Wall Street Underestimates the Great American Earnings Machine

Author: Frank Holmes
Date Posted: May 15, 2015 Read time: 40 min

We’re only halfway through the month, but so far the old trading adage “Sell in May and go away” seems a little premature. This Thursday, the S&P 500 Index closed at a new record high, topping the previous record set on April 24 and extending the 6-year bull run even further. The surge came on the heels of weak economic data this week, which likely assured investors that the Federal Reserve will withhold raising interest rates this summer, if not this year.

Press Releases:
U.S. Global Investors Reports Financial Results for the Third Quarter of 2015 Fiscal Year – Company Launches First ETF Product

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By Frank Holmes
CEO and Chief Investment Officer
U.S. Global Investors

We’re only halfway through the month, but so far the old trading adage “Sell in May and go away” seems a little premature.

This Thursday, the S&P 500 Index closed at a new record high, topping the previous record set on April 24 and extending the 6-year bull run even further. The surge came on the heels of weak economic data this week, which likely assured investors that the Federal Reserve will withhold raising interest rates this summer, if not this year.  

All 10 sectors ended Thursday’s session in the black, with technology leading the rally. Apple, held in both our All American Equity Fund (GBTFX) and Holmes Macro Trends Fund (MEGAX), and Facebook, held in MEGAX, made the widest gains.

Friday’s close came within just a few points of another new high, suggesting that a top has not yet been reached but that instead the market is looking to break out.

Lots of blue sky! Delta announced a 50-percent dividend raise and $5-billion  stock buyback program.

Dividend Growth at 15 Percent

With a little over 90 percent of S&P 500 companies having reported, it looks as if the index has risen a modest 2 percent for the first quarter. That might not seem significant, but as LP Financial Services Chief Investment Officer Burt White points out in a recent Barron’s piece, “given the steep uphill climb that corporate America faced due to the twin drags of the oil downturn and strong U.S. dollar, this is actually a good result.”

Indeed, when the earnings season began, economists were expecting to see a 3-percent drop because of depressed oil and the strong dollar. Of course, we’re now seeing a price reversal in both the commodity and currency.

Dividends from S&P 500 companies also jumped about 15 percent in the first quarter, defying lackluster estimates. Delta Air Lines, also in MEGAX, announced this week that it would be raising its dividend 50 percent as well as buying back $5 billion in stock over the next couple of years.

What’s important for investors to recognize here is that the S&P 500 dividend yield is currently at 1.92 percent, ahead of the 1.50-percent yield on a 5-year government bond. And unlike the government bonds, equities give you growth. It’s these high dividend-paying companies that GBTFX and MEGAX seek to invest in.

Investors Shrug Off Weak Economic News

The week’s economic data suggests that the U.S. economy is growing at a slower rate now than in previous months.

Employment improved marginally in April, bringing the unemployment rate down to 5.4 percent from 5.5 percent. But the Bureau of Labor Statistics revised downward its March numbers, from 126,000 new jobs added to a chilly 85,000.

According to the U.S. Census Bureau, retail and food service sales in April were little changed from March. Inventories are steadily creeping up.

Today, economists trimmed their forecast for the rate of jobs growth this year from 3.2 percent to 2.4 percent. Meanwhile, the University of Michigan consumer confidence index fell pretty dramatically from 95.9 in April to 88.6 in May.   

This soft economic news appears not to have dampened investors’ spirits too much, however, as it means the Fed will be more likely to keep rates low for at least the short-term.

You can see that the M1 money supply, the most liquid form of capital, began to ramp up with the first round of quantitative easing (QE) in late 2008, pulling the S&P 500 up with it. We called the bottom of the market in an Investor Alert from December 2008.

Follow the Money: Quantitative Easing and the S&P 500 Index
click to enlarge

After three cycles, QE officially wrapped up last October, but money continues to flow into the market, lifting all boats.

At the same time, investors have been moving more of their money out of domestic equity funds and into internationally-focused funds, especially European, according to a Credit Suisse report. This is in line with the results of a Bloomberg survey I shared earlier in the month which shows that global investors are most bullish on the eurozone than any other region, a good sign for our Emerging Europe Fund (EUROX).

Significant Inverse Relationship Between the U.S. Dollar and Gold/Oil

In response to the slowing economy, the U.S. dollar lost more ground for the fifth straight week, falling to its lowest level since January. This has allowed crude oil to begin its recovery—it’s currently trading just below $60 per barrel—while gold marks time in the $1,200 range.

Year-Over-Year Percent Change Oscillator: U.S. Dollar vs. Oil Prices
click to enlarge

As you can see, the dollar has reverted back to its mean after rising to close to three standard deviations as recently as mid-March. There’s plenty of momentum for the dollar to drop even further, which should help oil’s recovery.

Gold remains in a 3-year bear market. In an interview with Jim Puplava on the Financial Sense Newshour, I explained that the domestic equity bull market has lately overshadowed the yellow metal as an asset class, but that when gold’s down, as it is now, it might be time to put money in gold and gold stocks.

Next week we expect to see preliminary purchasing manager’s index (PMI) numbers for not only the U.S. and Europe but also China. We’ll find out for sure if the U.S. economy has really softened or if it’s simply taking a breather after months of steady growth.

Happy investing!

What's gold's touchdown pass this week?

Index Summary

  • The major market indices finished higher this week.  The Dow Jones Industrial Average rose 0.45 percent. The S&P 500 Stock Index rose 0.31 percent, while the Nasdaq Composite rose 0.89 percent. The Russell 2000 small capitalization index rose 0.73 percent this week.
  • The Hang Seng Composite gained 0.89 percent this week; while Taiwan fell 1.16 percent and the KOSPI rose 1.01 percent.
  • The 10-year Treasury bond yield fell slightly closing at 2.14 percent.

Time-Tested History of No Drama. Explore NEARX

Domestic Equity Market

The S&P 500 ended the week higher, up 0.4 percent on solid jobs data for the month of April.

S&P 500 Economic Sectors
click to enlarge


  • Consumer staples and health care were the best performing sectors this week as investors turned slightly more risk averse due to weak economic data released this week. The S&P 500 Consumer Staples Index and the S&P 500 Health Care Index rose 1.17 and 1.06 percent, respectively.
  • April’s employment gains brought the unemployment rate down to 5.4 percent, its lowest level since 2008. Employers added 223,000 jobs in April. Furthermore, worker confidence is on the rise as the amount of people quitting their jobs reached 2008 highs.
  •  NFIB small business optimism came in higher than expected this week, at 96.9 versus an expected 96. This data point coincides with the stronger employment data seen recently.


  • Retail sales were particularly weak during the month of April according to the data released this week. Retail sales growth came in flat for the prior month compared to an expected growth of 0.2 percent. The underwhelming data release could negatively impact retail-oriented industries.
  • Empire manufacturing came in weaker than expected for the second straight month. The continued weakness of this data point is concerning for industrials and other cyclical sectors.
  • Industrial production declined for the month of April, contracting 0.3 percent. While this is an improvement from the prior month, which saw a contraction of 0.6 percent, it was still lower than expected and should have implications for more cyclically oriented industries.


  • The spread between the U.S. government 10-year yield and the German 10-year yield remains extended. As this effectively puts a cap on how high U.S. rates could rise, utilities and other high-yield plays should benefit.

U.S. Government Debt Reacts to German Bond Movement
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  • The yield curve has steepened a significant amount over the last few months as the global economy experiences an elevated risk-on mentality. A steeper yield curve should benefit financials moving forward.

A Steeper Yield Curve Looks Positive for Financials
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  • Mortgage rates continue to remain attractively low. With plenty of room to grow, housing plays should continue to see benefits from low rates.

