We can mark another milestone for the S&P 500. It breached 3000 for the first time yesterday morning, but unfortunately it couldn’t hold that level into the close. With futures up this morning, today just might be that day. It’s taken 5 long years since the index first broke through 2000, with the charge to 3000 powered largely by tech stocks. Leaders such as Apple, Microsoft and Amazon all reached the trillion-dollar market cap level.
In our Chart of the Day
we plot the return attribution by sector for the S&P 500 since first breaking through 2000 back in August 2014. The total return for the SPY (our proxy) over this time period was 65.84%, thanks to dividends and compounding return. As we mentioned Tech (19.94%) was the big driver, followed by Consumer Discretionary (8.87%), and Health Care (8.26%). The Energy sector detracted from returns over the past five years with an attribution of -2.21%. Tech accounted for nearly 30% of the total return over the time periods, certainly punching above its 17% average weight.
While we’re in the weeds, we took some time to look at the attribution from the individual company level and detailed some results in the chart below. It clearly paid to be long tech and short energy. Who would have guess you should have been short two of the oldest blue chip companies out there (GE and IBM).
Ok, enough gushing about the S&P, lets get back to some real news.
Iran is not responding well to US sanctions and beginning to remind us why the initial nuclear deal was put into place. They failed to seize a British tanker yesterday (thanks to the British navy) in a tit for tat move, after the UK seized an Iranian tanker breaking sanctions yesterday. Iran has said that if European countries don’t meet their commitments under a nuclear deal, Iran will “strongly” take steps to reduce its own obligations.
They’re threatening to enrich uranium far further than what they’ve been doing recently (which only break deal rules by a small amount), and potentially install new centrifuges. Kind of scary stuff when you consider they’re currently referring to US sanctions as economic terrorism.
As the U.S. housing meltdown ramped up late 2000s, Wall Street bankers at JPMorgan Chase & Co and other large banks were on the hunt for a way to move beyond the mortgage sector, finding a gold mine in the agriculture industry. However, with rising tensions in the U.S. – China trade war, bankers are heading for the exit sign once again, although the demand for farm credit continues to grow
. With the lowering loan options, farms are struggling to survive.Diversion
: Nothing quite like sitting on your yacht, relaxing in the sun, and watching a volcano explode