PEEK OF THE WEEK
January 22, 2018
Leif Hagen & Donna Roberts
The Markets
Inflation, inflation, where’s the inflation?
The U.S. Federal Reserve has been raising
interest rates in anticipation of higher inflation.
In its 2018 forecast, Goldman Sachs indicated it expected to
see “a gradual increase in global core inflation, albeit to levels that are
still below central bank targets in most places.”
At year-end 2017, Barron’s wrote:
“Economists have raised the specter
of inflation for several years, only to be disproved time and again. There’s
reason to believe, however, that 2018 will be different – that prices will
finally rise in a more sustained pattern, forcing stock- and bond-market
investors to react to a new trend. ‘An unanticipated acceleration in inflation
is probably the biggest risk for markets in 2018,’ says Larry Hatheway, chief
economist at GAM Investments…Economists like Hatheway aren’t expecting runaway
inflation, as in the days of disco and leisure suits, when prices rose by
double digits. They’re girding for an annual increase of 2 percent to 2.5
percent at the most.”
Last week, data released by the Department of Labor showed U.S.
inflation, as measured by the Consumer Price Index, ticked higher (0.1 percent)
during December. With food and energy excluded, the index was up 0.3 percent.
Shelter, which reflects the cost of rent, rose the most (0.4 percent). The
indices for medical care, new vehicles, used vehicles, and vehicle insurance
all increased during December.
Some publications are predicting
December’s uptick in inflation will lead to a March rate hike by the Federal
Reserve. It’s difficult to say with certainty, however, until January’s
inflation report is released on February 14.
Data as of 1/12/18
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500
(Domestic Stocks)
|
1.6%
|
4.2%
|
22.7%
|
11.2%
|
13.6%
|
7.0%
|
Dow Jones Global ex-U.S.
|
0.9
|
3.7
|
26.1
|
7.8
|
5.0
|
0.6
|
10-year Treasury Note (Yield
Only)
|
2.6
|
NA
|
2.4
|
1.9
|
1.9
|
3.8
|
Gold (per ounce)
|
1.2
|
2.8
|
10.6
|
2.9
|
-4.4
|
4.0
|
Bloomberg Commodity Index
|
1.0
|
0.7
|
0.3
|
-4.5
|
-8.7
|
-7.5
|
DJ Equity All REIT Total Return
Index
|
-3.1
|
-5.1
|
2.9
|
3.1
|
8.1
|
8.0
|
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.
How long do you want to live? In 2013, the
Pew Research Center asked Americans about the ideal lifespan. More than
two-thirds (69 percent) gave an age between 79 and 100. Four percent wanted to
live to be anywhere from 101 to 120, and another four percent wanted to live
beyond 120.
It’s interesting to note the
lifespans named by survey respondents generally matched to some scientists’
predictions about the hardiness of humans. One of the authors of a much-debated
article in the journal Nature
reported, “It seems highly likely we have reached our ceiling…From now on, this
is it. Humans will never get older than 115.”
A slew of billionaire investors
falls into the dissenting camp. They’re starting
companies and funding research with the goal of making death optional, reported
The New Yorker.
LiveMint wrote:
“Death is an old technology but, like the umbrella, it has
endured…Most of the billionaires who have waged the war against ageing and
death are from Silicon Valley because they are the sort of people who have been
trained to believe that a problem, because it is a problem, must have a
solution.”
While human longevity is interesting to think about, it also has
some practical applications. For instance, the life expectancy chosen for a
retirement plan should be carefully considered. It influences the amount saved,
the investments chosen, and the retirement income withdrawn.
If you would like to talk about your retirement and how it factors
into your financial plans, give us a call.
Weekly
Focus – Think About It
“It’s paradoxical, that the idea
of living a long life appeals to everyone, but the idea of getting old doesn’t
appeal to anyone.”
--Andy Rooney, American journalist
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:
https://www.barrons.com/articles/what-inflation-could-mean-for-the-market-1514604543 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/01-16-18_Barrons-What_Inflation_Could_Mean_for_the_Market-Footnote_3.pdf)
