PEEK OF THE WEEK
April 30, 2018
Leif Hagen & Donna Roberts
The Markets
A meeting of
the minds.
The Federal Reserve and the U.S.
bond market appear to be in agreement about the direction of interest rates. For
more years than anyone cares to count, investment professionals have been
predicting the end of the bull market in bonds. Bond guru Bill Gross called the
end of the bond bull in 2011 – and called it again in 2013. He wasn’t alone. Strategists
who participated in Barron’s Outlooks anticipated rising interest
rates in 2014 and 2015, too.
The Federal Reserve began
encouraging interest rates higher in December 2015 when it increased the Fed
funds rate for the first time in a decade. However, the yield on 10-year
Treasuries remained stubbornly low. In fact, it fell below 2 percent following
the rate hike and stayed there until November 2016.
Since 2015, the Fed has raised
rates six times. The latest increase, along with signs of higher inflation,
helped push bond rates higher. Higher interest rates could shift investors’
preferences in some significant ways, according to sources cited by Barron’s:
“Two years ago, dividend stocks
provided investors a one-percentage point advantage over risk-free rates…Now those
places have been swapped…this ability to get a “safe yield” for the first time
in a decade, with no risk from falling stock or bond prices, represents a
‘seminal shift and a huge source of competition for the dividend allure of the
stock market.’”
We may be at
a turning point.
Data as of 4/27/18
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500
(Domestic Stocks)
|
0.0%
|
-0.1%
|
11.8%
|
8.2%
|
10.9%
|
6.7%
|
Dow Jones Global ex-U.S.
|
-0.5
|
-0.4
|
13.3
|
2.5
|
3.6
|
0.2
|
10-year Treasury Note (Yield
Only)
|
3.0
|
NA
|
2.3
|
1.9
|
1.7
|
3.8
|
Gold (per ounce)
|
-1.1
|
1.9
|
4.7
|
3.3
|
-2.1
|
4.0
|
Bloomberg Commodity Index
|
-0.5
|
1.4
|
6.9
|
-4.1
|
-7.8
|
-8.4
|
DJ Equity All REIT Total
Return Index
|
2.9
|
-5.9
|
-1.6
|
3.9
|
5.8
|
6.0
|
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.
We’ll need a new kind of umbrella for thiS. In February, a new research paper disclosed a finding no
one wants to hear about: Viruses are falling from the sky. Literally. Science Daily summarized a report from
the University of British Columbia.
The report said:
“An
astonishing number of viruses are circulating around the Earth's atmosphere –
and falling from it – according to new research…‘Roughly 20 years ago we began
finding genetically similar viruses occurring in very different environments
around the globe,’ says [University of British Columbia virologist Curtis
Suttle.] ‘This preponderance of long-residence viruses travelling the atmosphere
likely explains why – it's quite conceivable to have a virus swept up into the
atmosphere on one continent and deposited on another.’”
The New York Times reported the researchers journeyed to Spain and used
buckets on mountaintops to catch whatever might fall from the sky. The
scientists weren’t surprised to find viruses, but they were surprised by the
quantity of viruses captured. Best estimates suggest 800 million viruses shower
every square meter of the Earth every day.
Don’t
panic! Viruses are responsible for a lot more than diseases. Scientists
theorize viruses and humans may have a symbiotic relationship. According to Popular Science:
“Each of
us has a unique collection of viruses although there are some species common to
us all…endogenous viruses make up some 8 percent of our genetic material.
Originally, they were thought to be nothing more than junk pieces of
evolutionary history. But we now know they have a variety of functions. One of
the most studied topics…focuses on reproduction. A particular protein encoded
by one particular virus…appears to be imperative for proper formation of the
placenta.”
Good or bad, the question
remains: where do atmospheric viruses originate? No one knows for sure. There
are a variety of theories. One theory is viruses are swept from the planet into
the atmosphere. Another is viruses originate in the atmosphere. A third is viruses
arrive from outer space.
The truth is
out there!
Weekly
Focus – Think About It
“The diversity of the phenomena
of nature is so great, and the treasures hidden in the heavens so rich,
precisely in order that the human mind shall never be lacking in fresh
nourishment.”
--Johannes Kepler, German scientist
Leif M. Hagen
Leif M. Hagen, CLU, ChFC
LP Financial Advisor
Securities offered through LPL Financial Inc., Member FINRA/SIPC.
P.S. Please feel free to forward this commentary
to family, friends, or colleagues.
P.S.S. Also,
please remind your friends and family members becoming Medicare eligible that
we offer Medicare insurance and Part D options with NO COST to work with Leif as
their agent
For more information and resources visit our website at www.HagenFN.com
For more information and resources visit our website at www.HagenFN.com
For Medicare supplement and part D information and
resources, please visit MEDICAREforSENIORS.info
Please FOLLOW and “LIKE US” on FACEBOOK.com/HagenFN
Please Read our Blog @ http://HagenFinancialNetwork.blogspot.com
Please Follow our Tweets on Twitter.com/SafeLeif
Check out this: http://www.MedicareForSeniors.info
* 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
“Peek of the Week”, please reply to this email with “Unsubscribe” in the
subject line, or write us at: Hagen Financial Network, Inc. 4640 Nicols Road,
Suite 203; Eagan, MN 55122.
Sources:
https://www.barrons.com/articles/BL-INCOMB-2495 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-30-18_Barrons-Pimcos_Gross-30-Yr_Bond_Bull_Market_Officially_Over-Footnote_1.pdf)
https://www.barrons.com/articles/stocks-could-rise-10-in-2016-according-to-market-strategists-1449899461 (or
go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-30-18_Barrons-Stock_Market_Outlook_2016-Footnote_2.pdf)
https://www.barrons.com/articles/outlook-2015-stick-with-the-bull-1418449329 (or
go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-30-18_Barrons-Outlook_2015-Stick_with_the_Bull-Footnote_3.pdf)
https://finance.yahoo.com/quote/^TNX/history?period1=1448949600&period2=1524891600&interval=1mo&filter=history&frequency=1mo (or
go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-30-18_Yahoo_Finance-CBOE_Interest_Rate-Footnote_5.pdf)
https://www.barrons.com/articles/the-stock-market-thats-never-satisfied-1524875305 (or
go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-30-18_Barrons-The_Stock_Market_Thats_Never_Satisfied-Footnote_7.pdf)