June 6, 2016
The Markets
Statistics means never having to say
your certain, and that was certainly true last week.
The employment report, which was released on Friday,
was a bit short on jobs. Analysts had predicted employers would add about
162,000 new jobs during May, according to CNBC.
Instead, a paltry 38,000 jobs added to payrolls.
The United
States Department of Labor focused on the fact the United States has
experienced 75 consecutive months of private-sector jobs growth, as well as the
significant decline in unemployment. The unemployment rate fell from 5.0
percent to 4.7 percent – but it was largely attributed to Americans leaving the
labor force.
United States Secretary of Labor Thomas E. Perez commented,
“At this point in a recovery, we expect to see trade-offs between job growth
and strong wage growth. Earnings growth in May was encouraging. So far this
year, average hourly earnings for private employees have increased 3.2 percent
at an annual rate.”
The anemic employment report triggered concern that
U.S. economic recovery may be slowing. That, in turn, means the Federal Reserve
may not implement measures designed to push interest rates higher during its
June meeting. CNBC reported the
probability of a Fed rate hike dropped from 21 percent to 4 percent after the employment
report.
U.S. markets were nonplussed. Barron’s reported the
Standard & Poor’s 500 Index finished the week flat. The Dow Jones
Industrial Index moved slightly lower, and the NASDAQ showed a slight gain.
Data
as of 6/3/16
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500
(Domestic Stocks)
|
0.0%
|
2.7%
|
-0.7%
|
8.6%
|
10.1%
|
5.2%
|
Dow Jones Global ex-U.S.
|
0.7
|
0.0
|
-12.6
|
-1.0
|
-1.5
|
-0.3
|
10-year Treasury Note (Yield
Only)
|
1.7
|
NA
|
2.4
|
2.1
|
3.0
|
5.0
|
Gold (per ounce)
|
2.0
|
16.8
|
4.2
|
-4.0
|
-4.2
|
6.8
|
Bloomberg Commodity Index
|
1.9
|
10.9
|
-13.7
|
-12.9
|
-12.1
|
-6.9
|
DJ Equity All REIT Total Return Index
|
1.0
|
7.6
|
13.7
|
10.2
|
11.3
|
7.0
|
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 are your wages worth? We’ve written about The Economist’s Big Mac Index, which is a lighthearted way to gauge
whether countries’ currencies are at the correct levels – just compare the
price of a hamburger in each country. At the start of the year, you could buy a
Big Mac pretty cheaply in Russia ($1.53), Hong Kong ($2.48), or Taiwan ($2.08).
There are
differences in how much things cost from state-to-state, too. Pew Research Center used federal wage
data to determine which regions of the United States had the lowest and highest
wages after adjusting for differences in cost-of-living:
“As
we’ve noted before, prices for everything from housing to groceries vary
widely from place to place, with the result being that a given income can mean
very different things in New York, New Orleans, or New Bern, North
Carolina. To get a handle on those variations, one can use the “regional
price parities,” or RPPs, developed by the federal Bureau of Economic Analysis.
The RPPs measure local price levels in each of the nation’s 381
metropolitan statistical areas, as well as the nonmetropolitan portions of
states, relative to the overall national price level.”
The highest
weekly wages for 3rd Quarter 2015, after adjusting for cost-of-living,
were found in: 1) San Jose-Sunnyvale-Santa Clara, California, 2)
California-Lexington Park, Maryland, 3) San Francisco-Oakland-Hayward, California,
and 4) Seattle-Tacoma-Bellevue, Washington.
The lowest
wages, after adjustment, were paid in: 1) Yakima, Washington, 2) Wenatchee,
Washington, 3) Logan, Utah-Idaho, and 4) Grants Pass, Oregon.
Weekly Focus – Think About It
“The best fishermen I know
try not to make the same mistakes over and over again; instead they strive to
make new and interesting mistakes and to remember what they learned from them.”
--John Gierach, American
author (and fisherman)
Best
regards,
Leif M. Hagen
Leif M. Hagen, CLU, ChFC
LP Financial Advisor
Securities offered through LPL Financial Inc., Member FINRA/SIPC.
P.S. Please feel free to forward this commentary to family, friends, or colleagues.
P.S.S. Also,
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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.cnbc.com/2016/06/03/odds-for-interest-rate-hikes-plunge-after-major-jobs-report-miss.html
http://online.barrons.com/mdc/public/page/9_3063-economicCalendar.html?mod=BOL_Nav_MAR_other (Click on U.S.
& Intl Recaps, then "Shock wave," and scroll down to Global Stock
Market Recap chart) (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/06-06-16_Barrons-Global_Stock_Market_Recap-Footnote_4.pdf)
http://www.economist.com/content/big-mac-index (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/06-06-16_TheEconomist-The_Big_Mac_Index-Footnote_5.pdf)
http://www.pewresearch.org/fact-tank/2016/06/02/where-wages-are-worth-the-most-and-least-in-the-u-s/
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