Week of July 20, 2015

Equity markets rebounded this week as concerns over Greece were put to rest, the slide in Chinese equities reversed and earnings season kicked off with strong quarterly results. The S&P 500 jumped 2.4%. The Dow Jones Industrial Average rose almost 2%. And, the Nasdaq Composite soared to a new record high, rising 4.3% for the week. Beyond equities, gold prices weakened to the lowest level since March 2010 as Janet Yellen confirmed again that the Federal Reserve remains on track to raise rates in 2015.

Party Like It’s 1999

Private technology and healthcare companies continue attracting capital at a pace not seen since the dot.com era. According to Dow Jones VentureSource, venture capitalists invested nearly $19.2 billion during the second quarter of 2015. This is a 24% increase over the same period last year and the highest amount since more than $19.7 billion was deployed in the fourth quarter of 2000. So far in 2015, nearly $36 billion has been invested; this is roughly the same amount for all of 2013. Venture capital bulls argue that while more money is being invested, the deal pace remains below the previous bubble. There were just 1,034 financings in 2Q15 compared to more than 1,300 in late 2000. Several large, late-stage companies are now attracting capital in the private markets and shunning initial public offerings due to increased regulatory requirements. Despite the differences, investors should proceed with caution. Some deals are getting done quicker than ever (within weeks compared to typically months), leading some to believe the amount of due diligence may be lacking.

Source: http://www.wsj.com/articles/venture-capital-investments-hit-19-2-billion-in-second-quarter-1437017401

China Growth Surprises

Last Wednesday, China’s National Bureau of Statistics reported that the country’s GDP grew 7% during the second quarter of 2015, surprising many economists who expected a lower figure. The average rate of growth expected by economists surveyed by The Wall Street Journal was just 6.8%. Many expected the surge in brokerage fees during the market volatility witnessed in the last two weeks of June would give a boost to performance, but still keep it below 7%. The fact that the rate was exactly in line with the Chinese government’s annual growth target raises questions again about the validity of the data. Skeptics question how quickly the data is assembled as well as how robust growth seems in the face of so many economic headwinds.

Source: http://www.wsj.com/articles/china-surprises-with-7-growth-in-second-quarter-1436927081

Long Live the King

Increased uncertainty from Greece and China has more fund managers moving to the sidelines. A recent survey by Bank of America Merrill Lynch asked nearly 200 investors worldwide who manage more than $510 billion how much cash they were holding. The average stood at 5.5% in July. This is the highest level of cash since the end of 2008. The survey indicated that investors were selling out of commodities and European stocks. The July figures show a continuing trend of money managers raising cash. Average cash holdings were just 4.5% in May and jumped to 4.9% in June.

Fun Story of the Week

On Sunday, Jordan Spieth put himself in position to win his third consecutive major tournament by shooting a 66 at St. Andrews to pull within one shot of the lead. Blustery conditions have delayed the final round until Monday. While there is no doubt about this young golfer’s talent, could the secret to his recent success be his pants? On Sunday, Spieth wore gray pants as planned by his sponsor, Under Armour. Spieth’s wardrobe for majors tournaments is planned by his sponsor, but he tends to stick to gray, blue or white pants. When wearing gray, he shoots on average 68.7 for a round. While he wore white during the final round of The Masters and U.S. Open, two tournaments he won, this color tends to be his worst. He has shot on average 69.4 in 12 rounds in 2015. What color will he wear for the final round of The Open Championship? If he’s hoping to take home another trophy, the pants should be blue. Over 18 rounds this year he’s shot on average 68.4, his best color. 

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_{Securities offered through Jacques Financial, LLC (JFLLC) a Broker-Dealer, Member FINRA and SIPC. Certain associates of Joseph W. Jacques, CPA, CFP^TM are registered representatives of JFLLC. Joseph W. Jacques, CPA, CFP^TM and JFLLC are affiliated. Investment advisory services are offered through Jacques Advisors, LLC an affiliate of JFLLC. Tax services are offered through Jacques & Associates Certified Public Accountants, LLC an affiliate of JFLLC.}

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments may be appropriate for you, consult with your financial advisor.

* 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 Nasdaq Composite Index is a market-capitalization weighted index of the more than 3,000 common equities listed on the Nasdaq stock exchange. The types of securities in the index include American depositary receipts, common stocks, real estate investment trusts (REITs) and tracking stocks.

* The Dow Jones Industrial Average is an unmanaged group of securities demonstrating how 30 large publicly owned companies have traded and cannot be invested into directly.

* Indexes are unmanaged, statistical composites and their returns do not include payment of any sales charges or fees an investor would pay to purchase the securities they represent. Such costs would lower performance. It is not possible to invest directly in an index.

* Past performance does not guarantee future results.

* Charts and graphs should not be relied upon as the sole basis for any investment decision and are for general informational purposes only.

* The prices of small cap stocks are generally more volatile than large cap stocks.

* Consult your financial professional before making any investment decision.

* This newsletter was prepared by CWM, LLC.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

Sources:

Wall Street Journal, July 2015, http://www.wsj.com/articles/increasingly-investors-think-cash-is-king-1436917127

Wall Street Journal, July 2015, http://www.wsj.com/articles/venture-capital-investments-hit-19-2-billion-in-second-quarter-1437017401

Wall Street Journal, July 2015, http://www.wsj.com/articles/white-pants-might-be-jordan-spieths-kryptonite-1436811407

Bloomberg, July 2015, https://www.bloomberg.com/news/articles/2015-07-15/china-growth-beats-economists-forecasts-as-stimulus-takes-effect

Bloomberg, July 2015, https://www.bloomberg.com/news/articles/2015-07-15/china-growth-beats-economists-forecasts-as-stimulus-takes-effect

Wall Street Journal, July 2015, http://www.wsj.com/articles/china-surprises-with-7-growth-in-second-quarter-1436927081

FinancialTimes, July 2015 (subscription required), https://www.ft.com/intl/cms/s/0/f0a12268-2eaf-11e5-91ac-a5e17d9b4cff.html#axzz3gQyOvYKa