Average 30-Year Fixed Mortgage Rate Rises
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  • Analysts are expecting May’s Markit U.S. Manufacturing Purchasing Manager’s Index reading released next week to come in at 54.5 versus 54.1 for the prior month. Should the data fail to meet these expectations, industrials and other cyclicals could suffer.
  • While the dollar has depreciated significantly against major currencies over the past few weeks, its pullback could be overextended. Should the dollar reverse course and begin to appreciate, companies with significant foreign sales exposure would be at risk.
  • Yields have shot up globally over the last couple of weeks, making bonds a more attractive asset class compared to equities than they have been in the recent past. If this trend continues, equities could be negatively impacted.

2015 GROW Third Quarter Watch the webcast on demand

The Economy and Bond Market

U.S. stock indices rose to new records on Thursday. However, surprisingly weak retail sales, industrial production and consumer sentiment data indicate that the U.S. economy might be losing some momentum, and potentially delaying the U.S. Federal Reserve’s first rate hike. Easing monetary policy in China sparked equity rallies in Hong Kong and Shanghai. Eurozone GDP increased to a two-year high, with Spain and France posting the strongest growth. As the selloff in global bond markets gained steam, ground zero was German bunds, where a spike in volatility rattled investors in this usually-quiet corner of the markets. A sharp move in bonds had investors in U.S. Treasuries licking their wounds, raising the specter of the 2013 “taper tantrum.” By the end of the week however, yields tempered with the yield on the U.S. 10-year note at 2.14 percent and down from an intra-week high of 2.29 percent.


  • Initial jobless claims of 264,000 this week beat expectations, resulting in the fewest claims for jobless benefits in 15 years.
  • S&P 500 earnings continue to handily outpace analysts’ expectations for the first quarter of 2015.
  • Eurozone GDP numbers reflect present relative stability as well as growth in the eurozone. France, in particular, surprised to the upside.


  • The U.S. dollar languished to three-month lows this week after poor U.S. retail sales proved a huge disappointment to those expecting a swift rebound from a weather-weakened first quarter. The key measure of sales was flat in April.
  • The vicious selloff in the global bond market has continued into another session, as several important global benchmark bonds hit lows on Tuesday before retracing some of their losses over the remainder of the week. Yields remain elevated from levels seen just two to three weeks ago, even after bonds strengthened into the end of the week. The startling rise in yields is making equities look more expensive in comparison to debt, keeping stock markets subdued.
  • Consumer sentiment fell to a preliminary May reading of 88.6, a seven-month low compared with a final April level of 95.9.


  • Economists are expecting the release of housing starts data next week to come in at 1.02 million, up from the previous 926,000. With the one-month trend above the three-month trend, the odds are for positive momentum to continue.
  • The Conference Board month-over-month U.S. Leading Index is expected to come in at 0.3 percent next week and with the one-month trend above the three-month trend, a positive result could foreshadow future strengthening of the economy.
  • Retail sales fell flat in April, but the relative outperformance of a number of discretionary categories suggests it is premature to write off a second-quarter rebound. Continued labor gains and fuel savings could yet provide a significant lift.


  • Volatility has picked up as the markets prepare for the Federal Reserve’s rate liftoff this year. Volatility has moved closer toward highs reached during the pre-crisis period and the taper tantrum more recently in 2013.

Volatility is Trending Higher as Fed Lift-Off Draws Nearer
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Moreover, liquidity has been curtailed as primary dealers’ trading in Treasuries has receded recently. The share of Treasuries held by brokers and dealers as a proportion of total marketable government securities has plunged as well.

Low Liquidity in the Treasury Market
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The rise in volatility has sparked concerns that reduced liquidity in fixed-income markets may amplify adverse reactions to the shift in Fed policy when it does occur.

Dealers Holding Fewer Treasuries
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  • With year-over-year consumer price index (CPI) data being released next week, any signs of disinflation could cause concern given the weakness in recent data. The one-month trend in year-over-year CPI remains below the three-month trend.
  • The preliminary Markit U.S. Manufacturing purchasing managers’ index (PMI) data for May is expected to come in at 54.5 next week. With April’s result coming in below March’s, a disappointing reading could solidify a softening trend in manufacturing.

