PEEK OF THE WEEK
March 30, 2017
Leif Hagen & Donna Roberts
The Markets
The Market
Three steps
and no stumble…
Technical analyst Edson Gould
developed a market rule of thumb known as ‘three steps and a stumble.’ It states
stock prices may fall after the Federal Reserve (Fed) raises the Fed funds rate
three times in a row without a decline, according to Market Technicians Association. [1]
The idea is three increases show
the Fed is serious about keeping rates at a relatively high level for a
significant length of time. Higher interest rates could potentially mean higher
costs and lower profits for businesses. As a result, stock investors may sell
shares and share prices may fall. [2]
Last week, with employment and
inflation data approaching Fed targets, the Federal Open Market Committee raised
rates for the third time, pushing the Fed funds target rate into the 0.75
percent to 1 percent range, reported Financial
Times: [3]
“Fed policymakers’ forecasts for
growth and inflation remained little changed, with growth tipped to be 2.1 percent
this year and next year, slipping to 1.9 percent in 2019. Core inflation is set
to be 1.9 percent in 2017 and 2 percent in the two following years. The
possibility of looser fiscal policy emerging from Congress has triggered
speculation that the central bank will have to further accelerate its
rate-rising campaign, but a number of policymakers are insistent that they want
to see firmer plans emerging from Congress before making a call on the impact
of possible tax cuts on the economy.”
Major U.S. stock market indices
finished the week higher, as did most markets in Europe and Asia. [4] MarketWatch indicated Asian markets were
encouraged by indications the Fed may not increase rates as often as expected
this year, [5] and CNBC reported European
markets were boosted by a better-than-expected outcome for mainstream parties
in Dutch elections. [6]
Data as of 3/17/17
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500
(Domestic Stocks)
|
0.2%
|
6.2%
|
16.6%
|
8.6%
|
11.0%
|
5.4%
|
|
Dow Jones Global ex-U.S.
|
2.4
|
7.8
|
10.8
|
-0.4
|
2.0
|
-0.6
|
|
10-year Treasury Note (Yield
Only)
|
2.5
|
NA
|
1.9
|
2.7
|
2.4
|
4.6
|
|
Gold (per ounce)
|
2.2
|
6.1
|
-2.9
|
-3.7
|
-5.8
|
6.5
|
|
Bloomberg Commodity Index
|
1.0
|
-2.7
|
4.8
|
-14.1
|
-10.3
|
-6.5
|
|
DJ Equity All REIT Total
Return Index
|
2.3
|
1.1
|
5.5
|
10.3
|
10.1
|
4.8
|
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.
I spy with my little eye…Robots! If you
take a cruise anytime soon, the bartender may not be able to lend an ear.
According to Financial Times, one
cruise line has installed robotic bartenders that produce one drink per minute
per arm, and can make up to 120 drinks an hour. [7]
It’s not just cruise lines,
either. The food industry in the United States is automating. Financial Times described food
preparation at a pizza restaurant in California: [7]
“…Pepe squirts tomato sauce on to a
pizza base before his colleague Marta spreads it; Noel has 22 seconds to
correct any imperfections and add cheese and other toppings, after which Bruno
takes the pizza from the line and places it in the oven. But on this production
line, only Noel is human. The others – anthropomorphised by name only – are
machines conducting tasks usually performed by people.”
The restaurant has 75 human
employees who earn about $18.00 an hour. They all are given opportunities to
take coding classes so they can better understand and manage robots as well as
the artificial intelligence used to evaluate delivery routes. [7]
Then, there is Sally, a robot
offered by a food robotics firm. Sally can produce “… fully-customized, fresh,
and healthy salads. Sally’s proprietary technology dispenses measured
quantities of more than 20 ingredients – refreshed daily – to create a
ready-to-eat meal any time of day.” Alternate versions of this robot will offer
Mexican and Indian food choices. [8]
Competition for employees is
becoming a significant issue in the restaurant industry, reported the National Restaurant Association. More
than a quarter of restaurant operators, who participated in a January 2017
survey, said recruiting and retaining employees is the single most important
challenge they face – a 9 percent jump from 2015. That’s the highest level
since October 2007. [9]
Soon, the attraction for young
children at burger joints may be watching robotic characters pull together kids’
meals!
Weekly
Focus – Think About It
“There is a point in every
contest when sitting on the sidelines is not an option.”
--Dean Smith, Former Head
Coach, University of North Carolina Tar Heels [10]
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:
[3] https://www.ft.com/content/6723f69c-09a4-11e7-ac5a-903b21361b43 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-20-17_FinancialTimes-Fed_Increases_Interest_Rates_as_Inflation_Pressures_Loom-Footnote_3.pdf)
[4] http://www.barrons.com/mdc/public/page/9_3063-economicCalendar.html (click on U.S. & Intl Recaps, select "The
central banks have spoken," and scroll down to the Global Stock Market
Recap) (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-20-17_Barrons-Global_Stock_Market_Recap-Footnote_4.pdf)
[7] https://www.ft.com/content/71e8c01e-fac0-11e6-9516-2d969e0d3b65 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-20-17_FinancialTimes-Burgers_and_Mircrochips_on_the_Menu_for_US_Fast-food_Chains-Footnote_7.pdf)
