Sept. 3, 2015
The Markets
U.S. stock markets finished last week higher than they
started it, but the five-day ride was awfully bumpy.
Concerns about China’s slowing growth, shifting
currency valuations, and falling stock markets, coupled with uncertainty about
the Federal Reserve’s next monetary policy move, contributed to malaise in
world markets early last week.
After falling by about 6 percent the previous week,
U.S. stocks spiraled even lower early last week. They flirted with correction status
(a correction is a 10 percent drop from previous highs) before moving higher.
By midweek, markets were on the rebound, bolstered in
part by the comments of New York Fed President William Dudley who indicated a
September rate hike might not be all that compelling. Strong U.S. economic data
also soothed some investors. Barron’s
reported:
“The economic
data, however, have been good enough to suggest that the market is too
pessimistic. There was that strong second-quarter gross-domestic-product
reading, which even included signs of stronger capital spending, while good
housing data suggest that third-quarter GDP could be better than many observers
expect.”
Market whiplash left investors feeling pretty shaky,
as did late-week comments from Fed Vice Chairman Stanley Fischer who indicated
it was too soon to know what the Fed would decide about interest rates in its
September meeting. He indicated the decision would depend on economic data that
is still being collected.
While the market’s end of week bounce was welcome, The Wall Street Journal reported traders
and investors appear to be ready for additional volatility.
Whether markets are volatile or calm this week, it’s
important to remember that it’s impossible for any of us to control what
happens in Washington, on Wall Street, or on Main Street. We can, however,
control how we prepare for and respond to market volatility. As you know, we
believe thoughtful goal identification, risk tolerance education, and a disciplined
approach can help investors reach their long-term financial goals.
We understand that market
volatility is uncomfortable, but it is not unusual or unexpected. If you have
any questions or would like to discuss recent events, please contact your
financial advisor.
Data as of 8/28/15
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500 (Domestic Stocks)
|
0.9%
|
-3.4%
|
-0.4%
|
12.2%
|
13.7%
|
5.1%
|
Dow Jones Global ex-U.S.
|
0.0
|
-4.9
|
-13.2
|
3.3
|
2.5
|
1.9
|
10-year Treasury Note (Yield Only)
|
2.2
|
NA
|
2.3
|
1.6
|
2.6
|
4.2
|
Gold (per ounce)
|
-1.9
|
-5.4
|
-12.2
|
-12.0
|
-1.9
|
10.2
|
Bloomberg Commodity Index
|
1.8
|
-14.4
|
-29.3
|
-14.8
|
-7.5
|
-6.2
|
DJ Equity All REIT Total Return
Index
|
-2.9
|
-4.7
|
2.1
|
8.5
|
12.8
|
7.0
|
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.
how bad is traffic congestion in the united states? It’s so bad, the average American spends the
equivalent of about five vacation days sitting in traffic every year – and that’s
just the tip of the iceberg.
As it turns outs, the Great
Recession had a silver lining – less traffic and less congested roads. Today,
according to researchers at the Texas A&M Transportation Institute, employment
is up and so is the number of commuters on the road:
“According
to the 2015 Urban Mobility Scorecard, travel delays due to traffic
congestion caused drivers to waste more than 3 billion gallons of fuel and kept
travelers stuck in their cars for nearly 7 billion extra hours – 42 hours per
rush-hour commuter. The total nationwide price tag: $160 billion, or $960 per
commuter.”
Of course, in some cities,
people spend a lot more time inching along freeways. In Washington, D.C.,
drivers spend about 82 hours each year commuting; in Los Angeles, 80 hours; in
San Francisco, 78 hours; and in New York, 74 hours. Across the nation, by 2020,
commuter delays are expected to increase from 42 hours to 47 hours on average,
raising the cost of congestion from $160 billion to $192 billion.
What’s to be done? Cities
like Singapore, London, San Diego, Stockholm, and Milan have adopted
“congestion pricing.” In San Diego, express toll-lanes allow drivers to bypass
gridlocked free lanes, if they are willing to pay a fee. Other cities have
cordon pricing. Drivers are charged a fee each time they enter a congested
area, such as a city center. The state of Oregon is charging per mile driven (a
system the state may use to replace fuel taxes in the future) and may begin to
charge a higher rate for miles traveled during periods of congestion on heavily
used roads.
Weekly
Focus – Think About It
“If opportunity doesn't knock, build a door.”
--Milton Berle, Comedian
Best regards,
Leif M. Hagen
Leif M. Hagen, CLU, ChFC
LP Financial Advisor
Securities
offered through LPL Financial Inc.,
Member
FINRA/SIPC.
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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.
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Sources:
http://www.barrons.com/articles/dow-ends-higher-after-global-tumult-1440826661?mod=BOL_hp_we_columns (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/08-31-15_Barrons-Dow_Ends_Higher_After_Global_Tumult-Footnote_1.pdf)
http://www.wsj.com/articles/global-stocks-stabilize-after-u-s-data-commodities-rally-1440748637 (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/08-31-15_WSJ-US_Stocks_Cap_Volatile_Period_with_Weekly_Gains-Footnote_3.pdf)
http://www.barrons.com/articles/two-bulls-keep-the-faith-on-u-s-stocks-1440826633?mod=BOL_hp_we_columns (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/08-31-15_Barrons-Two_Bulls_Keep_the_Faith_on_US_Stocks-Footnote_4.pdf)
