|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||249.30 - 252.49|
|52 Week Range||212.62 - 263.37|
|PE Ratio (TTM)||N/A|
|Expense Ratio (net)||0.04%|
FireEye launched Helix in early 2017, which spurred upgrades from several industry analysts and research firms like Morgan Stanley (MS) and Goldman Sachs (GS). The adoption of new offerings like the Helix platform and cost-cutting initiatives were the key reasons for Morgan Stanley’s optimism in the company’s early turnaround. Meanwhile, data breaches like Equifax and sophisticated cyberattacks like WannaCry and Petya have highlighted the inability of organizations to shield themselves from evolving cyber threats.
The International Monetary Fund expects the US economy to grow 2.7% in 2018 and 2.5% in 2019. The simultaneous growth could have a huge positive impact on the stock markets around the world. In the United States, recent tax reform legislation could result in healthy corporate earnings growth.
The ultra-loose monetary policies that have been in vogue for many years have helped jack up prices of all the asset classes. Real estate prices, as represented by the S&P CoreLogic Case-Shiller US National Home Price Index, have risen 36% during the past five years, and the stock market (QQQ), represented by the S&P 500 Index (SPX-INDEX) (SPY) has surged a whopping 91.5%. Lower interest rates and easy liquidity were the main drivers fueling a sharp rally in stocks (DIA) (VOO) and real estate.
Volatility is something else to think about. As the market has moved up, volatility has moved down. While volatility (price fluctuations) and drawdown risk (loss of principal) aren’t the same thing, dramatic price movements often lead investors to trade their portfolios at what, in retrospect, will turn out to have been an inopportune time.
Many liquid alternative funds were designed with exactly this in mind. By investing in non-correlated asset classes, they offer investors continued market exposure, paired with the potential to mitigate downside participation. Since the 2008 economic crisis, obtaining higher returns only through traditional investments (SPY) (SPX-INDEX) (IVV) has become quite difficult.
Markets have tended to move in cycles, from periods of extreme skepticism to periods of extreme conviction. The stock market and uncertainty go hand-in-hand. The stock market performance has historically followed a cyclical trend.
Earlier in this series, we saw how Microsoft (MSFT) and its investors could benefit from the new tax reforms that could bring billions of dollars of cash parked overseas back into the United States. Since Microsoft generates slightly more than 50% of its overall revenues outside the United States, a strengthening or weakening US dollar (UUP) has a marked impact on Microsoft. A stronger-than-expected macro data and expectations of monetary policy tightening by the European Central Bank are providing stimulus to the euro.
Earlier in this series, we looked at Microsoft’s (MSFT) position among the top 16 US companies that collectively have $1 trillion in cash. A survey by Bank of America Merrill Lynch (BAC) in late 2016 highlighted companies’ priorities in using overseas cash. Share buybacks and M&A (mergers and acquisitions) followed in second and third place, respectively, as you can see in the chart below. Recently, a Goldman Sachs (GS) analysis reported that the tax reform initiative could increase corporate buybacks in 2018 by $75 billion to reach $590 billion.
In the FOMC’s January statement, the committee said that information received since the last meeting indicated that the US economic activity has been increasing at a solid pace. Also, the labor market has continued to strengthen. The economic outlook remained positive—taking the gains in employment, household spending, and business (VOO) investment into account.
ADP, a human capital management solution provider, releases a monthly report on US non-farm employment. This monthly report is prepared by using actual anonymous payroll data of 411,000 clients that ADP services. The report is released two days before the non-farm payrolls data, so this report prepares markets for any surprises in the jobs report.
Earlier in this series, we looked at the S&P 500 rally and Microsoft’s (MSFT) contribution to it. September 2017 marked the first time Microsoft stock surged to its all-time high and crossed the $600 billion market cap (capitalization). Microsoft stock is currently trading at $92 and has crossed the $710 billion landmark.
The S&P 500 (VOO) index recorded its 13th record high this week. On January 26, 2018, it rose 1.2%, its biggest gain in the last 11 months. The surge pushed its 14-day RSI (relative strength index) to 86.7, putting it in an overbought category. Microsoft (MSFT) announced its fiscal 2Q18 earnings on January 31, 2018.
What Boosted the Leading Economic Index in 2017? The S&P 500 Index (SPY) closed 2017 with gains of ~19.4% and is on track for further gains, backed by the impact of tax cuts and impressive corporate performances. The S&P 500 index is inching closer to the 2,900 mark, amid positive earnings reports from US corporations, and is looking to break new records in coming months.