Peek of the Week
July 29, 2015
The Markets
There was a spate of bad news last week, and it drove
U.S. markets lower.
China’s wild ride isn’t over yet. The Purchasing
Managers’ Index, a private measure of Chinese manufacturing,came in below expectations at 48.2, according to BloombergBusiness. Results below 50
indicate the sector is contracting. That doesn’t bode well for growth in China, which is
the biggest global consumer of metals, grains, and energy,
or the rest of the world.
Things weren’t rosy in the United States either. Sales
of new homes in June came in below expectations, and the median new home price fell from a year ago. That news was a
U-turn from recent data indicating strength in the housing market.
Earnings news was also less than stellar. The Standard
& Poor’s 500 Index is kind of pricey, according to Reuters,and second quarter earnings for companies in the index
were mixed. Seventy-four percent of companies beat earnings expectations but not nearly as many delivered on expected
revenues.
Earnings weren’t the only issue on investors’ minds. Last
week, the Federal Reserve has signaled a September rate hike was a possibility. This week it inadvertently released
a confidential staff forecast that included estimates for inflation, unemployment, economic growth, and the fed funds rate.
The Washington Post reported:
“Currently,
the fed funds rate is between 0 and 0.25 percent, the same level it has been
since the financial crisis hit in
2008… The staff prediction is that the prevailing fed funds rate during the
fourth quarter will be 0.35 percent.
Though there is no reference to exactly when or how that could happen, analysts
say the most likely way is
for the central bank to raise its target rate in September.”
Experts cited by Barron’s
cautioned, “…it’s not the first rate hike that’s important. It is what comes
after that.” Stay tuned.
Data as of 7/24/15
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500 (Domestic Stocks)
|
-2.2%
|
1.0%
|
4.6%
|
15.8%
|
13.3%
|
5.4%
|
Dow Jones Global ex-U.S.
|
-2.0
|
1.9
|
-8.4
|
8.3
|
3.5
|
2.8
|
10-year Treasury Note (Yield Only)
|
2.3
|
NA
|
2.5
|
1.4
|
3.0
|
4.3
|
Gold (per ounce)
|
-4.6
|
-9.9
|
-16.4
|
-12.0
|
-1.8
|
9.8
|
Bloomberg Commodity Index
|
-4.4
|
-10.6
|
-27.7
|
-13.1
|
-6.4
|
-5.0
|
DJ Equity All REIT Total Return
Index
|
-0.5
|
-1.9
|
5.8
|
10.4
|
12.7
|
6.9
|
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.
a high school degree. Companies often take an interest in education.
Some involve themselves in community outreach efforts, sending employees to
teach financial literacy or
educate students about careers that demand knowledge of a particular field of
study. Others have foundations
that provide financial support to school districts.
Recently,
a new model of assistance was introduced. Pathways in Technology Early College
High Schools (P-Tech)
were the brainchild of New York City, City University of New York, and a large technology
company. The
schools offer a six-year educational program that combines public high school,
community college courses, and
paid work experience. Students graduate with an associate degree and it doesn’t
cost them a penny of tuition.
The first six students graduated from P-Tech – two years early – in June 2015. All received job offers from the technology company. Three accepted and three decided to go on to college. The Economist described one graduate, who opted for employment:
“He applies his programming and technical skills to a digital platform that provides market research
to his colleagues. It is a good job: he makes $50,000 a year, has a health-care package, and a pension plan. Mr. Saddler is 18 years old. He earned his high-school diploma last month. A few weeks before finishing school, he also received an associate degree in computer systems technology.”
Experts
cited by U.S. News & World Report
explained early college high schools help bridge the gap for students
from low-income families who sometimes struggle with the transition from high
school to college or
university.
Since
about 30 percent of the companies in the United States cannot fill open
positions, P-Tech is an idea that’s gaining
traction. More than 70 small and large companies are collaborating with high
schools and colleges to promote
the concept. Twenty-seven schools have been introduced in New York,
Connecticut, and Illinois, to date. Colorado
is expected to be the next state to follow suit.
Weekly
Focus – Think About It
“Rightful liberty is unobstructed action according to
our will within limits drawn around us by the equal rights of others.”
--Thomas Jefferson, Third President of the United States
Best regards,
Leif M. Hagen
Leif
M. Hagen, CLU, ChFC
LP Financial Advisor
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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:
