Tuesday, August 25, 2015

A drop in the DOW, China's slowdown, emerging markets and more in this week's PEEK of the WEEK

   Peek of the Week
   August 25, 2015
The Markets

Correction!

The Dow Jones Industrial Average lost about 6 percent last week. That puts the benchmark index about 10 percent below its record high on May 19, 2015, according to Barron’s.

A drop of that magnitude from a new high may be a correction – a brief but jarring drop in value that often causes investors to reassess the state of the market and the health of the companies they hold. If investors judge markets and holdings to be sound, a correction may represent a buying opportunity. Of course, there is a chance markets could fall further. A drop of 20 percent or more is considered a bear market.

The Standard & Poor’s 500 Index lost about the same amount as the Dow last week and is down almost 8 percent from its May high. Technically, it’s not yet in correction territory. A dip greater than 5 percent and less than 10 percent is a pullback.

Many factors contributed to U.S. stock markets’ performance last week. Concerns about global recovery were top of mind for many investors. China’s slowdown may significantly reduce demand for commodities, and emerging markets that are dependent on commodity exports are struggling. CNN Money reported:

“China's economic slowdown and currency devaluation have investors worried that things could get worse as the year goes on. Developing countries like Brazil and Russia are struggling to revive their economies as their currencies depreciate dramatically against the dollar. Brazil's currency value has declined over 20 percent and Russia's over 40 percent, hurting imports and everyday citizens. It's also a huge worry for America's biggest companies. About 44 percent of the revenues from S&P 500 companies come from outside the United States.”

Currency depreciation (not to be confused with devaluation, which is a government’s deliberate downward adjustment in currency value) is market-driven and sometimes causes investors to pull assets out of a country, which can put more pressure on the currency.

Uncertainty about the timing of a rate hike in America didn’t help matters. CNBC reported, after the minutes of the July Federal Open Market Committee meeting were released last week and indicated “almost all members” had some concerns about the strength of U.S. economic growth, the CME FedWatch barometer put the likelihood of a September increase at 24 percent – a 45 percent drop from the prior day.



Data as of 8/21/15
1-Week
Y-T-D
1-Year
3-Year
5-Year
10-Year
Standard & Poor's 500 (Domestic Stocks)
-5.8%
-4.3%
-1.1%
11.7%
13.1%
4.9%
Dow Jones Global ex-U.S.
-5.0
-4.9
-13.1
2.8
2.5
1.7
10-year Treasury Note (Yield Only)
2.1
NA
2.4
1.8
2.6
4.2
Gold (per ounce)
3.4
-3.6
-9.3
-11.0
-1.2
10.2
Bloomberg Commodity Index
-2.8
-15.8
-30.0
-15.6
-7.7
-6.1
DJ Equity All REIT Total Return Index
-2.4
-1.8
4.3
9.8
13.7
7.3
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.

From abstract to reality: the potential effects of rising rates.
When the economic data align, and the Federal Reserve pulls the trigger on tighter monetary policy, rising interest rates may affect everything from mortgage rates to bond yields to economic growth. Here are a few of the possible consequences:

·         Higher demand for short-term bonds. When interest rates rise, bond values fall, and vice versa. However, changes in bond values will be influenced by the speed and magnitude of the rate change. A sharp increase over a short period would have a greater effect than a gradual rise over a longer period. To date, the Fed has indicated the fed funds rate will rise gradually. Experts cited by The Wall Street Journal suggest shorter-term bonds and cash will be more attractive than longer-term bonds for a period of time.

·         Less attractive loan terms and credit card incentives. By raising the fed funds rate, the Fed will increase borrowing costs. That’s likely to affect mortgage rates as well as automobile and other consumer loan rates. The Journal cautioned homebuyers to be wary of adjustable-rate mortgages and indicated zero percent introductory offers on credit cards may disappear.

·         Slow improvement in savings account returns. Over the longer term, rising rates may prove to be a boon for savers, but there is likely to be little immediate change in the yields offered on savings accounts. That’s because banks set these rates. In general, banks raise rates to attract deposits and few banks need to do that right now, according to an expert cited by The Wall Street Journal.

While it seems counterintuitive, tightening monetary policy will not affect interest rates equally across all markets.

Weekly Focus – Think About It

“The individual investor should act consistently as an investor and not as a speculator.”
--Benjamin Graham, American economist



 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.
If you would like us to add them to our list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

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 CHARGE to work with me as their agent



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* 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:


Monday, August 24, 2015

Are REAL ESTATE TRUSTS right for your portfolio

Should I Invest In REITs?

