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.
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.