September 12, 2016
Leif Hagen and Donna Roberts
The
Markets
Blame it on the
central banks!
After 44 consecutive sleepy, summer days when Barron’s reported the Standard & Poor’s 500 Index opened and
closed without a 1 percent move in either direction, the index tumbled last
week – and so did indices in other markets around the world. What roused
investors from complacency? Some experts pointed their fingers at central
banks:
“Three central banks announced their monetary policy decisions
during the week and all three maintained the status quo and did not change
policy. The news disappointed the markets – they were looking for more
stimulus. And, in some cases, good economic data was interpreted as bad news
because it meant that there was less of a probability of more stimulus.”
The U.S. Federal Open Market Committee doesn’t meet until
September 20, but markets reacted sharply after Boston Fed President Eric
Rosengren (whom Thomson Reuters
labels as a dove) said, “My personal view, based on economic data that we have
received to date, is that a reasonable case can be made for continuing to
pursue a gradual normalization of monetary policy.” After his speech, Reuters reported the odds of a September
Fed rate increase rose from 24 percent to 30 percent.
Expectations for market volatility moved higher, too, but markets
weren’t too worried. The CBOE Volatility index (VIX) jumped 33 percent on
Friday, reaching 16.56, according to MarketWatch.
That was a big move, but significant market volatility is not indicated until
the VIX moves above 20.
Data as of 9/9/16
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard
& Poor's 500 (Domestic Stocks)
|
-2.4%
|
4.1%
|
9.6%
|
8.4%
|
13.0%
|
5.1%
|
Dow
Jones Global ex-U.S.
|
0.2
|
4.1
|
3.3
|
-0.6
|
2.8
|
0.2
|
10-year
Treasury Note (Yield Only)
|
1.7
|
NA
|
2.2
|
2.9
|
1.9
|
4.8
|
Gold
(per ounce)
|
0.5
|
25.3
|
19.9
|
-1.4
|
-6.4
|
8.5
|
Bloomberg Commodity Index
|
1.2
|
7.0
|
-4.8
|
-13.6
|
-12.2
|
-6.4
|
DJ Equity All REIT Total
Return Index
|
-3.8
|
10.6
|
24.6
|
13.5
|
14.0
|
6.3
|
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’s changing
in world markets? grocery shopping! Groceries may be mundane, but they’re big business. By 2020, the
value of the world’s grocery market is expected to reach $11.8 trillion,
according to The Institute of Grocery
Distribution (IGD). The largest markets are expected to be China, United
States, India, and Russia. That’s not the interesting part, though.
According to Morgan Stanley,
fewer people will gather food by carting up and down the aisles of local
grocery stores. Instead, in many countries, people will fill their baskets
online. Globally, the share of shoppers buying groceries via the Worldwide Web
and having them delivered is expected to grow from 21 percent in 2015 to 34
percent in 2016:
“Several factors may be driving the trend. Generally, more
shoppers are accustomed to buying online, including a younger, more mobile
generation of consumers. More specifically, boutique online-only grocery
services in recent years have proven that the business model can work,
overcoming logistical and consumer-behavioral barriers and building credibility
for the category as a whole. Now, larger traditional players have entered the
arena, offering more choices, services, and attractive prices, all within
familiar eCommerce experiences and expectations for an even larger audience.”
Developed economies are expected to experience faster adoption
rates. For instance, fewer than 10 percent of Americans bought fresh groceries
online last year, but this year the percentage is expected to reach 26 percent.
In Germany, just 10 percent of shoppers purchased groceries online. In 2016,
that number is expected to rise to 36 percent.
In emerging markets, the expansion of online grocery shopping is
dependent on the expansion of mobile networks. In countries like China and
India, online grocers must leverage mobile networks to grow their market share.
Weekly Focus –
Think About It
“People
have been starting to focus less on the disability and more on the actual
sport. I’ve had so many interviews that don’t even mention the backstory of how
I became an amputee or whatever. I prefer that – I prefer being on the back
pages with the rest of the sportsmen, not being just a heart-warming story.”
--Jonnie
Peacock, British paralympic sprinter
Warm almost autumn 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/worried-the-market-is-too-calm-bring-on-the-noise-1473485492?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/09-12-16_Barrons-Worried_the_Market_is_Too_Calm-Bring_on_the_Noise-Footnote_1.pdf)
http://www.barrons.com/mdc/public/page/9_3063-economicCalendar.html (Click on U.S. & Intl Recaps and then on "No new stimulus")
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