PEEK OF THE WEEK
January 21, 2017
Leif Hagen & Donna Roberts
The Markets
Up!
Four major U.S. benchmark stock
indices closed at record highs for four consecutive days during Valentine’s Day
week, reported Financial Times (FT).
To date, positive corporate
earnings and robust investor confidence have offset fiscal and political
uncertainty and helped push U.S. stock markets higher, said sources cited by FT. With 82
percent of companies in the Standard & Poor’s 500 Index reporting,
corporate earnings are up 4.6 percent for the fourth quarter of 2016, and the Investors
Intelligence Advisors Sentiment survey showed bullishness at a 12-year high
last week, according to CNBC.com.
While bullish performance is
welcome by stock investors, a Barron’s
article titled, ‘Memo to Investors: What Goes Up Must Come Down,’ listed the
responses of traders at a firm whose chief market strategist asked:
“In order to stay long U.S.
equities, you have to believe...what? Here are some answers: Trump’s recent
troubles are just the typical pains of any new administration. The Federal
Reserve hikes rates twice, not three times, in 2017, and the yield on 10-year
Treasuries stays at or below 3 percent. Oil prices remain stable. The Street,
for once, is too pessimistic on earnings, but since analysts already forecast
profit growth of 10.5 percent in 2017 and 11.7 percent in 2018, lower taxes
must goose growth.
To this list, [the chief
strategist] added the following: Trump doesn’t introduce overtly protectionist
policies. U.S. growth stays in the 2 percent to 3 percent range until Trump’s
economic agenda passes Congress. And no geopolitical event either increases
global energy prices or dampens U.S. consumer confidence.”
Stock markets may be highly
valued, but the Conference Board Leading
Economic Index, which was designed to determine highs and lows in the
business cycle, indicates the U.S. economy is doing well. The index increased
for three consecutive months (November through January). The Conference Board’s
director of business cycles and growth research, Ataman Ozyildirim, said, “The
January gain was broad based among the leading indicators. If this trend
continues, the U.S. economy may even accelerate in the near term.”
Data as of 2/17/17
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500
(Domestic Stocks)
|
1.5%
|
5.0%
|
22.0%
|
8.5%
|
11.6%
|
4.9%
|
|
Dow Jones Global ex-U.S.
|
0.8
|
5.6
|
17.4
|
-1.4
|
1.9
|
-1.1
|
|
10-year Treasury Note (Yield
Only)
|
2.4
|
NA
|
1.8
|
2.7
|
2.0
|
4.7
|
|
Gold (per ounce)
|
0.7
|
6.8
|
2.3
|
-2.3
|
-6.4
|
6.3
|
|
Bloomberg Commodity Index
|
-1.4
|
0.7
|
15.9
|
-12.8
|
-9.6
|
-6.2
|
|
DJ Equity All REIT Total
Return Index
|
0.2
|
2.1
|
19.6
|
11.0
|
10.9
|
4.1
|
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.
things you didn’t know your cat wanted. Cat
wine didn’t win the first Pet Care Innovation Prize – that went to a
dishwasher-safe bowl that connects to the pet owner’s phone and Wi-Fi – but the
product has been in the news. Hostilities appear to have broken out between
competing start-up companies that make faux wine for cats (and a few faux wines
for discriminating dogs). The New York
Times reported:
“But already the company that
brought its products to market first…‘the original cat winery’ – is accusing
its newer competitor…of being a copycat…Both have come up with clever names for
their products: For $11.95, people can buy Fluffy an 8-ounce bottle of
Catbernet or Pinot Meow…Or for $14.95, they can pour 12 ounces of Meow &
Chandon…Since alcohol can harm cats, these products are essentially catnip
water, which can make a cat loopy and an owner happy. But based on a wine
tasting I conducted at a local cat cafe-slash-adoption center, the products are
primarily catnip for the owners: The shelter cats did not like wines from
either company – only two of them indulged – but the people visiting the tastings
loved the concept.”
The challenge for companies that
want cats to enjoy their wines, according to data from National Geographic, is the active ingredient in catnip – the oil
found on catnip’s stems and leaves – functions as a pheromone. While humans
have ingested catnip for years in teas that assist digestion or reduce tension,
cats prefer to smell the stuff. That could make the bouquet of cat wine quite
important. Next on the docket for the cat wine start-ups: products for the next
generation – kittens.
If cat wine sounds over-the-top
to you, ponder this: One of the cat wine start-ups sold half of a million
dollars worth of pet wines last year.
Weekly Focus – Think About It
“Stories matter. Many stories
matter. Stories have been used to dispossess and to malign, but stories can
also be used to empower and to humanize. Stories can break the dignity of a
people, but stories can also repair that broken dignity.
--Chimamanda Ngozi Adichie,
Nigerian novelist
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:
https://www.ft.com/content/1bb7875e-f488-11e6-95ee-f14e55513608 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-21-17_FinancialTimes-US_Economy_Props_Wall_Street_Rally_as_Investors_Wait_on_Trump_Policies-Footnote_1.pdf)
http://www.barrons.com/articles/memo-to-investors-what-goes-up-must-come-down-1487399135?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-21-17_Barrons-Memo_to_Investors-What_Goes_Up_Must_Come_Down-Footnote_4.pdf)
