The Ricks Report
September 11, 2017

Numbers of $ignificance

  •  HARVEY’S IMPACT ON GAS – The national average price of gasoline had increased just 3 ½ cents per gallon YTD through Friday 8/25/17, the day Hurricane Harvey made landfall in Texas. In the 2 weeks since then, average gas prices nationwide have gone up another 32 cents a gallon (source: AAA). 
  • GETTING NEW CARS SOON – 1 in every 7 automobiles in the Houston area was destroyed by Hurricane Harvey (source: Evercore ISI).
  • SIGNIFICANTLY LESS IN JUST A DECADE – The USA imports 22% less oil than it did just a decade ago. Oil imports averaged 9 million barrels a day in 2016, down from 10.1 million barrels a day in 2006 (source: Department of Energy).   
  • PUSHING DEADLINES WAY BACK – Legislation to fund fiscal year 2018 spending and to suspend the nation’s debt ceiling for 3 months passed the Senate and the House last week. The bill, opposed by 107 lawmakers (out of 535 politicians), technically moves the deadline for both issues to midnight on Friday 12/08/17 (source: Congress).

Winning at Life with Gregory Ricks

Tune in every weeknight from 7:00 pm to 8:00 pm and every Saturday from 10:00 am to 1:00 pm!  We are now on News Talk 99.5 WRNO and News Talk 104.9 WBUV, as well as Facebook LIVE, Periscope (GregoryRicks) and the iHeart app.  Gregory Ricks and James Parker will be live in studio talking about some great current events and financial solutions. This week’s guest will be Jude Heath, CPA and member of the Total Wealth Authority. Remember, you can listen from any smartphone or computer through iHeartRadio.

  The Markets

Last week, the aftermath of Hurricane Harvey and potency of Hurricane Irma dominated hearts and minds, but there were some diversions and some welcome news, too.

The NFL kicked off its 2017 season with the Chiefs’ win over the Patriots. The men’s U.S. soccer team tied Honduras to stay in the running for a World Cup spot. And, Sloane Stephens made the jump from 957th best on the women’s tennis tour to U.S. Open Champion.

Also, last week, President Trump signed a bipartisan bill authorizing relief for victims of Hurricane Harvey. The damage from Harvey has been estimated at about $50 billion, reported Yahoo! Finance, and the damage from Hurricane Irma may be even greater.

The signed bill also raised the debt ceiling, avoided a U.S. Treasury default, and funded the government for three months. These aspects of the legislation may have been more important to stock markets, according to a source cited by Barron’s:

“Dubravko Lakos-Bujas, head of U.S. equity strategy and global quantitative research at JPMorgan, observes that the S&P 500 has dropped about 2 percent when hurricanes make landfall, as sectors that get slammed – think insurance companies, hotels, and cruise lines – are offset by ones that benefit, like autos, energy and equipment services, and basic materials for construction. A failure to raise the debt ceiling or pass a budget, though, has typically caused the market to drop 3 percent to 5 percent. ‘In essence, the market risk associated with the failure of passing the budget and addressing the debt ceiling has been pushed out for now…’”

Major U.S. stock markets finished the week slightly lower. The Standard & Poor’s 500 Index remains less than 1 percent below its all-time high.

 

Data as of 9/8/17 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) -0.6% 9.9% 12.8% 7.1% 11.5% 5.4%
Dow Jones Global ex-U.S. 0.6 18.1 14.1 1.0 5.0 -0.2
10-year Treasury Note (Yield Only) 2.0 NA 1.6 2.5 1.7 4.3
Gold (per ounce) 2.0 16.2 0.2 2.3 -4.9 6.7
Bloomberg Commodity Index -0.3 -3.1 -0.5 -12.0 -10.5 -6.7
DJ Equity All REIT Total Return Index 0.6 7.7 1.8 8.4 9.9 7.0

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

 

How do you protect personal data? Last week, Equifax, one of three major consumer credit reporting agencies, was hacked. The New York Times reported the company had data on more than 820 million consumers and more than 91 million businesses worldwide. Estimates suggest 143 million Americans may have been affected.

It’s no surprise new ways to safeguard personal data are on the horizon. Some involve blockchain technology, which underlies cryptocurrencies but has many other potential applications. PCMag.com described it like this:

“People often get bogged down in technological complexity when trying to understand blockchain, but the basic concept is a simple and universal one. We have facts and information we don’t want accessed, copied, or tampered with, but on the Internet, there’s always a chance it could be hacked or modified. Blockchain gives us a constant – a bedrock we know won’t change once we put something on it and where a transaction will be verified only if it follows the rules.”

In July, The Economist reported startup companies have begun using blockchain to register valuable assets, manage personal information, and provide ‘truth’ services that ensure research data integrity. Governments are embracing blockchain applications to manage land registries and corporate recordkeeping, among other things. Another potential application for blockchain is maintaining immutable personal data:

“One of the first things done for a baby could be to give the newborn an entry in a blockchain, the crypto-equivalent of a birth certificate. This sounds Orwellian, but it does not have to be. On the contrary, if people’s identity is anchored in one or several blockchains, this would give them more control over it and their personal data.”

If blockchain applications are successful, it may become easier to keep personal data safe online.

 Weekly Focus – Think About It

“I’m not much but I’m all I have.”

–Philip K. Dick, Author of Martian Time-Slip

 

Best regards,

Gregory Ricks

 

P.S.  Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added.

Gregory Ricks & Associates is a Registered Investment Advisor which offers services and charges fees as set forth in Form ADV, a copy of which you should obtain prior to investment. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Past performance does not guarantee future results.

* You cannot invest directly in an index

Sources:

https://www.sbnation.com/2017/9/9/16272632/kansas-city-chiefs-new-england-patriots-recap-keys

https://www.usatoday.com/story/sports/soccer/national/2017/09/05/us-mens-national-team-tie-honduras-world-cup-qualifying/635822001/

https://www.theguardian.com/sport/live/2017/sep/09/madison-keys-v-sloane-stephens-us-open-womens-final-live

https://finance.yahoo.com/news/full-economic-impact-irma-harvey-cant-known-wont-good-133300100.html

http://thehill.com/homenews/administration/349881-trump-signs-harvey-aid-debt-ceiling-package

http://www.barrons.com/articles/even-hurricanes-cant-kill-off-this-rally-1504929817 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/09-11-17_Barrons-Even_Hurricanes_Cant_Kill_Off_this_Rally-Footnote_6.pdf)

https://www.nytimes.com/2017/09/07/business/equifax-cyberattack.html?rref=collection%2Fsectioncollection%2Fbusiness&action=click&contentCollection=business&region=rank&module=package&version=highlights&contentPlacement=1&pgtype=sectionfront

https://www.pcmag.com/article/351486/blockchain-the-invisible-technology-thats-changing-the-wor

https://www.economist.com/news/world-if/21724906-trust-business-little-noticed-huge-startups-deploying-blockchain-technology-threaten (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/09-11-17_TheEconomist-Disrupting_the_Trust_Business-Footnote_9.pdf)

https://www.goodreads.com/author/quotes/4764.Philip_K_Dick