PEEK OF THE WEEK
January 31, 2017
Leif Hagen & Donna Roberts
The Markets
An historic
moment for U.S. stock markets…
The Dow Jones Industrial Average
surpassed 20,000 last week. Barron’s
cautioned investors not to make too much of the milestone since, “There are
only 30 stocks in the index so each one carries a lot of weight.”
Regardless of the significance
of the Dow’s move, U.S. stock markets generally were upbeat about President
Trump’s first week in office. Financial
Times reported ‘animal spirits’ – a term British economist John Maynard
Keynes used to describe the emotions that drive consumer and investor
confidence – returned as rapid executive action indicated the new President
would follow through on campaign promises, including infrastructure spending.
“However, the Trump trade –
reflecting hopes of tax cuts, higher infrastructure spending, and an easing in
business regulation – that had dominated financial markets since November also
underwent a subtle shift this week. While financial shares still shone, it was
sectors that will benefit from infrastructure spending and cope with higher
inflation that led the way. Up 3.4 percent, the materials sector was the best
performer on the S&P 500 with miners also seeing gains.”
Concerns
about trade protectionism and rising inflation lingered.
U.S. stocks upward move was also
supported by earnings growth. At the end of each quarter, companies report
their earnings (which indicate how much profit they made during the period). FactSet reported 34 percent of companies
in the Standard & Poor’s 500 Index have reported fourth quarter earnings,
so far. Altogether, earnings are 2.7 percent above the estimates, although they
remain below the five-year average.
Markets could be in for a bumpy
ride next week as investors weigh in on President Trump’s immigration ban. Bloomberg reported one large technology
company, “…inserted language in a securities filing on Thursday on the issue,
cautioning investors that immigration restrictions ‘may inhibit our ability to
adequately staff our research and development efforts.’”
Data as of 1/27/17
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500
(Domestic Stocks)
|
1.0%
|
2.5%
|
21.9%
|
8.8%
|
11.8%
|
4.9%
|
Dow Jones Global ex-U.S.
|
1.6
|
4.1
|
15.3
|
-1.0
|
2.3
|
-0.9
|
10-year Treasury Note (Yield
Only)
|
2.5
|
NA
|
2.0
|
2.8
|
1.9
|
4.9
|
Gold (per ounce)
|
-1.3
|
2.2
|
6.2
|
-2.0
|
-7.3
|
6.3
|
Bloomberg Commodity Index
|
-0.5
|
0.5
|
15.6
|
-11.2
|
-9.7
|
-5.8
|
DJ Equity All REIT Total
Return Index
|
-0.8
|
0.0
|
14.4
|
12.3
|
10.5
|
4.3
|
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.
are your children smart shoppers? Science Daily reported a meta-analysis
of 73 studies nationwide evaluated parenting styles and children’s buying
habits. The findings suggest, “children raised by parents who set limits and
explain the reason behind these limits are most likely to develop into wise
consumers.”
The study, which was conducted
by the Society for Consumer Psychology,
looked at the ways parents raise and communicate with their children. It
defined four basic parenting styles:
·
Authoritative
parents generally tell children what to do and also explain why the
children should do it. “These parents tend to relate quite effectively with
their children and expect them to act maturely and follow family rules, while
also allowing a certain degree of autonomy.”
·
Authoritarian
parents are restrictive, too. They tell children what to do, but don’t
often explain why it should be done. These parents are “…not as likely to
exhibit as much warmth in their communications.”
·
Neglecting
parents don’t offer much guidance or actively monitor children’s
activities. “They neither seek nor use parental power and control and, as a result,
communication between Neglecting parents and their children is generally
strained and minimized.”
·
Indulgent
parents often “…give children adult rights without concomitant
responsibilities while maintaining an open communication environment with
children.” These parents are described as “lenient, compliant, accepting,
affirmative, and non-punitive.”
The researchers concluded
children whose parents take an authoritative approach to parenting tend to make
better choices. The children choose to consume healthier foods (like fruits and
vegetables), make better safety decisions (such as wearing a bike helmet),
develop self-esteem, and offer viable opinions with regards to family
consumption decisions.
Weekly Focus – Think About It
“Americans of all ages, all
conditions, all minds constantly unite. Not only do they have commercial and
industrial associations in which all take part, but they also have a thousand
other kinds: religious, moral, grave, futile, very general and very particular,
immense and very small; Americans use associations to give fêtes, to found
seminaries, to build inns, to raise churches, to distribute books, to send
missionaries to the antipodes; in this manner they create hospitals, prisons,
schools. Finally, if it is a question of bringing to light a truth or
developing a sentiment with the support of a great example, they associate.”
--Alexis de Tocqueville,
Author of ‘Democracy in America’
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:
https://www.ft.com/content/bfb966b4-e3e5-11e6-8405-9e5580d6e5fb (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/01-30-17_FinancialTimes-Trump_Trade_Picks_Up_Speed_in_Presidents_First_Week-Footnote_3.pdf)