Frank Talk Insight for Investors

May 14, 2015

“Wrestling with Something Else”: Why this Gold Bear Market Is Different


May 13, 2015

Clearing Up CNBC’s Haze


May 11, 2015

Americans Take 3-Trillion-Mile Road Trip as Dollar Corrects and Commodities Rebound

A Blog by Frank Holmes, C.E.O. and Chief Investment Officer

Gold Market

For the week, spot gold closed at $1,224.06 up $35.68 per ounce, or 3.00 percent. Gold stocks, as measured by the NYSE Arca Gold Miners Index, gained 3.88 percent. The U.S. Trade-Weighted Dollar Index continued its weakly fall for the fifth consecutive week, shedding 1.61 percent; prices are down eight of the last nine weeks.

Date Event Survey Actual Prior
May-13 China Retail Sales YoY 10.40% 10.00% 10.20%
May-13 Germany CPI YoY 0.40% 0.50% 0.40%
May-14 U.S. PPI Final Demand YoY -0.80% -1.30% -0.80%
May-14 U.S. Initial Jobless Claims 273K 264K 265K
May-19 Germany ZEW Survey Current Situation 68 70.2
May-19 Germany ZEW Survey Expectations 49 53.3
May-19 Europe CPI Core YoY 0.60% 0.60%
May-19 U.S. Housing Starts 1018K 926K
May-20 HSBC China Manufacturing PMI 49.4 48.9
May-21 U.S. Initial Jobless Claims 270K 264k
May-22 U.S. CPI YoY -0.20% -0.10%


  • Gold traders remained bullish for a third week on speculation that a weaker dollar will increase demand.  Supportive of this survey, Shanghai Gold Exchange withdrawals were 857.7 metric tons as of May 8. Gold imports by India exceeded 100 metric tons for a second month in April as easing of state curbs on bullion imports boosted demand. German investors increased their buying of gold coins and bars by 20 percent during the first quarter, the highest rate in a year, as a hedge against European Central Bank (ECB) policy and the threat of a Greek default. Lastly, by weight, April saw the strongest net demand for gold according to BullionVault since August 2013.

Gold Stocks Strongly Outperforming Bullion So Far This Quarter
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  • Shares in gold mining companies are rallying this year while bullion prices have remained muted. Stock prices often anticipate moves in of the underlying drivers, so this could point to a turn in the gold market.
  • Silver is no longer the poor man’s gold as solar demand surges. Demand for solar power is set to increase by 30 percent in 2015.  After years of growth, silver production is expected to flatten as new investment in commodities has been put on hold.


  • Gold ETF holdings declined as investors sold the most from bullion-backed funds in seven months, according to Bloomberg.
  • Trading volumes in the global spot gold market have fallen to the lowest in a year, with shrinking liquidity and a slowdown in interbank trade, making customers reluctant to transact on a large scale.  Tighter regulatory oversight post the accusations of price manipulation have curtailed interbank activity.
  • Rallying Chinese stocks and a six-year U.S. bull market cut the appetite for gold in the first quarter according to the World Gold Council. Global demand for jewelry, coins and bars fell 5 percent in the first quarter from a year earlier as shoppers in the Middle East, China and the U.S. reigned in purchases.


  • Peng Xingyun, researcher at the Chinese Academy of Social Sciences, published an article in the China Securities Journal saying that with U.S. interest rates expected to increase, China should increase gold reserves and reduce holdings of U.S. treasuries to further boost confidence in the yuan. On a related note, China also has ambitions to include gold market development in the “One Belt One Road” economic project, according to the Managing Director of the World Gold Council.
  • Bridgewater’s Ray Dalio announced that everyone should allocate some of their portfolio to gold, saying that those who don’t “either don’t know history or don’t know the economics of it.” Also, in a recent roundup on the outlook for gold, ScotiaMocatta said a strong upside surprise may be in store for the price of gold. According to the group, the most bullish aspect of the gold market is that other assets are already expensive and thus, when things correct, people will look for a cheap safe haven.
  • Reuters reported that Mexico’s government is drawing up a land reform package to present to Congress in September that would strengthen the rights of private companies dealing with rural landholders in a bid to lure investment.  In recent years, rural landowners have increasingly pressed to re-negotiate past agreements.


