Market Update
(all values as of 10.30.2020)

Stock Indices:

Dow Jones 26,501
S&P 500 3,269
Nasdaq 10,911

Bond Sector Yields:

2 Yr Treasury 0.14%
10 Yr Treasury 0.88%
10 Yr Municipal 0.94%
High Yield 5.72%

Commodity Prices:

Gold 1,878
Silver 23.72
Oil (WTI) 35.71

Currencies:

Dollar / Euro 1.17
Dollar / Pound 1.29
Yen / Dollar 104.44
Dollar / Canadian 0.75
 

 

Energy Exposure

Recently we added energy exposure to our investment strategies.  Within the tactical strategy, we added exposure to the First Trust Energy ETF (FXN) that invests in the integrated oil companies like Exxon and Chevron.  Within the strategic strategy, we added exposure to the First Trust Energy Infrastructure Fund (EMLP) that invests in pipelines that transport the oil and gas from the wells, to the processing plants, and eventually to the consumer.  Our decision to add energy exposure was due to President Trump’s pro-energy plan and the planned OPEC production cuts.  We expect energy prices to continue to rise in 2017 as the economy picks up momentum and the US continues down the path of energy independence.

European Equity Exposure

Shamrock’s Tactical Strategy added exposure to European equities with the addition of the First Trust Europe AlphaDex Fund (FEP).  Despite concerns surrounding the European Union and the stability of the Euro, retail sales (excluding autos) and general economic confidence have improved since the back to back recessions that ended in 2014.  Preliminary PMI surveys of 2017 suggest that the Euro and its two largest economies, Germany and France, started the year strongly.  January manufacturing PMI for the eurozone was reported at 55.1 (expansion reading greater than 50).  Additionally, Europe has plenty of spare capacity and a central bank that is still expanding its balance sheet, which should make it a prime beneficiary of stronger global growth.

 

 

Japanese Equity Exposure

Shamrock’s Tactical Strategy added exposure to Japanese equity with the addition of the iShares Japan ETF Fund (EWJ).  We believe the Bank of Japan has regained credibility and control over the yen; as a result, we are increasingly optimistic about Japan’s equity market prospect.  We expect the yen will continue to weaken against the dollar, boosting Japanese earnings.  Japanese stocks have tended to move up and down in tandem with the dollar/yen relationship since 2012, and the recent strength of the US dollar has coincided with Japan’s rising stock market.

 

Commodity Exposure

Since November, global growth and inflation are showing signs of picking up.  Shamrock has used this as an opportunity to add exposure to commodities.  In the tactical strategies we have added the Powershares Optimal Yield Strategy ETF (PDBC) and the Elkhorn Commodity Rotation ETF (DWAC).  Within the strategic portfolio we added exposure to Master Limited Partnerships via the First Trust North American Energy Infrastructure Fund (EMLP).  We believe that commodities are entering another super-cycle as global manufacturing and inflation are gathering momentum.  Since the great recession, commodities have lagged the broad market and after five consecutive years of decline finally posted positive returns in 2016.