Top 4 Assets To Watch This Week – 5/16/2016

The US Economy Shows Surprising Trends

The US Treasury yield curve evened out on Friday 13th March 2016 to a level not seen since March 2016. The spread between the 10-Year US Treasury note and the 2-Year US Treasury note has flattened out in recent days indicating that the costs between long-term and short-term borrowing costs are declining. The closing of the gap between the Treasury notes reached a low of 94.9 points – a level not seen since March 8, 2016. While this is certainly a situation to be concerned about, it pales in comparison to a situation where there is an inversion of the yield curve. In that case, the Federal Reserve Bank may head towards a reduction of short-term interest rates owing to a slowdown in the economy.

There is still considerable doubt about how the US economy is going to be performing moving forward. Retail sales from April were also released on Friday 13th April and they indicate an uptick in the performance of the US economy. The labor market in the US remains robust, and consumption growth continues to offset the weakness in the manufacturing and energy sectors. In spite of the tightening with the spreads in the 10-Year Treasury note and the 2-Year US Treasury note, the economic performance of the US economy has been robust over the past several months. Since the middle of February 2016, the S&P 500 Index has appreciated by as much as 12.7%, and crude oil prices have rebounded sharply. On the other hand, the performance of the country’s corporate sector has been anything but strong. Several successive quarters of weak earnings have fueled negative sentiment. This has been brought on by a strong greenback and persistent weakness in emerging market economies.

1 – Stocks: Alphabet Inc (GOOG: Nasdaq) Reaffirms Market Strength

On Friday 13th May 2016, Alphabet Inc. rallied ahead of Apple Inc (AAPL: Nasdaq) as the world’s most valuable company by market cap. But while many investors may see a weaker share price for Apple as an ominous sign, nothing could be further from the truth. Alphabet’s ability to consistently perform strongly is indeed one of its most redeeming qualities as a solid stock. The money that is generated from the company’s cash cow – Google – is increasingly being used in innovative startup concepts that will invariably bear fruit one day. But the incredible plunge in Apple Inc. stock is more an indictment of Apple than it is a compliment to Alphabet Inc. The proverbial bragging rights that Alphabet Inc. has now may be nothing more than a flash in the pan, but they will inspire confidence in the ‘relative’ bullishness of Alphabet Inc. over Apple Inc. Even though Apple Inc. bested Alphabet Inc. by the close of the day, the likelihood that Alphabet will close that gap and eventually dominate in terms of market cap is growing all the time. Since July 2015, Apple has lost an incredible 32% in value. The top three contenders for world’s most valuable company include Apple, Alphabet, and Microsoft (MSFT). But the latter company is facing stiff headwinds as PC sales continue to decline as evidenced by Intel’s (INTC) quarterly figures. At last check, Alphabet Inc was valued at $488.02B while Apple Inc was valued at $495.82B.