  • South Africa’s biggest gold-mining labor union demanded a pay package of more than 80 percent for entry-level underground workers. The union’s wage request far outstrips the country’s annual rate of inflation. Negotiations are set to start in June. Along these issues, AngloGold Ashanti’s CEO said that South Africa’s competitive position is deteriorating rapidly. He said that there cannot be a debate on wage increases without economic consequences and pointed out that South Africa used to be the number-one gold producer in the world and is now ranked eighth.
  • The South African Department of Mineral Resources has announced that only 20 percent of mineral right holders are compliant to the Mining Charter’s ownership requirements. In contrast, the Chamber of Mines has responded with a statement that its members representing 85 percent of the industry have met and exceeded these targets. HSBC believes these disagreements signal deterioration in the trust relationship between government and industry which bodes negatively for broader investor sentiment.
  • According to GFMS analysts at Thomson Reuters, platinum prices could test $1,000 per ounce this year as supply from South African mines and global auto catalyst recyclers climbs by 22 percent and 10 percent, respectively.

Managing Expectations: Anticipate Before you Participate in the Market

Energy and Natural Resources Market


Oil Prices Below Breakeven Levels in Most Cases
click to enlarge


  • Gold stocks outperformed this week on higher inflation expectations along with the release of underwhelming economic data.  The U.S. dollar weakened following sluggish retail sales and industrial production data.  Accordingly, the NYSE Arca Gold Miners Index rose 3.88 percent this week.
  • Dry ships stocks outperformed this week as the industry was overdue for a bounce after three straight weeks of losses. The Bloomberg Dry Ships Index rose 2.43 percent this week.
  • Following positive earnings releases, containers and packaging stocks rallied this week. The S&P 500 Containers & Packaging Industry Index rose 2.38 percent this week.


  • Railroad stocks underperformed this week on the back of disappointing earnings releases and continued deceleration in the industry’s pricing power. The S&P Supercomposite Railroads Sub Industry Index fell 3.55 percent this week.
  • Oil and gas producers fell this week as the group is experiencing a slowdown in its rally momentum along with a slowdown in the price rally. The S&P Supercomposite Oil & Gas Exploration & Production Index fell 3.21 percent this week.
  • Oil and gas services and equipment stocks fell after the industry experienced downgrades this week. The S&P Supercomposite Oil & Gas Equipment & Services Index fell 1.56 percent this week.


  • Natural gas futures are trading near a four-month high on speculation of warmer temperatures in key gas-consuming regions later this month.  Seasonality for natural gas should be supportive as we enter the warmer summer months. 
  • Crude oil inventories in the U.S. are expected to decline further next week as refineries continue to ramp up production for summer gasoline. 
  • The price of lumber may rebound over the coming weeks in advance of a pick-up in building activity. This comes after a seasonally slow period marked by colder-than-normal temperatures that slowed construction projects.


  • The 34-percent rally in crude oil from its $44 low in March could be in jeopardy if operators are able to hedge at WTI prices north of $65 a barrel; this would lock in returns following a period of cost declines.
  • The U.S. dollar’s recent pullback has offered a tailwind for commodity prices.  However, the dollar’s decline may be entering an oversold condition, setting the stage for a short-term rally, particularly as it reaches the key 150-day moving average support level.

Weaker Dollar Good for WTI Crude Oil Prices
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  • Copper’s advance from its January low may be slowed if next week’s HSBC flash purchasing managers’ index (PMI) data for China is worse than forecast. China consumes approximately 40 percent of the world’s copper supply.


Emerging Markets



  • Turkish equities and the Turkish lira were incredibly strong this week, highlighting a potential trend reversal for the country. In fact, the Turkish lira closed up every day this week. This resurgence in Turkish markets is likely due to investors seeing an opportunity following the recent selloff. The Borsa Istanbul 100 Index and the Turkish lira closed up 4.22 and 4.62 percent, respectively.

