“Peek of the Week”
Market Commentary
January 13, 2020
The Markets
It
was a nerve-wracking week.
Iran
fired 22 ballistic missiles at the Ain Al Asad air base near western Iraq and a
second base in northern Iraq following last week’s U.S. drone strike that
killed a top Iranian military commander. Newsweek reported the bases
suffered minimal damage and there were no casualties from the attack. However,
Iran mistakenly downed a commercial airliner, killing all on board, reported CBS
News.
U.S.
stock prices faltered after the initial attack, but recovered quickly when both
sides, “…step[ped] back from further violent escalation…,” reported Barron’s.
U.S.
Treasury bond yields dropped sharply last week before rebounding. Financial
Times reported the possibility of war caused global investors to seek out investments
perceived to be safe havens. Record amounts of cash moved into bond investments,
particularly U.S. Treasuries, during the week ended last Wednesday.
Australia
was ravaged by wildfires. Citing the Insurance Council of Australia, NPR
reported, “The wildfires have killed more than two dozen people, more than a
billion animals. They've destroyed more than 1,800 houses, an untold number of
commercial buildings and thousands of acres of prime farmland…” At the end of
last week, 130 fires were burning and 50 were uncontained, according to the BBC.
The damage could mark the end Australia’s nearly 30-year economic expansion.
Puerto
Rico was shaken by a 5.9 magnitude earthquake. The quake followed a magnitude
6.4 quake that hit the same region four days earlier, reported the
Associated Press. Since December 28, the region has been hit by, “…more
than 1,280 earthquakes, of which more than 100 were felt and more than 70 were
of magnitude 3.5 or greater.”
On
Friday, a tepid U.S. employment report cooled U.S. stock returns. However, Barron’s
reported all three major U.S. indices closed, “within a half-percentage point
of their highest-ever closes.”
Data as of
1/10/20
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic Stocks)
|
0.9%
|
1.1%
|
25.8%
|
12.9%
|
10.0%
|
11.0%
|
|
Dow Jones Global ex-U.S.
|
0.2
|
0.5
|
14.4
|
6.7
|
3.7
|
2.4
|
|
10-year Treasury Note (Yield Only)
|
1.8
|
NA
|
2.7
|
2.4
|
1.9
|
3.8
|
|
Gold (per ounce)
|
0.3
|
2.0
|
20.3
|
9.3
|
4.8
|
3.0
|
|
Bloomberg Commodity Index
|
-0.8
|
-0.2
|
1.5
|
-2.4
|
-4.6
|
-5.5
|
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; 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, MarketWatch, 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.
More
milestones of the past decade. As we mentioned last week, the period from
2010 through 2020 was filled with memorable events. We covered a few in last
week’s commentary. Here are some more:
·
Gangnam Style. In 2012, Korean pop music went viral with Gangnam Style. Its online
video became the first to be viewed one billion times.
·
Total solar eclipse. For the first time since June 1918, a solar eclipse was visible across
the entire United States in August 2017. We won’t have to wait so long for the
next one. Good Housekeeping reported it will happen in 2024.
·
Economic confidence
increased. In January 2010, Gallup reported just
9 percent of Americans said it was a good time to find a quality job. By the
end of 2019, the number had increased to 66 percent.
·
Bionic men, women,
and children. Bionic people are no longer limited to the
realm of science fiction. Prosthetics “…are morphing into mind-controlled
extensions of the human body that let their wearers feel what they're
touching,” reported CNET.
·
Trillion-dollar stock
valuations. Late in the decade, three companies in the technology
sector saw their stock valuations reach thirteen digits. Not all have remained
at that level.
·
Global middle class
expansion. At the end of last year, about one-half of
the world belonged to the middle class, according to the World Data Lab.
Middle class means different things in different countries. Middle class income
ranged from $3,872 a year to $38,720 a year.
·
The U.S. wealth gap. The St. Louis Federal Reserve explained the gap like this: The ‘income
pie’ in the United States grew from $7 trillion in 1989 to almost $12.9
trillion in 2016. The share of pie going to the top 10 percent of earners
increased from 42 percent to 50 percent. Lower earners’ shares shrank.
Weekly Focus – Think About It
“After many
months of reflection and internal discussions, we have chosen to make a
transition this year in starting to carve out a progressive new role within
this institution. We intend to step back as ‘senior’ members of the Royal Family
and work to become financially independent, while continuing to fully support
Her Majesty The Queen. It is with your encouragement, particularly over the
last few years, that we feel prepared to make this adjustment. We now plan to
balance our time between the United Kingdom and North America, continuing to
honor our duty to The Queen, the Commonwealth, and our patronages. This
geographic balance will enable us to raise our son with an appreciation for the
royal tradition into which he was born, while also providing our family with
the space to focus on the next chapter, including the launch of our new
charitable entity. We look forward to sharing the full details of this exciting
next step in due course, as we continue to collaborate with Her Majesty The
Queen, The Prince of Wales, The Duke of Cambridge, and all relevant parties.
Until then, please accept our deepest thanks for your continued support.”
--The Duke and Duchess of Sussex
Best regards,
Leif
M. Hagen
Leif M. Hagen, CLU ChFC
LPL Financial Advisor
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Securities
offered through LPL Financial, Member FINRA/SIPC.
*
These views are those of Carson Coaching, and not the presenting
Representative, the Representative’s Broker/Dealer, or Registered Investment
Advisor, and should not be construed as investment advice.
*
This newsletter was prepared by Carson Coaching. Carson Coaching is not
affiliated with the named firm.
*
Government bonds and Treasury Bills are guaranteed by the U.S. government as to
the timely payment of principal and interest and, if held to maturity, offer a
fixed rate of return and fixed principal value.
However, the value of fund shares is not guaranteed and will fluctuate.
*
Corporate bonds are considered higher risk than government bonds but normally
offer a higher yield and are subject to market, interest rate and credit risk
as well as additional risks based on the quality of issuer coupon rate, price,
yield, maturity, and redemption features.
*
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.
*
All indexes referenced are unmanaged. The volatility of indexes could be
materially different from that of a client’s portfolio. Unmanaged index returns
do not reflect fees, expenses, or sales charges. Index performance is not
indicative of the performance of any investment. You cannot invest directly in
an index.
*
The Dow Jones Global ex-U.S. Index covers approximately 95% of the market
capitalization of the 45 developed and emerging countries included in the
Index.
*
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.
*
The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an
index representing 30 stock of companies maintained and reviewed by the editors
of The Wall Street Journal.
*
The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ
system.
*
International investing involves special risks such as currency fluctuation and
political instability and may not be suitable for all investors. These risks
are often heightened for investments in emerging markets.
*
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.
* The foregoing information has
been obtained from sources considered to be reliable, but we do not guarantee
it is accurate or complete.
*
There is no guarantee a diversified portfolio will enhance overall returns or
outperform a non-diversified portfolio. Diversification does not protect
against market risk.
*
Asset allocation does not ensure a profit or protect against a loss.
*
Consult your financial professional before making any investment decision.
*
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