PEEK OF THE WEEK
June 26, 2017
Leif Hagen & Donna Roberts
The Markets
It has been a
very good year, so far.
Through the end
of last week, the Standard & Poor’s 500 Index posted 24 record highs and
delivered returns in the high single digits. The MSCI World ex USA Index was up
more than 11 percent, and the MSCI Emerging Markets Index gained more than 17
percent.
After reading
those numbers, many people would assume bond markets are down for the year.
After all, stock and bond markets tend to move in different directions. Zacks explained,
“Stock
and bond prices usually move in opposite directions. When the stock market is
not doing well and becomes risky for investors, investors withdraw their money
and put it into bonds, which they consider safer. This increased demand raises
bond prices. When stocks rally and the risk seems justified, investors may move
out of bonds and into stocks, driving stock prices up further.”
That hasn’t been the case recently. Bonds have been delivering
attractive returns, too. The Bloomberg Barclay’s U.S. Aggregate Bond Index is
up 2.9 percent year-to-date, while its Global Aggregate Bond Index is up 4.7
percent, and its Emerging Markets Aggregate Bond Index is up 5.5 percent.
So, why are stock and bond markets both showing attractive gains for
the year?
There are a number of possibilities. Zacks described one of the most straightforward. “When stocks are
doing well but investors remain skeptical about how long they will do well,
stock and bond prices can rise together. This is because investors continue to
put money in stocks but also put money into bonds just in case the stock market
drops.”
There is nothing wrong with a little skepticism.
Data as of 6/23/17
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500
(Domestic Stocks)
|
0.2%
|
8.9%
|
15.4%
|
7.5%
|
13.2%
|
5.0%
|
|
Dow Jones Global ex-U.S.
|
0.1
|
12.8
|
14.2
|
-1.0
|
6.1
|
-1.1
|
|
10-year Treasury Note (Yield
Only)
|
2.1
|
NA
|
1.7
|
2.6
|
1.6
|
5.1
|
|
Gold (per ounce)
|
0.0
|
8.3
|
-0.5
|
-1.5
|
-4.4
|
6.8
|
|
Bloomberg Commodity Index
|
-2.0
|
-9.0
|
-9.9
|
-16.4
|
-9.4
|
-7.3
|
|
DJ Equity All REIT Total Return
Index
|
0.0
|
6.0
|
4.7
|
9.5
|
11.2
|
6.4
|
S&P 500, Dow Jones Global
ex-U.S., 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.
If you live in Norway, Denmark, Iceland, Switzerland,
or Finland, then you’re among the
happiest people in the world. On the other hand, if you reside in Sierra Leone,
Bulgaria, Egypt, Palestinian Territories, or Tunisia, you’re among the least
happy, according to the United Nation’s World Happiness
Report 2017.
The report relies on six
measurements to “explain happiness differences among
countries and through time.” These include:
·
Income (GDP per
capita)
·
Healthy life
expectancy (Relative to other nations)
·
Social support (Having
someone to count on in times of trouble)
·
Generosity (Charitable
donations)
·
Freedom (To make life
choices)
·
Trust (Defined as the
absence of corruption in business and government)
While measuring ‘happiness’ or
‘satisfaction with life’ may seem frivolous to some, others believe it should
be a cornerstone of governance. The report’s authors explained, “Happiness is
increasingly considered to be the proper measure of social progress and the
goal of public policy.”
For instance, Norway, which is an oil-rich nation, is the
happiest country in the world even though oil prices are relatively low. The World Happiness Report 2017 suggests the country “achieves and maintains its high
happiness not because of its oil wealth, but in spite of it. By choosing to
produce its oil slowly, and investing the proceeds for the future rather than
spending them in the present, Norway has insulated itself from the boom and
bust cycle of many other resource-rich economies.”
The
United States ranks 14th in the world. While our country’s income and healthy
life expectancy remain high, keeping us at the top of the list, other factors
have caused Americans’ happiness to deteriorate. The study found “less social
support, less sense of personal freedom, lower donations, and more perceived
corruption of government and business.” America’s issues, the report opines,
are social, rather than economic.
Weekly
Focus – Think About It
“Brigadier General Wilma Vaught spearheaded…the Women
in Military Service for America Memorial, a museum-style memorial on the
outskirts of Arlington National Cemetery…There are the thigh-high black leather
boots worn by enlisted women to protect their legs from mosquitos before they
were allowed to wear pants. The cape of a nurse working at a frontline casualty
cleaning station in World War I. Army-issue glasses painted with red nail
polish worn by the only African-American WAC unit dispatched overseas in World
War II—sent to sort letters under the motto ‘No Mail, Low Morale.’”
-- National Geographic, May 2017
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:
or go here: https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/Fn+1.pdf
[3]
https://www.msci.com/end-of-day-data-search or go here:
https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/Fn+3.pdf
[4]
http://finance.zacks.com/stocks-bonds-up-same-time-7209.html (or go to: https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/When+Do+Stocks+%26+Bonds+Go+Up+at+the+Same+Time_+_+Finance+-+Zacks.pdf)
[5]
https://www.bloombergindices.com/bloomberg-barclays-indices/#/ (or
go to: https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/Fn+5.pdf)
