PEEK OF THE WEEK
March 29, 2017
Leif Hagen & Donna Roberts
The Markets
You’ve read
it before – and it’s true. Markets hate uncertainty.
Failure to pass the American
Healthcare Act, which was supported by Republican leaders in Congress and
President Trump, may have spooked U.S. stock markets last week.
In an article titled, “How To
Make Investing Decisions Based On Politics: Don't,” Nasdaq.com reported controversy over the bill was “raising
questions about [Republicans’] ability to focus on and pass policies that the
market has been eagerly anticipating, such as tax reform and infrastructure
spending.” Financial Times concurred:
“The post-election stock market
rally has been largely powered by hopes Donald Trump’s administration would
swiftly launch a bevy of aggressive economic stimulus measures, including tax
cuts, deregulation, and infrastructure spending. However, Mr. Trump’s
difficulty in Congress over the government’s healthcare plan has prompted some
reappraisal by investors of the prospect of significant stimulus arriving later
this year.”
Financial Times pointed out it’s likely other factors played a role
in investors’ decision-making, as well. Some professionals have become
concerned about market valuations. About 34 percent of fund managers believe
global equity markets are overvalued and 81 percent say U.S. equities are the
most expensive in the world, reported Fortune
Magazine citing Bank of America
Merrill Lynch’s survey of fund managers.
In addition, estimates for
corporate earnings have been revised lower for the first quarter of 2017. Take
that with a grain of salt, though. FactSet
wrote, “In terms of estimate revisions for companies in the S&P 500,
analysts have made smaller cuts than average to earnings estimates for Q1 2017
to date…”
Politics is one factor affecting
markets, and partisanship may be affecting consumer sentiment. Richard Curtin,
chief economist of University of Michigan
Surveys of Consumers, said consumers’ expectations about future economic
growth were split along party lines in March. “…among Democrats, the
Expectations Index at 55.3 signaled that a deep recession was imminent, while
among Republicans the Index at 122.4 indicated a new era of robust economic
growth was ahead.”
We live in
interesting times!
Data as of 3/24/17
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500
(Domestic Stocks)
|
-1.4%
|
4.7%
|
15.1%
|
8.1%
|
10.6%
|
5.0%
|
|
Dow Jones Global ex-U.S.
|
0.0
|
7.8
|
13.2
|
-0.2
|
2.2
|
-0.9
|
|
10-year Treasury Note (Yield
Only)
|
2.4
|
NA
|
1.9
|
2.7
|
2.2
|
4.6
|
|
Gold (per ounce)
|
1.5
|
7.6
|
-0.3
|
-1.6
|
-5.8
|
6.5
|
|
Bloomberg Commodity Index
|
-0.7
|
-3.4
|
6.7
|
-14.0
|
-10.2
|
-6.7
|
|
DJ Equity All REIT Total
Return Index
|
0.4
|
1.5
|
7.6
|
10.9
|
10.3
|
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.
“It ain't what
you don't know that gets you into trouble. It's what you know for
sure that just ain't so,” wrote Mark Twain.
In 2016, NerdWallet commissioned a survey* to get a better handle on
Americans’ thoughts about lying when money is involved. It’s interesting to
note which money-saving lies participants found acceptable. The list included:
·
Logging on to someone else’s retail or media
account to avoid subscription fees (33 percent)
·
Not reporting under-the-table income to avoid
taxes due (24 percent)
·
Lying about your age or your child’s age to
receive a discount at a restaurant or retailer (21 percent)
·
Lying about annual mileage to lower auto
insurance rates (20 percent)
·
Lying about income on a loan or credit card
application (12 percent)
·
Lying about smoking tobacco to lower life
insurance rates (11 percent)
(The number in the parentheses
reflects the percent of those surveyed who said the lie was okay.)
The survey found far more men
than women believe it is acceptable to tell lies to save money. For instance,
30 percent of men said it was okay not to report under-the-table income to the
IRS. Only 18 percent of women agreed. One-fourth of male survey participants
thought it was okay to fudge annual mileage to receive lower auto insurance rates,
while just 16 percent of female respondents agreed.
Age also makes a difference.
Americans who are age 65 or older were far less likely to find financial
dishonesty acceptable:
“The survey found that 11 percent
of seniors say it is acceptable to use someone else’s paid account for online
movies, music, or articles to save on subscription costs, compared with 39
percent of Americans ages 18-64. Just 7 percent of Americans ages 65 and older
think it’s acceptable to lie about annual mileage for lower auto insurance
rates compared with 23 percent of Americans ages 18-64. Among all of the lies
in the survey, the one that gets the most support from those 65 and older is
not disclosing under-the-table income to the IRS in order to pay less in taxes
– 14 percent say that’s acceptable.”
When it came down to it, “For
all questions, retirees had the lowest rates of acceptance of lies compared
with students, employees, and the unemployed.”
*The survey included 2,115
Americans, ages 18 and older, and was conducted February 18-22, 2016, by Harris
Poll on behalf of NerdWallet. This survey is not based on a probability sample
and therefore no estimate of theoretical sampling error can be calculated.
Weekly
Focus – Think About It
“I believe that there is a
subtle magnetism in Nature, which, if we unconsciously yield to it, will direct
us aright.”
--Henry David Thoreau,
American author
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.
* To unsubscribe from the
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Sources:
[2] https://www.ft.com/content/aa4efa32-0f37-11e7-b030-768954394623 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-27-17_FinancialTimes-Why_are_Investors_On_Edge_Over_Trumps_Healthcare_Vote-Footnote_2.pdf)
[5] http://www.sca.isr.umich.edu (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-27-17_Univ_of_Michigan-Survey_of_Consumers-Footnote_5.pdf)
