Peek of the Week
May 26, 2015
You could have set the events of last week to music.
Should they stay or should they go?
Last week, the Bank of England (BOE), Britain’s
central bank, inadvertently sent a memo describing how staffers should handle press
inquiries about its confidential research into the possibility of a British
exit (Brexit) from the European Union, to the media. Oops.
The possibility of a Brexit is
top-of-mind after the re-election of British Prime Minister David Cameron who
promised voters a referendum on the issue by the end of 2017. Reuters reported, “Many British business leaders are worried about the
possibility of losing access to their main export markets and there are also
concerns about the impact on Britain's financial services industry.”
There is no
job too immense when you’ve got confidence.
Just before the long holiday weekend, while confirming
the Federal Reserve still expects to begin raising its benchmark interest rate
during 2015, Chairwoman Janet Yellen’s comments took a philosophical turn:
“Of course, the outlook for the
economy, as always, is highly uncertain. I am describing the outlook that I see
as most likely, but based on many years of making economic projections, I can
assure you that any specific projection I write down will turn out to be wrong,
perhaps markedly so. For many reasons, output and job growth over the next few
years could prove to be stronger, and inflation higher, than I expect;
correspondingly, employment could grow more slowly, and inflation could remain
undesirably low.”
Money, it’s a
gas.
When oil prices fell, many people assumed consumers
would spend the windfall. For the most part, they didn’t. Barron’s reported earnings for several retailers were lower than
expected last week.
All in all, it wasn’t a very exciting week for U.S.
stock markets.
Data as of 5/22/15
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500 (Domestic Stocks)
|
0.2%
|
3.3%
|
12.3%
|
17.3%
|
14.6%
|
5.9%
|
Dow Jones Global ex-U.S.
|
-0.7
|
8.6
|
0.4
|
10.1
|
6.7
|
3.9
|
10-year Treasury Note (Yield Only)
|
2.2
|
NA
|
2.6
|
1.8
|
3.2
|
4.1
|
Gold (per ounce)
|
-1.3
|
0.4
|
-7.3
|
-8.7
|
0.3
|
11.2
|
Bloomberg Commodity Index
|
-2.7
|
-1.8
|
-24.4
|
-8.7
|
-3.8
|
-3.6
|
DJ Equity All REIT Total Return
Index
|
-1.2
|
-0.6
|
12.5
|
12.9
|
15.1
|
7.9
|
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.
changing wages. The federal minimum wage remains at $7.25. However, last
week, the Los Angeles city council voted to raise the city’s minimum wage from
$9 to $15 an hour. The increase will be implemented gradually between 2015 and
2020. It is hoped higher wages for minimum wage workers will help address
cost-of-living issues that affect LA’s poorer residents, according to The Economist.
Did
the minimum wage really need to increase by two-thirds? According to the Massachusetts Institute of Technology (MIT)
Living Wage Calculator, an individual living in the Los Angeles-Long
Beach-Santa Ana area, who was the sole provider for his or her family (1 adult,
2 children) and worked 2,080 hours a year, would need to earn about $29.84 an
hour to earn a living wage and $9.00 an hour to live at poverty level. The
living wage is different in various parts of the country. For example, the
living wage for the same family if they lived in:
Is
a higher minimum wage good for business? It depends on the business model
employed. One Harvard Business Review
blogger opined:
“The smart way to deal with an increase in the minimum
wage is to design work in a way that improves employees’ productivity and
increases their contribution to profits. All this is possible even in low-wage
settings. In fact, some companies are already doing it… When
I examined these companies, I saw that they made four choices in how they
designed their work. They: (1) offer less, (2) combine standardization with
empowerment, (3) cross-train, and (4) operate with slack. These choices
transform their heavy investment in employees into great performance by
reducing costs, improving employee productivity, and leveraging a fully capable
and committed workforce.”
There
is some food for thought.
Weekly
Focus – Think About It
“Everyone thinks of changing the world, but no one
thinks of changing himself.
--Leo Tolstoy, Russian
novelist
Best regards,
Leif M. Hagen
Leif
M. Hagen, CLU, ChFC
LP Financial Advisor
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Securities
offered through LPL Financial Inc., Member
FINRA/SIPC.
* 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:
