treasury was lower 8bps at 1.71% and the U.S. dollar (as measured by the DXY index) was weaker 0.6%.
How powerful is disruption? If the original 1980 Toyota Camry followed Moore’s Law, its 94 horsepower engine would have exceeded a semi-truck’s by 1986, surpassed a tank’s by ’88, outpaced the largest container ship’s by 2001, outclassed a nuclear reactor by ’08, and finally eclipse space shuttle’s power by 2019, growing to over 47 million hp!
Buoyed by increased optimism of a U.S.-China trade agreement, overall better-than-expected U.S. earnings reports and continued expectations of U.S. Federal Reserve Bank easing, the S&P 500 Index, increased 1.2% to 3022.55, just shy of its record in late July of 3025.86. The U.S. dollar strengthened over the week, despite U.S. Federal Reserve Bank easing expectations, on the back of weak economic reports from the EU and China. At week’s end the U.S. dollar (as measured by the DXY index) strengthened 0.6% and 10-year U.S Treasury rates increased 4.5bps to 1.0%
GraniteShares is an independent, fully funded ETF company headquartered in New York City. GraniteShares’ ETF suite includes one of the lowest-cost physical gold ETFs (BAR), a broad-based commodity ETF (COMB), an ETF that seeks to exclude U.S. large cap companies most likely to suffer from technological disruption over the long term (XOUT), a high alternative income-focused fund that invests in pass-through securities (HIPS) and the lowest-cost* physical platinum ETF (PLTM). GraniteShares has experienced robust growth in 2019, recently surpassing $700 million in total assets under management.
Stronger-than-expected U.S. earnings reports overcame a weaker-than-expected retail sales report and reduced expectations of a U.S-China “partial” trade agreement last week. The S&P 500 Index, lower on Monday after China announced it wanted more talks before signing any trade agreement, rallied through Thursday on the back of stronger-than-expected U.S. earnings reports despite weaker-than-expected retail sales numbers released on Wednesday. U.S. stock markets lost some ground on Friday after weaker-than-expected Chinese economic data and a couple of “missed” U.S. earnings reports. At week’s end the S&P 500 index was up 0.5% at 2986.20, 10-year U.S. Treasury rates were up 2.5bps at 1.75% and the dollar weakened 1.0 % as measured by the DXY index.
Concerns of weak U.S. economic growth spurred by the previous week’s weaker-than-expected ISM manufacturing report and exacerbated by growing concerns of increased trade frictions between the U.S. and China pushed U.S. stock markets lower and strengthened the U.S. dollar early last week. The release of FOMC minutes on Wednesday, comments from various Fed officials reaffirming the U.S. Federal Reserve Bank would continue to act to maintain the expansion and the Fed’s announcement it would increase its balance sheet by buying short-term Treasuries helped move U.S. stock markets off their intra-week lows through the remainder of the week. Reports on Thursday that President Trump would meet with Vice Premier Liu on Friday and the announcement that a partial trade agreement had been reached with China on Friday, pushed U.S. stock markets and U.S. Treasury rates higher and weakened the U.S. dollar.
A bevy of weak U.S. economic reports on Tuesday and Wednesday, including a very weak ISM manufacturing index release on Tuesday and extremely disappointing auto sales numbers on Wednesday, drove U.S. stock markets, U.S. Treasury rates and the U.S. dollar lower last week. Concerns of a slowing U.S. economy increased Thursday after the release of a weaker-than-expected ISM non-manufacturing index number, a weaker-than-expected ADP private payroll report as well as by a mediocre employment report on Friday. Despite Thursday’s and Friday’s reports, U.S. stock markets rebounded off their lows with increasing market expectations of more U.S. Federal Reserve Bank rate reductions . The S&P 500 Index, down more 2.5% through Wednesday, finished the week only 0.3% lower at 2,952.01. 10-year U.S. Treasury rates fell 15bps over the week to 1.53% and the U.S. dollar (as measured by the DXY index) weakened 0.3% over the week.