Turkish Lira is Moving Higher
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  • Chinese equities bounced back this week, and was widely expected as last week’s underperformance was primarily centered on profit taking. Even more significant, the Chinese government cut benchmark interest rates for the third time in six months on Monday, further highlighting the government’s commitment to stimulate growth. The Shanghai Stock Exchange Composite Index rose 2.44 percent this week.
  • The Russian ruble had a strong week despite the government’s intent and actions to stem its appreciation. The ruble appreciated 3.41 percent against the U.S. dollar this week.


  • Polish equities underperformed this week as investors were surprised with the first round of elections. The results showed the opponent of the incumbent seizing the majority of votes. The WIG20 Index closed down 1.25 percent.
  • Hungarian equities fell this week as GDP growth for the first quarter came in lower than expected. Economic production grew at a rate of 0.6 percent quarter-over-quarter compared to an expected 1.0 percent. The Budapest Stock Exchange Index fell 1.54 percent, its first weekly drop since February.
  • Greek stocks pulled back this week as uncertainty surrounding the country’s financial position continues to worry investors. The Athens Stock Exchange fell 3.21 percent this week.


  • China’s latest interest rate cut is reinforcing the pattern of “bad news is good news” over the last six months for its stock market. April’s economic data came out predictably weak and stabilizing growth remains a top policy priority in the short run.  With few inflationary signs, further monetary easing is almost imperative to lower the country’s real interest rate which stays elevated, even after the cut, at 100 basis points above the decade average.  Should next week’s release of the flash HSBC purchasing managers’ index (PMI) data produce another humbling warning, then more supportive policies (whether monetary, fiscal or administrative), could be fast-tracked to anchor investor expectations. 

Plenty of Room Left for Lower Interest Rates in China
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  • Next week, the central bank of Turkey will release its decision on the country’s benchmark policy rates. While the central bank remains under pressure to cut rates further, most analysts expect all three rates to remain unchanged. Should rates rise, the Turkish lira could appreciate further.
  • The Czech Republic grew at a much faster rate than expected during the first quarter of 2015, according to the official data released Friday. As this upside surprise failed to move markets in a positive direction, further validation of the results could boost equities in the near term.


  • Currently the yield on Turkish 2-year government notes are higher than those on the 10-year government notes, a situation commonly referred to as an “inversion of the yield curve.” An inverted yield curve is a common warning sign of future economic hardship and highlights investors’ relative fear of the short term versus the long term.

Rates on Turkey's Two-Year Notes Rise Above Those on Ten-Year Securities
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  • The Russian central bank stated on Thursday that it has started buying dollars, a policy move primarily aimed at weakening the domestic currency. The rapid appreciation of the ruble this year has led to a decline in export revenue for the country, causing the central bank to step in and put a cap on the currency. It appears that the great ruble run is over, at least for the short term.
  • Slowing economic growth and rising political noise in Indonesia may challenge the investment theme of infrastructure upgrades in the country. This also points to the lingering risk of rupiah depreciation, with potentially rising U.S. interest rates later this year, and could make Indonesian stocks increasingly vulnerable as a source of funds for foreign investors.

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Leaders and Laggards


Weekly Performance
Index Close Weekly
DJIA 18,272.56 +81.45 +0.45%
S&P 500 2,122.73 +6.63 +0.31%
S&P Energy 587.93 -9.88 -1.65%
S&P Basic Materials 322.44 -0.99 -0.31%
Nasdaq 5,048.29 +44.74 +0.89%
Russell 2000 1,243.95 +9.02 +0.73%
Hang Seng Composite Index 3,923.50 +34.46 +0.89%
Korean KOSPI Index 2,106.50 +20.98 +1.01%
S&P/TSX Canadian Gold Index 170.51 +5.13 +3.10%
XAU 75.12 +2.65 +3.66%
Gold Futures 1,223.50 +34.60 +2.91%
Oil Futures 59.94 +0.55 +0.93%
Natural Gas Futures 3.02 +0.14 +4.72%
10-Yr Treasury Bond 2.14 -0.01 -0.28%


Monthly Performance
Index Close Monthly
DJIA 18,272.56 +159.95 +0.88%
S&P 500 2,122.73 +16.10 +0.76%
S&P Energy 587.93 -16.41 -2.72%
S&P Basic Materials 322.44 +7.35 +2.33%
Nasdaq 5,048.29 +37.27 +0.74%
Russell 2000 1,243.95 -31.40 -2.46%
Hang Seng Composite Index 3,923.50 -332.01 -14.83%
Korean KOSPI Index 2,106.50 -13.46 -0.63%
S&P/TSX Canadian Gold Index 170.51 +3.12 +1.86%
XAU 75.12 +3.29 +4.58%
Gold Futures 1,223.50 +22.20 +1.85%
Oil Futures 59.94 +3.55 +6.30%
Natural Gas Futures 3.02 +0.41 +15.56%
10-Yr Treasury Bond 2.14 +0.25 +13.45%


Quarterly Performance
Index Close Quarterly
DJIA 18,272.56 +253.21 +1.41%
S&P 500 2,122.73 +25.74 +1.23%
S&P Energy 587.93 -15.47 -2.56%
S&P Basic Materials 322.44 -0.19 -0.06%
Nasdaq 5,048.29 +154.46 +3.16%
Russell 2000 1,243.95 +20.82 +1.70%
Hang Seng Composite Index 3,923.50 +559.39 +16.63%
Korean KOSPI Index 2,106.50 +149.00 +7.61%
S&P/TSX Canadian Gold Index 170.51 -9.81 -5.44%
XAU 75.12 -2.00 -2.59%
Gold Futures 1,223.50 -4.40 -0.36%
Oil Futures 59.94 +7.16 +13.57%
Natural Gas Futures 3.02 +0.21 +7.56%
10-Yr Treasury Bond 2.14 +0.09 +4.49%

Please consider carefully a fund’s investment objectives, risks, charges and expenses.   For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637).   Read it carefully before investing.  Distributed by U.S. Global Brokerage, Inc.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

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The Emerging Europe Fund invests more than 25 percent of its investments in companies principally engaged in the oil & gas or banking industries. The risk of concentrating investments in this group of industries will make the fund more susceptible to risk in these industries than funds which do not concentrate their investments in an industry and may make the fund’s performance more volatile.

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Gold, precious metals, and precious minerals funds may be susceptible to adverse economic, political or regulatory developments due to concentrating in a single theme. The prices of gold, precious metals, and precious minerals are subject to substantial price fluctuations over short periods of time and may be affected by unpredicted international monetary and political policies. We suggest investing no more than 5 percent to 10 percent of your portfolio in these sectors.

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These market comments were compiled using Bloomberg and Reuters financial news.

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings as a percentage of net assets as of 3/31/15:

AngloGold Ashanti Ltd: Gold and Precious Metals Fund, 0.07%; World Precious Minerals Fund, 0.08%
Apple, Inc.: All American Equity Fund, 4.03%; Holmes Macro Trends Fund, 5.34%
Facebook, Inc.: Holmes Macro Trends Fund, 3.23%
Delta Air Lines, Inc.: Holmes Macro Trends Fund, 1.93%

*The above-mentioned indices are not total returns. These returns reflect simple appreciation only and do not reflect dividend reinvestment.

