A second case of bird flu in Tennessee has been reported at a chicken farm, heightening the threat of the disease in the U.S. southeast, the country’s biggest poultry region.

“Given the close proximity of the two premises, this is not unexpected,” Tennessee state veterinarian Charles Hatcher said in the statement. “We will continue to execute our plan, working quickly to prevent the virus from spreading further.”

Shares of Tyson, the largest U.S. chicken company, dropped 2.7 percent to $61.39 at 12:30 p.m. in New York. The stock earlier fell as much as 2.9 percent, the biggest intraday decline since March 6. Rival poultry producer Sanderson Farms Inc. declined 2.4 percent and Pilgrim’s Pride Corp. slid 1.5 percent.

While countries across Europe and Asia are also battling with bird flu outbreaks, Brazil, the world’s leading chicken exporter, has remained free of the disease. BRF SA, the country’s largest chicken exporting company, had the biggest intraday gain in eight days after the news of the second Tennessee case.

55,000 Chickens

Since the initial Tennessee report, South Korea banned imports of U.S. poultry and some other importing nations restricted product from the state or area affected.

The U.S. southeast was largely spared during the last major American outbreak, which affected turkey and egg farms in the Midwest and led to the death of more than 48 million birds through mid-2015, either from infection or culling.

Lincoln County is near Tennessee’s border with Alabama, one of the largest U.S. chicken-producing states. Earlier this week, Alabama said it was investigating bird flu cases at three premises in the northern part of the state. One was a commercial chicken-breeding facility, while the others were at a backyard poultry flock and flea market.

A case of low-pathogenic avian influenza, which typically causes only minor symptoms in poultry, was also found last week in a commercial chicken flock in Giles County, Tennessee.

Bloomberg by Julie Verhage

The Fed’s policy decision is sending shock waves through financial markets.

But it’s not the first rate hike of 2017 that’s got the dollar tumbling and Treasuries rallying with equities. Instead, markets are reacting to Federal Reserve officials’ forecast that rates will rise three times this year, which is in line with its outlook from December. Some investors had thought policy makers might change it to four increases.

“The markets are excited -- bonds, stocks, gold and everyone short the dollar -- because the Fed didn’t change their dot plot and thus remain on pace with 3 hikes this year in total,” said Peter Boockvar, chief market analyst at The Lindsey Group LLC. “The Fed reminded us all of the gradual nature of their expected behavior on this rate hike cycle.”

Investors anticipated the tightening. In fact, Treasury yields had climbed with the dollar on speculation the central bank might signal a faster pace. But those trades unwound quickly Wednesday afternoon.

Here’s a look at the markets seeing some of the biggest moves:

Stocks

The S&P 500 Index rallied to its highest level of the session on the back of the Fed’s announcement and is holding on to its gains.

Treasuries

The yield on 10-year Treasury notes fell 9 basis points to 2.51 percent, erasing gains made over the past week.

Dollar

The U.S. Dollar Index tumbled to the lowest level since Feb. 20 on the back of a dovish outlook from the Fed.

Gold

The weaker dollar is helping commodities like gold. The precious metal is up more than 1 percent following the announcement.

Weekly Market Commentary

March 13, 2017

The Markets

Rate hike ahead…maybe.

Last week’s U.S. employment report was better than expected. The United States added 235,000 jobs in February, which was a few more than economists had forecast.

It may seem counter-intuitive, but the positive economic data helped push U.S. stock markets lower. The jobs report was a sign the American economy continues to be strong and indicates a rate hike may be on the horizon. Barron’s reported:

“If anything, the data just confirms what we’ve known for a while now: The economy is growing, and one rate hike is unlikely to do much damage…There’s still a strong likelihood of some sort of economic stimulus plan from the Trump administration sometime this year…But the fact that tax cuts and infrastructure projects are even being considered at a time when the U.S. economy is adding 200,000-plus jobs a month is ‘unprecedented’…”

Federal Reserve (Fed) interest rate hikes affect stock markets because they make borrowing more expensive. Higher borrowing costs may reduce the amounts people and companies spend and affect companies’ profitability and share values.

At the end of last week, CME’s FedWatch Tool, which gauges the likelihood of changes in U.S. monetary policy, indicated there was better than an 88 percent chance of a rate hike when the Fed meets on March 15.

It’s interesting to note investor sentiment has become less optimistic. Last week, the AAII Investor Sentiment Survey showed investor pessimism had reached its highest level since February 2016. Bearish sentiment increased by almost 11 points, finishing at 46.5 percent. That’s significantly higher than the historic average of 30.5 percent. Bullish sentiment fell by almost eight points to 30 percent. That’s below the historic average of 38.5 percent. The AAII survey is often used as a contrarian indicator.

Data as of 3/10/17	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	-0.4%	6.0%	19.3%	8.1%	11.6%	5.4%
Dow Jones Global ex-U.S.	0.1	5.2	11.7	-1.7	1.9	-0.9
10-year Treasury Note (Yield Only)	2.6	NA	1.9	2.8	2.0	4.6
Gold (per ounce)	-1.9	3.8	-5.0	-3.6	-6.7	6.4
Bloomberg Commodity Index	-3.4	-3.7	6.2	-14.6	-10.3	-6.6
DJ Equity All REIT Total Return Index	-4.2	-1.1	8.3	9.8	10.3	4.4

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.

