We hope you had a great Easter weekend! To say that there is a lot going on in the world lately is an understatement. Iran is assisting the Iraqi’s to take back Tigrit from ISIS, with some help from U.S. military air strikes. It’s hard to believe Iran and the U.S. are fighting against the same cause, especially since a U.S. assisted coalition is fighting against Iran-backed Houthi militants in Yemen. Saudi Arabia recently conducted Air Strikes against Iran-backed Houthi militant targets as well. Israel’s Prime Minister Benjamin Netanyahu recently visited congress to lobby against a nuclear deal with Iran. Iran, the U.S. and five other nations missed a deadline on Tuesday to create a nuclear agreement to remove sanctions. The U.S. for the first time that we can remember, has threatened to not use its Security Council veto against an independent Palestinian state.
In summary, the U.S. has strained ties with Israel, and is fighting with, and against Iran forces. As unusual as that statement is, we still have a balancing act with Russia, who is defying peace treaties, and China who is quietly building up the world’s largest navy and building man-made military/naval base islands in the South China Sea. Those are disputed waters with Taiwan, Malaysia, the Philippines, and other nations.
This global turmoil may have affected the market as oil prices dropped about 5% in March (Source: http://www.macrotrends.net/chart/1369/crude-oil-price-history-chart), and the S&P 500, DOW Jones, and Nasdaq were all negative for the month between 1-2%. The DOW Jones is now negative for the year, with the S&P 500 up about 0.44% (Source: http://www.bloomberg.com/markets).
The good news is that our actively managed portfolios on the TD Ameritrade direct platform had another good month, and all portfolios are solidly up for the year. Our theory that lower oil prices will give consumers more money to spend on discretionary items has paid off recently. Our theory that a late batch of Obamacare enrollees because of tax penalties will benefit the healthcare sector also worked out well. With the first quarter in the books, we believe we will most likely see more of the same in April. However, the U.S. Dollar and long term bond positions have been so strong recently that there is the potential for a counter-trend move. Because of this, we may sell some of our winning positions in the coming weeks to reduce portfolio risk.
Interesting Notes
No Cash – Over half (53%) of American adults say they’ve gone an entire week without paying for anything with cash or coins. – Rasmussen Reports, January 15, 2015
Pizza, health food for children? – U.S. pizza companies spent $1.5 million on political contributions in the 2012 and 2014 elections. The agenda of the American Pizza Community includes fighting mandatory menu-labeling laws and keeping pizza classified as a vegetable by the USDA for school lunches. – Bloomberg.com, March 3, 2015
Scare Tactics – “We could use up all of the proven reserves of oil in the entire world by the end of the next decade.” – President Jimmy Carter, 1977
Abundance of Oil – The U.S. has 449 million barrels of oil sitting in storage tanks, the highest level on record and almost 70% of capacity – The Wall Street Journal, February 13, 2015
Breaking the trend with the NCAA Tournament? – The NCAA basketball tournament is here, and we can predict one thing – the stock market is probably going to do better than your bracket. Based on data from the past 10 years, every single stock in the Dow Jones has had a positive return during the tournament, and of the 445 stocks that have been around 10 years in the S&P 500, 97% of them were up. – CNBC, March 16, 2015
Rust – In the U.S. alone, rust, the oxidation that turns aluminum white, copper green, and steel brown, is costlier than all other natural disasters combined, amounting to $437 billion a year or 3% of GDP. – The Wall Street Journal, March 13, 2015
Vikings – “The Vikings believed that children’s teeth had magical powers that would help them fight in battles. This explains why there are no more Vikings.”. – Jimmy Kimmel