January 10, 2017
The Markets
…And, they’re off!
Bullish sentiment helped world
equity markets get off to a fast start last week. Just name a country or region
– developed markets, emerging markets, the United States, Latin America, Asia,
Europe, the United Kingdom – and it’s likely the area’s benchmark index may
have been up for the week.
Not everyone was in the bullish camp, though. Barron’s reported:
“The market optimism is understandable.
After a long spell of zero interest rates, a baton transfer from monetary
manipulation to fiscal stimulus and pro-growth chutzpah can be an exciting
regime change…But investors’ hopes could be misplaced. It would be one thing if
there were shovel-ready infrastructure projects or proposed tax cuts on the
table that could quickly boost spending. Instead, Republicans propose, for
example, changing the basis for corporate tax from location of operations to
location of sales. The aim is to encourage domestic production and exports, but
the plan could hurt companies that import materials or goods. Will big
importers like [big box stores] pass the tax hit onto consumers by raising
prices?”
For
contrarians, record highs for U.S. stock markets (both the Standard &
Poor’s 500 Index and NASDAQ closed at new highs last week) and strong bullish
sentiment (Barron’s reported, “The
Investors Intelligence survey of newsletter writers showed the bullish herd
swelling above 60 percent...”) are red flags, signaling an inflection point may
be near.
No matter which camp you fall into, there is a lot of
uncertainty. Which policies will the new administration pursue? Will China’s
growth slow more quickly than expected? How quickly will the Federal Reserve
raise rates? Will interest rates continue to move higher? Will a stronger
dollar negatively affect emerging markets? In the face of so much uncertainty,
it’s important to be diversified.
Data as of 1/6/17
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500
(Domestic Stocks)
|
1.7%
|
1.7%
|
14.4%
|
7.6%
|
12.3%
|
4.9%
|
Dow Jones Global ex-U.S.
|
2.0
|
2.0
|
8.3
|
-2.4
|
3.3
|
-0.9
|
10-year Treasury Note (Yield
Only)
|
2.4
|
NA
|
2.2
|
3.0
|
2.0
|
4.7
|
Gold (per ounce)
|
1.5
|
1.5
|
7.7
|
-1.9
|
-6.2
|
6.8
|
Bloomberg Commodity Index
|
-0.2
|
-0.2
|
14.0
|
-11.3
|
-9.3
|
-5.7
|
DJ Equity All REIT Total
Return Index
|
2.0
|
2.0
|
10.6
|
13.2
|
12.4
|
5.4
|
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 you thinking
about starting a business? Small businesses in the United States
employed 56.8 million people or 48 percent of the private workforce in 2013
(the latest numbers available), according to the U.S. Small Business
Administration. That’s pretty remarkable when you realize that 34 percent of
small businesses employ fewer than 100 people.
If you’re thinking of starting a
business, the AARP suggests you carefully consider legal and tax issues,
including:
·
Business
structure. Will you be a sole proprietor? Or will you establish a
corporation, limited liability company, or partnership? The structure of your
business will affect taxes, liability, and other matters.
·
Licensing.
Many cities and states require a new business to register, apply for a business
license, and pay an annual fee to do business.
·
Tax
payments. Talk with a tax professional to determine whether you need to
make quarterly tax payments. Also, be aware that people who work for themselves
pay both the employer and employee portions of Social Security and Medicare
taxes. You’ll want to factor that in when deciding pricing for products or
services.
·
Recordkeeping.
In many cases, your business will need its own bank account and credit
cards. You’ll also need a system for tracking business receipts and
expenditures. Investing in business accounting software can make recordkeeping
a lot easier.
·
Contracts.
Contracts specify deadlines, terms of payment, and other particulars, ensuring
everyone shares the same understanding and expectations. If your client asks
you to sign a contract or asks you to provide a contract, consult with your
attorney.
·
Liability
insurance. Professional liability insurance protects you if you’re ever
sued, and some clients may require you to have coverage. Talk with your
financial or insurance professional to determine what type of coverage you may
need.
Of course, when you work for
yourself, it’s critical to set money aside for retirement. Contact your
financial and/or tax professional to discuss options that might work for you.
Weekly Focus – Think About It
“We have neglected the truth
that a good farmer is a craftsman of the highest order, a kind of artist.”
--Wendell Berry, American
novelist and poet
Warm regards from Eagan,
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,
please remind your friends and family members becoming Medicare eligible that
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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.barrons.com/articles/cheering-and-fearing-the-post-trump-rally-1483767229?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/01-09-17_Barrons-Cheering_and_Fearing_the_Post-Trump_Rally-Footnote_1.pdf)
http://www.barrons.com/mdc/public/page/9_3063-economicCalendar.html?mod=BOL_Nav_MAR_hps (Click
on U.S. & Intl Recaps, then on "Equities rise to the occasion") (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/01-09-17_Barrons-Global_Stock_Market_Recap-Footnote_2.pdf)
http://www.barrons.com/articles/no-cigar-yet-dow-stops-short-of-20-000-1483767234 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/01-09-17_Barrons-No_Cigar_Yet-Dow_Stops_Short_of_20000-Footnote_4.pdf)
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