They’re all on the pro rodeo circuit.They all grow corn and soybeans. They all have renowned universities. In addition, according to The Economist, Texas, Iowa, Nebraska, Mississippi, Alabama, and Michigan are likely to experience the biggest increase in tariffs – as a percent of state gross domestic product (GDP) – if and when the North American Free-Trade Agreement (NAFTA) is revised.

Under NAFTA, goods are imported from and exported to Mexico and Canada without tariffs, which are essentially taxes on imported goods. Tariffs typically increase the cost of imports, making them less attractive to consumers. This can help support the market for domestically produced goods and help protect domestic jobs and industries. Currently, the United States sends about $240 billion worth of goods to Mexico, each year, and Mexico sends even more to the United States.

The Economist’s analysis measured potential increases in tariffs, in tandem with the volume of state exports to Mexico, to determine the possible impact on a state’s economy. (The analysis did not include Canadian exports, even though Canada is also a NAFTA participant.) While the effect on the majority of states’ economies would be relatively small, the impact on others could be more significant:

“In 2015, Iowa’s farmers shipped $132M of high-fructose corn syrup to Mexico. Without NAFTA, Mexico would slap a tooth-aching 100 percent tariff on the stuff…Among this group, Texas stands out. It faces an average tariff of only 3 percent, but its exports to Mexico are worth nearly 6 percent of its GDP (compared with 1.3 percent nationally)…Michigan also fits this category. Its exports of cars and parts – many of which end up back in America – would attract tariffs averaging only about 5 percent. But, with such shipments totaling $4.1B, the bill would be painfully large.”

No one yet knows how renegotiating NAFTA may affect any of the countries involved because talks are not expected to begin for several months.

Weekly Focus – Think About It

“Making good decisions involves hard work. Important decisions are made in the face of great uncertainty, and often under time pressure. The world is a complex place: People and organizations respond to any decision, working together or against one another, in ways that defy comprehension. There are too many factors to consider. There is rarely an abundance of relevant, trusted data that bears directly on the matter at hand. Quite the contrary – there are plenty of partially relevant facts from disparate sources – some of which can be trusted, some not – pointing in different directions. With this backdrop, it is easy to see how one can fall into the trap of making the decision first and then finding the data to back it up later. It is so much faster. But faster is not the same as well-thought-out.”

--Thomas C. Redman, “the Data Doc”

Best regards,

Womack Investment Advisers, Inc.

WOMACK INVESTMENT ADVISERS, INC.
Oklahoma / Main Office: 1366 E. 15th Street - Edmond, OK  73013
California Office: 4660 La Jolla Village Dr., Ste. 500 - San Diego, CA 92122
Phone (405) 340-1717 - Toll Free (877) 340-1717 

Website: www.womackadvisers.com

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* These views are those of Peak Advisor Alliance, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.

* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.

* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.

* All indices referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.

* 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.

* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.

* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

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

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

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Past performance does not guarantee future results. Investing involves risk, including loss of principal.

* You cannot invest directly in an index.

* Consult your financial professional before making any investment decision.

* Stock investing involves risk including loss of principal.

* To unsubscribe from the Womack Weekly Commentary please reply to this e-mail with “Unsubscribe” in the subject line, or write us atmichelle@womackadvisers.com

Sources:

http://www.barrons.com/articles/major-indexes-suffer-their-first-loss-in-weeks-1489210563?mod=BOL_hp_we_columns(or go tohttps://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-13-17_Barrons-Major_Indexes_Suffer_Their_First_Loss_in_Weeks-Footnote_1.pdf)

http://www.investopedia.com/investing/how-interest-rates-affect-stock-market/

http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html(or go tohttps://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-13-17_CMEGroup-Countdown_to_FOMC-Footnote_3.pdf)

http://blog.aaii.com/aaii-sentiment-survey-most-pessimism-since-february-2016/

http://www.aaii.com/journal/article3/is-the-aaii-sentiment-survey-a-contrarian-indicator

http://beef2live.com/story-states-produce-corn-0-107129

http://beef2live.com/story-soybeans-ranking-production-state-2012-vs-2013-0-110116

http://www.prorodeo.com/prorodeo/rodeo/rodeo-schedule

http://www.economist.com/news/united-states/21716057-rural-republican-states-have-most-lose-farmers-and-texans-would-lose-most(or go tohttps://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-13-17_TheEconomist-Farmers_and_Texans_Would_Lose_Most_from_Barriers_to_Trade_with_Mexico-Footnote_9.pdf)

https://www.economist.com/blogs/graphicdetail/2017/02/daily-chart-2(or go tohttps://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-13-17_TheEconomist-Which_American_Producers_Would_Suffer_from_Ending_NAFTA-Footnote_10.pdf)

http://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp

http://www.reuters.com/article/us-usa-mexico-trade-idUSKBN16H27V?il=0

https://hbr.org/2017/03/root-out-bias-from-your-decision-making-process