PEEK OF THE WEEK
August 21, 2017
Leif Hagen & Donna Roberts
The Markets
Here, there,
and everywhere…
Markets
around the world appear to be benefitting from global economic recovery.
After pointing out the United
States’ economy is the heart of the global financial system, Barron’s reported:
“The Standard & Poor’s 500
index has tirelessly amassed 30 record closes this year, but is up just 1.2
percent since March 1. Meanwhile, nearly every foreign stock market has
sprinted ahead…We wrote on March 25 about how a global recovery should goose
smaller, fresher bull markets abroad. By now, it is firmly becoming the
consensus view – metals are rallying, with copper up 18 percent this year; the
MSCI All Worlds Index has risen for eight straight months.”
Emerging markets haven’t
performed too shabbily either. Through the end of last week, the MSCI Emerging
Markets Index was up 22.88 percent year-to-date. Franklin Templeton’s Mark Mobius wrote improved performance in
emerging markets is the result of “…encouraging economic data in China,
investor inflows, and corporate earnings growth.”
So, global
stock markets have been delivering relatively robust performance this year.
What have
bonds been up to? They’ve gained value year-to-date, too.
Bond markets continue to tell a
different story than stock markets. The Federal Reserve raised its benchmark
interest rate for the third time in June. In theory, interest rates should be
moving higher, yet the yield on 10-year Treasury bonds was lower (2.19 percent)
at the end of last week than it was at the start of the year (2.45 percent).
Data as of 8/18/17
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500
(Domestic Stocks)
|
-0.7%
|
8.3%
|
10.9%
|
7.2%
|
11.3%
|
5.3%
|
|
Dow Jones Global ex-U.S.
|
0.3
|
15.4
|
12.5
|
0.2
|
4.8
|
-0.1
|
|
10-year Treasury Note (Yield
Only)
|
2.2
|
NA
|
1.5
|
2.4
|
1.8
|
4.6
|
|
Gold (per ounce)
|
0.8
|
11.8
|
-4.0
|
0.0
|
-4.3
|
7.0
|
|
Bloomberg Commodity Index
|
-0.6
|
-4.9
|
-4.1
|
-12.7
|
-10.4
|
-6.4
|
|
DJ Equity All REIT Total
Return Index
|
0.3
|
4.1
|
-0.8
|
7.6
|
9.5
|
6.5
|
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.
Have you tried taco mode? In March, the Harvard Business Review (HBR) offered
some ideas about innovation in America. It’s a topic that deserves some
attention as “…recent data
suggests that innovation is getting harder and the pace of growth is slowing
down. A major challenge in business and policy spheres is to understand the
environments that are most conducive to innovation.”
One place to look for examples of innovation is the sharing
economy where innovations often echo the late 1800s. Back then,
according to HBR, innovation primarily occurred outside of
companies. In contrast, today, the majority of patents go to inventors who are
associated with companies.
Let’s take a look at a couple recent
ideas that may or may not gain traction:
·
Taco
Mode. Ridesharing – arranging for a ride via an app – has changed
transportation and become one of the industry’s fastest growing market
segments, according to data from Statista
reported by TechCrunch.com.
The latest rideshare innovation is Taco Mode. Hungry passengers can
request rides that include stops at a fast food chain drive-throughs. One
company executive described the option as ‘inverse delivery.’ The hungry are
delivered to the food rather than vice versa.
·
Just-in-time
watch rentals. The demand for Swiss watches has fallen off in the United
States. The Federation of the Swiss Watch Industry reported exports to the
United States dropped steadily (-9.6 percent) between 2015 and June 2017.
Could the culprit be luxury watch rentals? Barron’s Penta reported luxury watch rentals are a relatively
recent sharing-economy innovation. For a monthly membership fee of $149 to
$999, watch lovers have opportunities to “…access experiences and embark on
journeys otherwise unattainable – without having to spend a major chunk of
their savings.”
·
Neighborhood
networks. It’s a straightforward concept: A social network that connects
neighbors so they can share tools, leftovers, playgroups, and more. It’s big in
Brazil, according to Forbes. One
company has more than 140,000 registered users across 3,800 cities.
But, anyone who has ever watched Homer Simpson borrow Ned Flanders’ tools
and not return them understands why some aspects of this idea may not catch on.
What
innovations would you like to see in the sharing economy?
Weekly
Focus – Think About It
“One word sums up our country’s
achievements: miraculous. From a standing start 240 years ago – a span of time
less than triple my days on earth – Americans have combined human ingenuity, a
market system, a tide of talented and ambitious immigrants, and the rule of law
to deliver abundance beyond any dreams of our forefathers.”
--Warren Buffett, Oracle of Omaha
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:
http://www.barrons.com/articles/investors-chasing-faster-growth-look-abroad-1503109144 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-21-17_Barrons-Investors_Chasing_Faster_Growth_Look_Abroad-Footnote_1.pdf)
https://www.msci.com/end-of-day-data-search (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-21-17_MSCI-End_of_Day_Index_Data_Search-Footnote_2.pdf)
https://finance.yahoo.com/quote/^TNX/history?period1=1483250400&period2=1503118800&interval=1d&filter=history&frequency=1d (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-21-17_Yahoo_Finance-10-year_Treasury_Bond_Yield-Footnote_5.pdf)
