PEEK OF THE WEEK
September 25, 2017
Leif Hagen & Donna Roberts
The Markets
Geopolitics, what is it good
for? Absolutely nothin'!
In January, Robert Kahn of the Council on Foreign Relations wrote in Global Economics Monthly:
“Markets showed impressive resilience
in the face of a range of geopolitical shocks in 2016, but recent market moves
suggest this year could be different…It should be the year that global
geopolitical risks provide the volatility in markets that I, and many other
economists, have been predicting for some time.”
Kahn may share the bemusement of bond market prognosticators
who have anticipated the end of the bull market in bonds for years and have yet
to see their predictions prove out.
So far in 2017, investor confidence has remained impervious
to geopolitical threats. Bloomberg
reported, while diplomats at the United Nations stress over North Korea’s
threat to drop a hydrogen bomb, Russia’s provocations along the borders of
Eastern Europe, rising Middle East tensions, and conflict between the United
States and China in the South China Sea, investors remain relatively sanguine.
The CBOE Volatility Index, or VIX, which measures market
expectations for near-term volatility in the Standard & Poor’s 500 Index
(S&P 500), finished below 10 on Friday. Historically, the VIX has finished
below 10 on just a few days in its history. While the very low level of the VIX
doesn’t tell us much about the future, Barron’s
reports it indicates investors are not too concerned about “what’s happening
now and what has happened.”
That contention appears to be supported by U.S. stock market
performance. Despite hostile rhetoric between the United States and North Korea
last week, the S&P 500 and Dow Jones Industrial Average both finished
slightly higher.
Data as of 9/22/17
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic Stocks)
|
0.1%
|
11.8%
|
14.9%
|
87.9%
|
11.4%
|
5.1%
|
|
Dow Jones Global ex-U.S.
|
0.4
|
19.4
|
15.7
|
2.0
|
4.7
|
-0.6
|
|
10-year Treasury Note (Yield Only)
|
2.3
|
NA
|
1.6
|
2.6
|
1.7
|
4.6
|
|
Gold (per ounce)
|
-2.1
|
11.7
|
-3.3
|
2.2
|
-6.0
|
5.9
|
|
Bloomberg Commodity Index
|
-0.4
|
-3.0
|
-0.8
|
-10.6
|
-10.3
|
-7.1
|
|
DJ Equity All REIT Total Return Index
|
-2.5
|
5.4
|
0.5
|
9.8
|
9.6
|
5.9
|
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’s the ig nobel awards! On September 14, the
27th First Annual Ig Nobel Prize Ceremony kicked off with a flight of paper
airplanes.
The winners were chosen by the publishers
of the Annals of Improbable Research,
which reviews, “Real research, about anything and everything, from everywhere.
Research that's maybe good or bad, important or trivial, valuable or
worthless.” The most important characteristic of the works published is they
make people laugh and think.
The evening’s entertainment
included ceremonial bows from returning Ig winners John Culvenor, who received
the 2003 Physics Prize for analyzing the forces required to drag sheep across
various surfaces, and Deborah Anderson, who received the 2008 Chemistry Prize
for testing whether a dark cola is an effective spermicide.
This year’s winning research
explored diverse and improbable ideas, including studies entitled:
·
Didgeridoo
Playing as Alternative Treatment for Obstructive Sleep Apnoea Syndrome:
Randomised Controlled Trial, which discovered that, “Regular didgeridoo
playing is an effective treatment alternative well accepted by patients with
moderate obstructive sleep apnoea syndrome.”
·
Never
Smile at a Crocodile: Betting on Electronic Gaming Machines is Intensified by
Reptile-Induced Arousal, which showed that, “At-risk gamblers with few
self-reported negative emotions placed higher average bets at the EGM after
having held the crocodile when compared to the control.”
·
Is That Me
or My Twin? Lack of Self-Face Recognition Advantage in Identical Twins
concluded that, “identical twins cannot tell themselves apart, visually.”
·
On the
Rheology of Cats, which explored whether a cat can be both a solid and a
liquid and determined, “much more work remains ahead, but cats are proving to
be a rich model system for rheological research.”
Each of the 10 Ig Nobel winners
was given 60 seconds to explain themselves before being awarded a bust replica
of a human head with a question mark on top of it, a certificate signed by a
Nobel Laureate, and one trillion Zimbabweans.
Russian-born physicist Andre
Geim was the first scientist to win both awards. He received a 2000 Ig Nobel
Prize for his work using magnets to levitate frogs, and a 2010 Nobel Prize for
discovering graphene (a new form of carbon).
Weekly
Focus – Think About It
“Like a welcome summer rain, humor may suddenly
cleanse and cool the earth, the air, and you.”
--Langston Hughes, American poet
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/the-pros-and-cons-of-vix-the-markets-fear-gauge-1505942074 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/09-25-17_Barrons-The_Pros_and_Cons_of_VIX-the_Markets_Fear_Gauge-Footnote_6.pdf)
http://www.barrons.com/mdc/public/page/9_3063-economicCalendar.html?mod=BOL_Nav_MAR_other (Click on U.S. & Intl Recaps, then "The Fed
and BoJ do the expected") (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/09-25-17_Barrons-Global_Stock_Market_Recap-Footnote_7.pdf)
