Peek of the Week
December 28, 2015
The Markets
It was a short week, but it wasn’t quiet.
Oil prices moved higher, according to The Wall Street Journal, after the U.S.
Energy Information Administration reported crude-oil inventories fell unexpectedly
last year. Analysts had predicted oil supplies would rise.
One expert cited by The Wall Street Journal suggested the stockpile decline and
subsequent oil price rally owed much to Gulf Coast refiners reducing
inventories “to mitigate state ad valorem taxes on year-end crude stocks.” If
that’s the case, the oil price increase may not be sustained.
Regardless, improving oil prices gave U.S. stock
markets a boost. In particular, the Standard & Poor’s 500 Index (S&P
500) benefited from improving performance in the energy sector:
“Of 80 U.S. listed oil and gas producers, all but one
– a bankrupt company – rose on the day, with nearly half of the companies up
more than 10 percent. Energy shares were the biggest gainers Wednesday in the
S&P 500, up 3.8 percent and helped the S&P 500 on the whole gain 1.2
percent in late-afternoon trading.”
Barron’s reported energy stocks had gained 5 percent for the
week, but were still off by about 22 percent for the year.
The Organization of the Petroleum Exporting Countries
(OPEC) released its World Oil Outlook last week. BBC reported OPEC anticipates oil prices will begin to rise in
2016, although its producers’ share of the market is expected to shrink by 2020
as rival oil-producers proved to be more resilient in the face of low oil
prices than had been expected.
Data as of 12/24/15
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic Stocks)
|
2.8%
|
0.1%
|
-1.0%
|
13.1%
|
10.4%
|
5.1%
|
|
Dow Jones Global ex-U.S.
|
1.9
|
-6.2
|
-6.6
|
0.3
|
-0.7
|
0.7
|
|
10-year Treasury Note (Yield Only)
|
2.2
|
NA
|
2.2
|
1.8
|
3.4
|
4.3
|
|
Gold (per ounce)
|
0.9
|
-10.6
|
-8.9
|
-13.6
|
-4.9
|
7.5
|
|
Bloomberg Commodity Index
|
1.3
|
-24.8
|
-26.1
|
-17.3
|
-13.2
|
-7.4
|
|
DJ Equity All REIT Total
Return Index
|
2.0
|
2.6
|
1.7
|
10.6
|
11.8
|
7.2
|
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.
looking back… Each week, ‘The Economist Explains’ blog expounds
on subjects ranging from current events to economics, from philosophical or
scientific issues to everyday oddities. Let’s take a quick look at a few of its
headlines during 2015:
1. Why the
Swiss unpegged the Swiss franc
(January 18, 2015). Remember when the Swiss National Bank removed its currency
peg last January? The Swiss franc realized double-digit gains in value and the
Swiss stock market dropped.
2. Everything you want to know about falling oil prices (March 18, 2015). “The main
reason for falling prices is increased supply from America thanks to its
fracking boom, which has reduced its demand for oil imports. Other countries,
notably Saudi Arabia, have been loth to curb supply lest they lose their share
of the global oil market.”
3. Why so many
Dutch people work part time (May 11,
2015). More than one-half of the working population in Netherlands is employed
part-time – a higher percentage than anywhere else in the world. “This is
partly a relic of prevailing Christian attitudes which said that mothers should
be home for tea time and partly down to the wide availability of well-paid
“first tier” part-time jobs.”
4. What Greece
must do to receive a new bail-out
(July 14, 2015). After challenging negotiations, Greece and its European
creditors cut a deal, allowing the country to remain in the euro area.
5. China’s botched stock market rescue
(July 30, 2015). Chinese
stocks lost nearly a third of their value last summer. China’s authorities
“resorted to heavy-handed measures to prop up swooning share prices, from
pressuring banks to buy stocks to blocking big investors from selling theirs.”
6. Why is the
Nobel prize in chemistry given for things that are not chemistry (October 7, 2015)? Apparently, five of the last 10
Nobel chemistry prizes have been awarded for pursuits that might better be
described as biology. A possible explanation is “the diversity of chemistry
prizes reflects the fact that chemistry is found everywhere…”
7. How the Fed
will raise interest rates (December
14, 2015). Just as the Fed employed unconventional monetary tools to stimulate
the economy, it is using new policy tools to try to increase the Fed funds
rate.
We
hope 2015 has been a memorable and rewarding year for you, and we look forward to
working with you in the New Year.
Weekly
Focus – Think About It
“It
is not enough to have a good mind; the main thing is to use it well.”
--Rene Descartes, French philosopher, mathematician,
and scientist
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.
* To unsubscribe from the
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Sources:
http://www.wsj.com/articles/crude-prices-up-despite-bearish-brent-wti-indicators-1450868795 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/12-28-15_WSJ-Oil_Prices_Rally_After_Large_Fall_in_US_Stockpiles-Footnote_1.pdf)
http://www.barrons.com/articles/stocks-rise-3-leaving-s-p-500-flat-on-year-1451108350?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/12-28-15_Barrons-Stocks_Rise_3_Percent_Leaving_S%26P_500_Flat_on_Year-Footnote_2.pdf)
http://www.economist.com/blogs/economist-explains/2015/01/economist-explains-13 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/12-28-15_TheEconomist-Why_the_Swiss_Unpegged_the_Franc-Footnote_4.pdf)
http://www.economist.com/blogs/economist-explains/2015/12/year-explained-0 (or
go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/12-28-15_TheEconomist-Why_So_Many_Dutch_People_Work_Part-time-AND-Everything_You_Want_to_Know_About_Falling_Oil_Prices-Footnote_5.pdf)
http://www.economist.com/blogs/economist-explains/2015/07/economist-explains-10 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/12-28-15_TheEconomist-What_Greece_Must_Do_to_Receive_a_New_Bailout-Footnote_6.pdf)
http://www.economist.com/blogs/economist-explains/2015/07/economist-explains-22 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/12-28-15_TheEconomist-Chinas_Botched_Stock_Market_Rescue-Footnote_7.pdf)
http://www.economist.com/blogs/economist-explains/2015/10/economist-explains-9 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/12-28-15_TheEconomist-Why_is_the_Nobel_Prize_in_Chemistry_Given_for_Things_that_are_not_Chemistry-Footnote_8.pdf)
http://www.economist.com/blogs/economist-explains/2015/12/economist-explains-10 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/12-28-15_TheEconomist-How_the_Fed_Will_Raise_Interest_Rates_Footnote_9.pdf)
