Howard Capital Management Reviews - Wealth Watch & Global Weekly Summary
Howard Capital Management Reviews - Global Weekly Summary - April 12, 2024
Inflation Returns to Haunt Capital Markets
- POSTED BY : EDITORIAL TEAM
The world’s capital markets were left slightly shocked as the latest inflation print from the U.S. sent tremors across borders. The S&P 500 and the Dow Jones Industrial Average both had an extremely volatile week after inflation numbers came in higher than expected, reigniting speculation of delayed rate cuts. The yields on U.S. fixed-income securities rose once again for the second week in a row. The Fed’s reiteration of its hawkish stance on interest rates and inflation led to the rise in yields. China’s economic outlook was marred once again by underwhelming data for exports and investment banking.
Global Equity
- The MSCI All Country World Index declined during the week, due to persisting inflation concerns as well as diminishing expectations for a U.S. Federal Reserve rate cut in June. Last week, global equity funds faced an outflow of $2.9 billion. Specifically, U.S. equity funds saw outflows of $2.7 billion, while Asian equity funds witnessed outflows worth $1.9 billion.
- In the U.S., Federal Reserve Chairperson Jerome Powell reaffirmed his outlook for three quarter-point rate cuts during the year.
- European stocks rose during the week due to optimism about a rate cut by the European Central Bank as hinted by a surprise rate cut by the Swiss Central Bank. Germany witnessed a rise in industrial production by 2.1%. Inflation in France was recorded at 2.4% in March due to a rise in energy and food prices.
- China witnessed a decline in market performance due to lower possibilities of rate cuts by the Fed amid a murky inflation outlook. As per the latest data, investment banking declined in the first quarter of 2024. Market performance was affected by the underperformance of the real estate sector and exports and rating agency Fitch revised its outlook on China to negative.
- The Japanese market was not directly impacted by the global banking instability. Japanese Finance Minister Shunichi Suzuki stated that they are monitoring yen fluctuations and are prepared to act if currency swings become excessive. As part of its historic shift away from ultra-accommodative policy, the Bank of Japan is scaling back corporate bond purchases.
U.S. Equity
- The S&P 500 this week saw multiple fluctuations. S&P began the week at 5,210, fell to 5,143 mid-week, and ended the week at 5,198.
- S&P Dow Jones Indices reported that dividend payouts in the U.S. rose by a net $16 billion in the first quarter of 2024 led by large-caps, Meta, Salesforce, and Booking Holdings.
- S&P Dow Jones also reported that large caps are weathering uncertainty and market volatility better than smaller cap companies.
- GE Aerospace shares surged as the company announced a 250% increase in its quarterly dividend to 28 cents from 8 cents per share.
- Mid-Week inflation shock drove major stock indexes lower, with 10 of the S&P 500’s 11 sectors falling and the Dow Jones Industrial Average losing more than 400 points.
- Kimberly-Clark announced that it will sell its PPE Business to Ansell for $640 Million.
- Moderna shares soared 6.2%, topping the S&P 500 as the biotech firm reported positive data from an early-stage trial of its individualized cancer.
- The U.S. Justice Department has opened an extended antitrust investigation into Nippon Steel’s $14.1 billion takeover bid for United States Steel Corp., creating additional legal hurdles to completing the deal.
- Alphabet neared $2 trillion market capitalization and its stock traded at a lower forward price-to-earnings ratio than Apple, Microsoft, and Nvidia.
U.S. Fixed Income
- The Bloomberg U.S. Aggregate Bond Index was low over the week. The slight decline can be attributed to the uncertainty of rate cuts, higher inflation and the associated inflationary pressure.
- The U.S. 10-year Treasury yield hit 4.57% during the week, the highest level in over 5 months. The yield on the 2-year was at 4.9%.
- The U.S. Dollar Index strengthened over the week as anticipations of potential interest rate cuts by the Fed weighed on the currency.
Sources
- https://finance.yahoo.com/news/global-investors-pull-back-equity-053001917.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuYmluZy5jb20v&guce_referrer_sig=AQAAABAbYc3vB-S0bvSsEjdVd9ERmI_OM-bF8Zq17vuCZZmzHmHn-w1OXckKYv10naPrqauevNRHFzbdAB6Nvrd2oBEyZ6rUohXRZoOBr0SeF4rH-vcJA-UzvlZtelcHf_c3_OCnfZOlB0sZP96X6K_R1wVXPo62dWSgHc9HQ3v28sDa#:~:text=Global%20equity%20funds%20saw%20an%20outflow%20of%20%242.9,outflows%20worth%20%242.7%20billion%20and%20%241.9%20billion%20respectively.
- https://www.marketscreener.com/news/latest/Global-investors-pull-back-from-equity-funds-amid-inflation-concerns-46419116/
- https://www.bbc.com/news/world-us-canada-68794803
- https://economictimes.indiatimes.com/news/international/us/2024-us-presidential-election-donald-trump-is-losing-grip-show-poll-surveys/articleshow/109149079.cms?from=mdr
- https://www.reuters.com/markets/europe/french-inflation-confirmed-24-march-2024-04-12/
- https://www.marketscreener.com/quote/stock/CHINA-MENGNIU-DAIRY-COMPA-1847989/news/China-stocks-track-Asian-markets-lower-on-rate-concerns-46419072/
- https://www.theasset.com/article/51267/china-investment-banking-fees-down-33-in-q1-2024
- Navigating Japan Equities: Monthly Insights from Tokyo (April 2023) | Nikko AM Insights
- https://finance.yahoo.com/news/historic-boj-move-drives-short-042433752.html
- https://economictimes.indiatimes.com/markets/forex/japan-repeats-warning-against-excessive-weak-yen/articleshow/109231207.cms?from=mdr
- US 10 Year Treasury Bond Note Yield – Quote – Chart – Historical Data – News (tradingeconomics.com)
- Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis (DGS10) | FRED | St. Louis Fed (stlouisfed.org)
- United States Dollar – Quote – Chart – Historical Data – News (tradingeconomics.com)
- https://www.ishares.com/uk/individual/en/products/291773/ishares-global-aggregate-bond-ucits-etf-usd-(dist)-fund?switchLocale=y&siteEntryPassthrough=true#/
- https://www.investopedia.com/ge-aerospace-stock-surges-as-jet-engine-maker-boosts-its-dividend-250-percent-8627618
- https://www.investopedia.com/nearly-60-percent-of-consumers-plan-to-spend-more-on-amazon-in-2024-wedbush-finds-8625311
- https://www.investopedia.com/meta-salesforce-and-booking-help-drive-usd16b-rise-in-us-dividend-payouts-in-q1-8623804
- https://www.livemint.com/news/world/nippon-steel-bid-to-buy-us-steel-gets-extended-antitrust-review-11712793282228.html
- https://www.investopedia.com/alphabet-nears-usd2-trillion-market-capitalization-key-price-level-to-watch-8629323
- https://www.wsj.com/livecoverage/stock-market-today-dow-jones-04-09-2024/card/moderna-stock-jumps-continuing-recent-rally-2vIYLyExLUPUCnqugNlm
HCM-030624-063.GWS
Short-Term Turmoil – Can the market keep pushing? - April 16, 2024
Wealth Watch: From the desk of Vance Howard
The S&P 500 has pulled back and closed below its 50-day moving average, indicating a structural breakdown. We remain bullish, but a short-term correction is likely underway. Investors are de-risking and moving money to cash and/or short-term bonds. Does this change our view of the S&P 500 closing above 5500 this year? No, we still anticipate stocks moving higher.
Geopolitical risks are clearly at play, but looking at the upward move of the S&P 500 a pullback was warranted, and a period of consolidation was needed. With the market breaking below the 50-day moving average, some short-term damage has been done and will need to be repaired for the market to continue its climb.
So far earnings are looking good. 42 companies are reporting this week, and of the 34 companies that have reported so far (7% of the S&P 500): Overall, 85% are beating estimates, and those that “beat” are beating by a median of 9%. Of the 15% missing, those are missing by a median of -4%. On the top line, overall results are beating estimates by a median of 3% and missing by a median of -2%, and 56% of those reporting are beating estimates.
Retail sales increased 0.7% in March, more than double the consensus estimate of 0.3%. Additionally, the previous month was revised up to 0.9% from 0.6%, fully erasing the weather-related drop at the start of the year. It confirms the economy has ended Q1 with strong consumer demand, which partly explains elevated inflation. Strong growth and relatively high inflation have pushed off market expectations for Fed rate cuts until later this year.
Who is Howard Capital Management, Inc?
Located in Roswell, Georgia, Howard Capital Management (HCM) is an SEC-Registered Investment Advisor Firm. They aim to deliver professional money management solutions to individuals seeking growth while maintaining a prudent investment approach. The firm offers the use of the HCM-BuyLine®, developed by Vance Howard, CEO and Portfolio Manager at Howard Capital Management Inc., which has been their cornerstone since 1996. This unique stoploss safeguard is crafted to provide timely guidance during market volatility. The HCM-BuyLine® effectively reduces downside risk by moving from equities to cash and cash equivalents while actively identifying opportunities to boost equity exposure during a market upswing.