The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry.
The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies.
The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks.
The Russell 2000 Index® is a U.S. equity index measuring the performance of the 2,000 smallest companies in the Russell 3000®, a widely recognized small-cap index.
The Hang Seng Composite Index is a market capitalization-weighted index that comprises the top 200 companies listed on Stock Exchange of Hong Kong, based on average market cap for the 12 months.
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The Korea Stock Price Index is a capitalization-weighted index of all common shares and preferred shares on the Korean Stock Exchanges.
The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leading companies involved in the mining of gold and silver.
The U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar.
The S&P/TSX Canadian Gold Capped Sector Index is a modified capitalization-weighted index, whose equity weights are capped 25 percent and index constituents are derived from a subset stock pool of S&P/TSX Composite Index stocks.
The S&P 500 Energy Index is a capitalization-weighted index that tracks the companies in the energy sector as a subset of the S&P 500.
The S&P 500 Materials Index is a capitalization-weighted index that tracks the companies in the material sector as a subset of the S&P 500.
The S&P 500 Financials Index is a capitalization-weighted index. The index was developed with a base level of 10 for the 1941-43 base period.
The S&P 500 Industrials Index is a Materials Index is a capitalization-weighted index that tracks the companies in the industrial sector as a subset of the S&P 500.
The S&P 500 Consumer Discretionary Index is a capitalization-weighted index that tracks the companies in the consumer discretionary sector as a subset of the S&P 500.
The S&P 500 Information Technology Index is a capitalization-weighted index that tracks the companies in the information technology sector as a subset of the S&P 500.
The S&P 500 Consumer Staples Index is a Materials Index is a capitalization-weighted index that tracks the companies in the consumer staples sector as a subset of the S&P 500.
The S&P 500 Utilities Index is a capitalization-weighted index that tracks the companies in the utilities sector as a subset of the S&P 500.
The S&P 500 Healthcare Index is a capitalization-weighted index that tracks the companies in the healthcare sector as a subset of the S&P 500.
The S&P 500 Telecom Index is a Materials Index is a capitalization-weighted index that tracks the companies in the telecom sector as a subset of the S&P 500.
The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver.
The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns.
The National Federation of Independent Business’s (NFIB) Index of business optimism is based on responses from 1221 member firms.
The New York Empire State Manufacturing Survey is sent out to companies in the manufacturing industry in New York state. The survey provides an early indication of business conditions, such as price levels and employment trends, and it gives an indication of changes in sentiment. The survey is produced by the Federal Reserve Bank of New York and is released around the middle of the month.
The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.
The Conference Board index of leading economic indicators is an index published monthly by the Conference Board used to predict the direction of the economy’s movements in the months to come. The index is made up of 10 economic components, whose changes tend to precede changes in the overall economy.
The Deutsche Bank Volatility Index measures the implied volatility of currency markets.
The Merrill Lynch Option Volatility Estimate (MOVE) Index is a yield curve weighted index of the normalized implied volatility on 1-month Treasury options.
Chicago Board Options Exchange (CBOE) Volatility Index (VIX) shows the market’s expectation of 30-day volatility.
The Bloomberg Dry Ships Index is a capitalization weighted index. The index was developed with a base value of 100 as of December 31, 1998.
The S&P 500 Containers & Packaging Industry Index is a capitalization-weighted index.
The S&P Supercomposite Railroads Index is a capitalization-weighted index.
The S&P Supercomposite Oil & Gas Exploration & Production Index consists of all oil and gas exploration and production stocks included in the S&P Supercomposite 1500 Index.
The S&P 1500 Supercomposite Oil & Gas Equipment & Services Index is a capitalization-weighted index comprised of stocks whose primary function is equipment and services for natural gas and oil resources.
The Borsa Istanbul 100 Index is a capitalization-weighted index composed of National Market companies except investment trusts.
The Shanghai Stock Exchange Composite Index is a capitalization-weighted index that tracks the daily price performance of all A-shares and B-shares listed on the Shanghai Stock Exchange.
The WIG20 Index is a modified capitalization-weighted index of 20 Polish stocks which are listed on the main market. The index is the underlying instrument for futures transactions listed on the Warsaw Stock Exchange.
The Budapest Stock Exchange Index is a capitalization-weighted index adjusted for free float. The index tracks the daily price-only performance of large, actively traded shares on the Budapest Stock Exchange.
The Athens Stock Exchange General Index is a capitalization-weighted index of Greek stocks listed on the Athens Stock Exchange.
The University of Michigan Confidence Index is a survey of consumer confidence conducted by the University of Michigan. The report, released on the tenth of each month, gives a snapshot of whether or not consumers are willing to spend money.