Monday, March 20, 2017

Do you remember “The Jetsons” show?

PEEK OF THE WEEK
March 30, 2017

Leif Hagen & Donna Roberts
The Markets
The Market

Three steps and no stumble…

Technical analyst Edson Gould developed a market rule of thumb known as ‘three steps and a stumble.’ It states stock prices may fall after the Federal Reserve (Fed) raises the Fed funds rate three times in a row without a decline, according to Market Technicians Association. [1]

The idea is three increases show the Fed is serious about keeping rates at a relatively high level for a significant length of time. Higher interest rates could potentially mean higher costs and lower profits for businesses. As a result, stock investors may sell shares and share prices may fall. [2]

Last week, with employment and inflation data approaching Fed targets, the Federal Open Market Committee raised rates for the third time, pushing the Fed funds target rate into the 0.75 percent to 1 percent range, reported Financial Times: [3]

“Fed policymakers’ forecasts for growth and inflation remained little changed, with growth tipped to be 2.1 percent this year and next year, slipping to 1.9 percent in 2019. Core inflation is set to be 1.9 percent in 2017 and 2 percent in the two following years. The possibility of looser fiscal policy emerging from Congress has triggered speculation that the central bank will have to further accelerate its rate-rising campaign, but a number of policymakers are insistent that they want to see firmer plans emerging from Congress before making a call on the impact of possible tax cuts on the economy.”

Major U.S. stock market indices finished the week higher, as did most markets in Europe and Asia. [4] MarketWatch indicated Asian markets were encouraged by indications the Fed may not increase rates as often as expected this year, [5] and CNBC reported European markets were boosted by a better-than-expected outcome for mainstream parties in Dutch elections. [6]


Data as of 3/17/17
1-Week
Y-T-D
1-Year
3-Year
5-Year
10-Year
Standard & Poor's 500 (Domestic Stocks)
0.2%
6.2%
16.6%
8.6%
11.0%
5.4%
Dow Jones Global ex-U.S.
2.4
7.8
10.8
-0.4
2.0
-0.6
10-year Treasury Note (Yield Only)
2.5
NA
1.9
2.7
2.4
4.6
Gold (per ounce)
2.2
6.1
-2.9
-3.7
-5.8
6.5
Bloomberg Commodity Index
1.0
-2.7
4.8
-14.1
-10.3
-6.5
DJ Equity All REIT Total Return Index
2.3
1.1
5.5
10.3
10.1
4.8
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.

I spy with my little eye…Robots! If you take a cruise anytime soon, the bartender may not be able to lend an ear. According to Financial Times, one cruise line has installed robotic bartenders that produce one drink per minute per arm, and can make up to 120 drinks an hour. [7]

It’s not just cruise lines, either. The food industry in the United States is automating. Financial Times described food preparation at a pizza restaurant in California: [7]

“…Pepe squirts tomato sauce on to a pizza base before his colleague Marta spreads it; Noel has 22 seconds to correct any imperfections and add cheese and other toppings, after which Bruno takes the pizza from the line and places it in the oven. But on this production line, only Noel is human. The others – anthropomorphised by name only – are machines conducting tasks usually performed by people.”

The restaurant has 75 human employees who earn about $18.00 an hour. They all are given opportunities to take coding classes so they can better understand and manage robots as well as the artificial intelligence used to evaluate delivery routes. [7]

Then, there is Sally, a robot offered by a food robotics firm. Sally can produce “… fully-customized, fresh, and healthy salads. Sally’s proprietary technology dispenses measured quantities of more than 20 ingredients – refreshed daily – to create a ready-to-eat meal any time of day.” Alternate versions of this robot will offer Mexican and Indian food choices. [8]

Competition for employees is becoming a significant issue in the restaurant industry, reported the National Restaurant Association. More than a quarter of restaurant operators, who participated in a January 2017 survey, said recruiting and retaining employees is the single most important challenge they face – a 9 percent jump from 2015. That’s the highest level since October 2007. [9]

Soon, the attraction for young children at burger joints may be watching robotic characters pull together kids’ meals!

Weekly Focus – Think About It

“There is a point in every contest when sitting on the sidelines is not an option.”
--Dean Smith, Former Head Coach, University of North Carolina Tar Heels [10] 

Best Regards,







Leif  M. Hagen
Leif  M. Hagen, CLU, ChFC                                                                       
LP Financial Advisor

Securities offered through LPL Financial Inc., Member FINRA/SIPC.
P.S.  Please feel free to forward this commentary to family, friends, or colleagues.

P.S.S. Also, please remind your friends and family members becoming Medicare eligible that we offer Medicare insurance and Part D options with NO COST to work with Leif as their agent

For more information and resources visit our website at www.HagenFN.com

For Medicare supplement and part D information and resources, please visit MEDICAREforSENIORS.info


Please FOLLOW and “LIKE US” on FACEBOOK.com/HagenFN


Please Follow our Tweets on Twitter.com/SafeLeif

                                                                                               
* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.
* 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.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees,
expenses, or sales charges. Index performance is not indicative of the performance of any investment.
* 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 “Peek of the Week”, please reply to this email with “Unsubscribe” in the subject line, or write us at: Hagen Financial Network, Inc. 4640 Nicols Road, Suite 203; Eagan, MN 55122.
Sources:
[4] http://www.barrons.com/mdc/public/page/9_3063-economicCalendar.html (click on U.S. & Intl Recaps, select "The central banks have spoken," and scroll down to the Global Stock Market Recap) (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-20-17_Barrons-Global_Stock_Market_Recap-Footnote_4.pdf)

Monday, March 13, 2017

Interest rate hikes & tariffs!


PEEK OF THE WEEK
March 13, 2017

Leif Hagen & Donna Roberts

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 counterintuitive, 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 Economists 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,







Leif  M. Hagen
Leif  M. Hagen, CLU, ChFC                                                                        
LP Financial Advisor

Securities offered through LPL Financial Inc., Member FINRA/SIPC.
P.S.  Please feel free to forward this commentary to family, friends, or colleagues.

P.S.S. Also, please remind your friends and family members becoming Medicare eligible that we offer Medicare insurance and Part D options with NO COST to work with Leif as their agent

For more information and resources visit our website at www.HagenFN.com

For Medicare supplement and part D information and resources, please visit MEDICAREforSENIORS.info


Please FOLLOW and “LIKE US” on FACEBOOK.com/HagenFN


Please Follow our Tweets on Twitter.com/SafeLeif

                                                                                               
* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.
* 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.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees,
expenses, or sales charges. Index performance is not indicative of the performance of any investment.
* 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 “Peek of the Week”, please reply to this email with “Unsubscribe” in the subject line, or write us at: Hagen Financial Network, Inc. 4640 Nicols Road, Suite 203; Eagan, MN 55122.
Sources:

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