Sept. 28, 2015
The Markets
Oh, the uncertainty!
Investors are keeping one eye on the Federal Reserve
and the other on politicians trying to determine what may happen during the
last quarter of the year.
The Fed, which is the central bank of the United
States, is responsible for conducting monetary policy with an eye toward full
employment and stable prices. If, as St. Louis Fed President James Bullard told
Reuters, the economy is near full
employment and inflation is sure to rise, then why didn’t the Fed raise rates
in September?
Reuters reported voting members of the Federal Open Market
Committee (FOMC) decided uncertainty in global markets had the potential to
negatively affect domestic economic strength. Mr. Bullard believes the decision
puts an October increase in doubt, too, according to Nasdaq.com. Mr. Bullard
told reporters:
“For the committee, it's always hard to have made a
big decision at one meeting and come back at the next meeting. The key question
will be what kind of data did you get during the intervening period that
changed your mind, and it's not that clear what data we will have in hand in
October that we would be able to cite to support my position, relative to what
we had at the September meeting. But it is possible.”
Regardless, Chairwoman Janet Yellen made it clear last
week she expects to see a rate hike before year-end. That might have helped
settle markets, except Speaker of the House John Boehner resigned soon after
Yellen spoke. The Speaker’s resignation made a government shutdown this week
less likely, according to Barron’s.
However, fiscal policy issues haven’t been resolved. A meeting of the political
minds this week would set the stage for a mid-December showdown and that’s data
the Fed will have to consider if the December FOMC meeting occurs amidst a
government shutdown and debt-ceiling crisis.
No one seemed to be happy with the state of affairs
this week, and stock markets were awash in red ink.
Data as of 9/25/15
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic Stocks)
|
-1.4%
|
-6.2%
|
-1.8%
|
10.2%
|
11.1%
|
4.7%
|
|
Dow Jones Global ex-U.S.
|
-3.4
|
-9.2
|
-13.7
|
0.2
|
-0.1
|
0.9
|
|
10-year Treasury Note (Yield Only)
|
2.2
|
NA
|
2.5
|
1.7
|
2.5
|
4.3
|
|
Gold (per ounce)
|
0.5
|
-4.4
|
-5.5
|
-13.5
|
-2.4
|
9.5
|
|
Bloomberg Commodity Index
|
0.9
|
-15.2
|
-25.7
|
-15.5
|
-8.7
|
-6.6
|
|
DJ Equity All REIT Total Return
Index
|
-0.3
|
-4.7
|
8.4
|
9.0
|
11.6
|
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.
what will they say? Soon,
cars will be able to talk with one another. Vehicle-to-vehicle communication
(V2V) has been tested in Ann Arbor, Michigan, a relatively mild and polite
Midwestern town. Now, V2V is being rolled out in New York City, along with
technology that allows traffic signals to contribute their two cents. Just
imagine what a New York cab might have to say to another New York cab that
changes lanes without signaling.
Okay, it’s nothing like that.
The idea is to reduce traffic
accidents. If a dangerous situation arises an alert sounds. Gizmodo.com described it like this:
“These
sensors send out signals over a specific wireless spectrum band and also
receive them from other vehicles, creating a network of communicating sensors
that ping when there’s danger… A secondary form of the technology, called
Vehicle-to-Infrastructure, does the same thing – but with sensors embedded in
stop signs, traffic lights, and other pieces of road infrastructure.”
Soon, people will be able to
install V2V on smartphones so they can ping a warning to approaching cars as
well.
While V2V seems like a good
idea, pinging a warning to a distracted driver moments before a crash and
expecting them to respond appropriately may be asking too much. The Economist suggests that automation –
giving vehicles the ability to take over – cannot be far behind. “Depending on
how you look at it, that’s a good thing – or terrifying… opening cars and buses
up to computerized control also means opening them up to hackers… Imagine the
fun they could have if thousands more vehicles could be controlled from
computers or smartphones.”
Ultimately, intelligent
transportation systems are expected to optimize the number of vehicles that can
use roadways, helping save money that would otherwise be spent on expanding
infrastructure to accommodate population growth.
Weekly Focus –
Think About It
“Forgiveness is the fragrance that the violet sheds on
the heel that has crushed it.
--Mark Twain, American writer
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/vw-offers-a-lesson-in-perfidy-so-does-turing-pharmaceuticals-1443248114?mod=BOL_hp_we_columns# (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/09-28-15_Barrons-VW_Offers_a_Lesson_in_Perfidy-Footnote_4.pdf
