PEEK OF THE WEEK
May 29, 2018
Leif Hagen & Donna Roberts
The Markets
Geopolitical
uncertainty didn’t dent U.S. stocks last week.
Geopolitics is the intersection
of geography, economics, and politics. Last week, there were some fine examples
of the ways geopolitical events can create uncertainty. Barron’s reported:
“President Donald Trump began the
week suggesting that a trade war with China was on hold, before later ordering
his administration to explore penalties on imported automobiles. The president
also canceled talks with North Korea. Italy’s bond market melted down following
the emergence of a Euroskeptic government, while Turkey’s lira tumbled over
concerns that President Tayyip Erdogan would take control of its central bank,
raising concerns about emerging markets.”
Uncertainty caused major indices
across Europe to finish lower last week. A majority of Asian-Pacific indices
moved south, too, as did Canadian and Mexican indices. Despite pessimism
elsewhere, investors in the United States remained unfazed and major U.S. stock
market indices finished the week higher. The Standard & Poor’s (S&P)
500 Index was up 0.3 percent.
The strong performance of U.S.
markets last week was remarkable because the S&P 500 moved higher on news
that would seem to inspire uncertainty. It was also remarkable because U.S.
stocks gained less when S&P 500 companies reported first quarter profits
were better than expected.
First quarter’s earnings season
– when companies report how profitable they were during the first quarter – is
almost over. A majority of S&P 500 companies did better than expected,
according to FactSet. However,
companies with stronger than expected earnings saw share prices increase 0.2
percent on average, less than share prices increased last week.
During the past five years,
companies with higher-than-expected profits have realized share price gains of
1.1 percent.
Data as of 5/25/18
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500
(Domestic Stocks)
|
0.3%
|
1.8%
|
12.7%
|
9.0%
|
10.4%
|
7.0%
|
|
Dow Jones Global ex-U.S.
|
-1.1
|
-1.6
|
8.9
|
2.5
|
3.5
|
0.0
|
|
10-year Treasury Note (Yield
Only)
|
2.9
|
NA
|
2.3
|
2.1
|
2.1
|
3.9
|
|
Gold (per ounce)
|
1.2
|
0.5
|
3.7
|
3.2
|
-1.1
|
3.7
|
|
Bloomberg Commodity Index
|
0.6
|
3.1
|
8.6
|
-4.0
|
-7.2
|
-8.3
|
|
DJ Equity All REIT Total
Return Index
|
2.4
|
-4.3
|
0.1
|
5.7
|
6.3
|
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.
working out the bugs. There was a lot of
news about new inventions last week. Some devices appear to have potential
while others have been delivering unexpected results. Take a look at recent
innovation news:
·
Droning
on. Remember the vehicles Galactic storm troopers rode into battle against the
Ewoks in Star Wars? They’re now available on Earth. Hover bikes look a lot like
a super-sized drone that can carry a person. They can travel up to 13 miles or
20 minutes, at speeds up to 43 miles an hour, before recharging is needed.
·
Shhh.
It’s listening. Smart speakers made the news last week after it was widely
reported that one had recorded a family’s conversation and sent it to someone
on their contact list. A writer for MIT
Technology Review investigated further, checking her smart speaker history.
She found:
“…in the past several months it
has also tuned in, frequently several times a day, for no obvious reason. It’s
heard me complain to my dad about something work-related, chide my toddler
about eating dinner, and talk to my husband – the kinds of normal, everyday
things you say at home when you think no one else is listening.”
·
Diagnosed
by math. There’s a new algorithm in town. The U.S. Food and Drug
Administration (FDA) just gave the thumbs-up to artificial intelligence that
helps surgeons detect wrist fractures, reported MIT Technology Review. In fact, the FDA is “writing new rules to
speed up approvals for AI-based devices and tools.”
·
Folding
wingtips. It seems like poor design, but some planes’ wingspans are too
wide for standard airport gates. Instead of asking airports to build special
gates, the Federal Aviation Administration approved folding wingtips on Friday.
We know
change is constant. Adapting to change is the challenge.
Weekly
Focus – Think About It
“Our flag does not fly because
the wind moves it. It flies with the last breath of each soldier who died
protecting it.”
--Unknown
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/dow-ticks-higher-but-beware-a-summer-storm-1527292801 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/05-29-18_Barrons-Dow_Ticks_Higher_but_Beware_a_Summer_Storm-Footnote_1.pdf
http://www.barrons.com/mdc/public/page/9_3063-economicCalendar.html (Click on U.S. & Intl Recaps, then click on
"Shadows over the financial markets") (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/05-29-18_Barrons-Global_Stock_Market_Recap-Footnote_2.pdf