Enjoy the weekly "Wealth Watch" below from Vance Howard and Howard Capital Management.
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— VANCE HOWARD, CEO + PORTFOLIO MANAGER
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Howard Capital Management, Inc, issues this communication. It is for informational purposes and is not an official confirmation of terms. It is not guaranteed as to the accuracy, nor is it a complete statement of the financial products or markets referred to. Opinions expressed are subject to change without notice. Howard Capital Management, Inc. may maintain long or short positions in the financial instruments referred to and transact as principal or agent. Unless explicitly stated otherwise, this is not a recommendation, offer, or solicitation to buy or sell, and any prices or quotations contained herein are indicative only. To the extent permitted by law, Howard Capital Management, Inc. does not accept any liability arising from using this communication. Howard Capital Management is an SEC-registered investment advisor that only does business where it is properly registered or is otherwise exempt from registration. SEC registration does not constitute an endorsement of the firm by the Commission nor indicates that the advisor has attained a particular skill or ability. Past performance is no guarantee of future results.
This newsletter is a publication of Howard Capital Management, Inc. It should not be regarded as a complete analysis of the subjects discussed, nor should the newsletter be construed as personalized investment advice. All expressions of opinion reflect the author's judgment as of the publication date and are subject to change. It should not be viewed as legal or tax advice. Always consult an attorney or tax professional regarding your legal or tax situation. There can be no guarantee that the HCM-BuyLine® indicator will perform as anticipated. Stoploss protection will not necessarily limit your losses to the desired amounts due to the limitations of the HCM-BuyLine®, market conditions, and delays in executing orders. It is not an actual stop-loss order that automatically sells securities in the portfolio at a certain price.
Who is Vance Howard?
Vance Howard embarked on his professional career in the financial industry in 1992, establishing Chartered Financial Services, Inc. He subsequently founded Howard Capital Management, Inc. in 1999, a fee-only Registered Investment Advisor. Mr. Howard brings expertise in the analysis, creation, and execution of diverse trading strategies.
Prior to his focus on financial services, Mr. Howard founded Delta Waste Services in 1988, a waste management company he later sold in 1992. Additionally, he co-published investment-focused newsletters, "The Savvy Investor" and the "SI Intermediate-term Trader", which garnered an international readership across over 25 countries between 1992-1999.
Demonstrating a commitment to community, Vance has served on the Huntsville, Texas city council for four terms, including two terms as mayor pro tem. His civic involvement extends to roles such as Huntsville's City Finance Chairman, Chairman of the Huntsville/Walker County 911 Emergency Service, and board positions on the Houston/Galveston Economic Development Council and the District 910 Legal Grievance Committee. He is a former President and active member of the Huntsville Rotary Club.
Outside of the professional sphere, Vance collaborates with family members in the operation of the Bar C Ranch in Madisonville, Texas, where they specialize in raising registered longhorn cattle. His leisure interests include travel with his wife and children, cycling, kayaking, scuba diving, and hiking.
Who is Vance Howard?
Vance Howard embarked on his professional career in the financial industry in 1992, establishing Chartered Financial Services, Inc. He subsequently founded Howard Capital Management, Inc. in 1999, a fee-only Registered Investment Advisor. Mr. Howard brings expertise in the analysis, creation, and execution of diverse trading strategies.
Prior to his focus on financial services, Mr. Howard founded Delta Waste Services in 1988, a waste management company he later sold in 1992. Additionally, he co-published investment-focused newsletters, "The Savvy Investor" and the "SI Intermediate-term Trader", which garnered an international readership across over 25 countries between 1992-1999.
Demonstrating a commitment to community, Vance has served on the Huntsville, Texas city council for four terms, including two terms as mayor pro tem. His civic involvement extends to roles such as Huntsville's City Finance Chairman, Chairman of the Huntsville/Walker County 911 Emergency Service, and board positions on the Houston/Galveston Economic Development Council and the District 910 Legal Grievance Committee. He is a former President and active member of the Huntsville Rotary Club.
Outside of the professional sphere, Vance collaborates with family members in the operation of the Bar C Ranch in Madisonville, Texas, where they specialize in raising registered longhorn cattle. His leisure interests include travel with his wife and children, cycling, kayaking, scuba diving, and hiking.