Are Real Estate Investment 

Trusts right for your portfolio?

Discover more....visit this link...

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http://www.hagenfn.com/resource-center/investment/should-i-invest-in-reits



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Tuesday, August 18, 2015

WHAT DOES THE FUTURE HOLD? Read about that and more in this week's PEEK of the WEEK Financial Newsletter

   Peek of the Week
   August 18, 2015
The Markets

Stock markets in the United States got off to a good start last week, heading higher before stumbling over China’s currency news.

China, which has one of the world’s largest and fastest growing economies, is experiencing a slowdown in economic growth. The Economist reported data released last week showed, “…an 8 percent fall in Chinese exports in July and a 5.4 percent drop in factory-gate prices. Output prices have fallen for 41 straight months, a symptom of overcapacity in much of China’s heavy industry.” MarketWatch suggested China may be in (or on the verge of) recession.

In an effort to slow its slowdown, China announced an unexpected devaluation of its currency, the renminbi, last week. Don’t confuse the terms renminbi and yuan. Renminbi is the name of China’s currency. Yuan describes a unit of that currency. For instance, when shopping in China, you would not ask how many renminbi you owed, you would ask how many yuan you owed.

Barron’s questioned whether China’s relatively small currency adjustment would be enough to help its economy and speculated last week’s devaluation could be the tip of the iceberg:

“One wonders what a 3 percent adjustment in the yuan will do to spur China’s economy… To a longtime observer of finance ministers and central bankers, the claim that the initial moves to tweak currencies will suffice is a familiar refrain. The larger the underlying imbalance, the larger the eventual exchange-rate adjustment.”

A Fed spokesman told The Wall Street Journal China’s new currency policy has significant implications for the world economy and it probably won’t affect the Fed’s impending rate hike.

The currency devaluation didn’t have a sustained affect on U.S. stock markets last week. Major U.S. stock markets finished the week higher. China’s benchmark national index was up for the week, too.



Data as of 8/14/15
1-Week
Y-T-D
1-Year
3-Year
5-Year
10-Year
Standard & Poor's 500 (Domestic Stocks)
0.7%
1.6%
7.0%
14.2%
14.2%
5.4%
Dow Jones Global ex-U.S.
-1.5
0.1
-7.6
5.1
3.3
2.1
10-year Treasury Note (Yield Only)
2.2
NA
2.4
1.7
2.6
4.3
Gold (per ounce)
2.3
-6.8
-14.9
-11.2
-7.8
9.7
Bloomberg Commodity Index
-0.1
-13.4
-28.1
-14.0
-7.3
-5.8
DJ Equity All REIT Total Return Index
1.5
0.6
8.5
11.1
14.0
7.5
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.

what does the future hold? It’s not stuff most of us think about every day, but we may soon be a lot more familiar with terms like brain organoids, megascale desalination, Internet balloons, liquid biopsies, and more. At least, that’s what the MIT Technology Review reported in Breakthrough Technologies 2015:

“Not all breakthroughs are created equal. Some arrive more or less as usable things; others mainly set the stage for innovations that emerge later, and we have to estimate when that will be. But we’d bet that every one of the milestones on this list will be worth following in the coming years.”

Here are a few of the items included on the list:

·         Brain organoids: In greatly oversimplified terms, these are miniature brains that can be grown from an adult’s cells. They may help researchers better understand brain disorders and develop effective treatments.
·         Megascale desalinization: The world does not have enough fresh water. One solution is seawater desalination. Thanks to engineering improvements, reverse-osmosis desalination has become cost-effective.
·         Internet balloons: Imagine 15-meter helium balloons with solar-powered electronics hovering 20 kilometers in the air (far above commercial airline flights) and making the Internet available to people who currently have no access.
·         Liquid biopsies: Someday soon, annual blood tests may help diagnose cancer early. Gene sequencing machines decode millions of fragments of DNA in the bloodstream, looking for specific DNA patterns that indicate cancer. Knowing the DNA mutation behind a cancer may also help physicians choose the most effective treatments.

It’s important to keep track of developing technologies because they have the potential to disrupt industries and change the way business is done.

Weekly Focus – Think About It

“Any sufficiently advanced technology is indistinguishable from magic.”
 --Arthur C. Clarke, British science fiction writer
 
 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.
If you would like us to add them to our list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

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 CHARGE to work with me as their agent



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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Securities offered through LPL Financial.
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