PEEK OF THE WEEK
AUGUST 13, 32018
Leif Hagen & Donna Roberts
The Markets
Let’s talk Turkey!
So, how did a country that
represents just about 1.4 percent of the world’s economy spark a global
selloff?
Turkey was once a rising star.
The country’s Prime Minister Recep Tayyip Erdogan took office in 2003 and his
“conservative, pro-business policies helped pull the country back from an
economic crisis,” reported Financial
Times.
As Turkey’s economy
strengthened, investors saw opportunity. Investments from outside the country
averaged about $13 billion a year, according to World Bank figures cited by Financial
Times, although investment slowed after terror attacks in 2015.
Bloomberg reported Prime Minister Erdogan has become more
authoritarian since being re-elected in 2018, giving himself power to name the
head of Turkey’s central bank. Financial
Times reported the Prime Minister’s “…unorthodox views on interest
rates…has proved disruptive for monetary policy, leaving…Turkey’s central bank,
struggling to contain inflation that is running at close to 16 percent.”
Lack of central bank autonomy
concerned investors. The Turkish lira began to weaken against the U.S. dollar,
making it costly for businesses to repay dollar-denominated debt.
Politics have factored into the
situation, as well. During 2018, negotiations were underway to secure the
release of an American pastor who was arrested on “farcical terrorism charges,”
reported The Economist. However,
talks collapsed early in August. Asset freezes and sanctions followed, along
with promises of additional tariffs on Turkish goods imported by the United
States.
The subsequent steep drop in the
value of Turkish lira sparked concerns that rippled through global markets. Financial Times reported:
“Turkey’s deepening crisis punished
emerging market currencies and sparked a global pullback from riskier assets on
Friday…The S&P 500 fell 0.7 percent in New York on Friday. Treasury yields
also moved lower, with the 10-year dipping below 2.9 percent for the first time
this month, as investors sought safe assets…Investors’ shift from risky assets
knocked equities across Europe, with Germany’s Dax, France’s CAC 40 and Spain’s
Ibex all about 2 percent weaker.”
For quite some time, investors
have appeared immune to geopolitical risks. Perhaps that is beginning to
change.
Data as of 8/10/18
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500
(Domestic Stocks)
|
-0.3%
|
6.0%
|
16.2%
|
10.4%
|
10.9%
|
8.1%
|
|
Dow Jones Global ex-U.S.
|
-1.5
|
-5.5
|
1.7
|
2.9
|
2.6
|
1.1
|
|
10-year Treasury Note (Yield
Only)
|
2.9
|
NA
|
2.2
|
2.2
|
2.6
|
4.0
|
|
Gold (per ounce)
|
-0.2
|
-6.3
|
-5.5
|
3.5
|
-2.0
|
3.6
|
|
Bloomberg Commodity Index
|
-0.8
|
-4.5
|
0.8
|
-3.1
|
-7.9
|
-7.7
|
|
DJ Equity All REIT Total
Return Index
|
-1.5
|
1.7
|
5.8
|
7.7
|
9.2
|
7.3
|
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.
3 things to consider Before claiming social security
benefits: timing, spousal benefits,
and work status. Most Americans understand they can choose
when to begin receiving Social Security benefits. The choices are fairly
straightforward:
·
Early (age
62 to full retirement age). People who decide to collect benefits early
typically receive a smaller monthly benefit than they would if they waited
until full retirement age. The reduction in monthly income may be as large as
30 percent. However, they receive benefits for a longer period of time.
·
Normal
(full retirement age). An American’s full retirement age is determined by his
or her date of birth. For someone born in 1960 or later, full retirement age is
67 years. The amount of income a person receives at normal retirement age is
determined by the amount earned during his or her working years.
·
Delayed (after
full retirement age to age 70). By delaying the start of Social Security
benefits, a person can increase his or her monthly benefit by accruing delayed
retirement credits. For Americans born in 1943 and after, credit accrues at a
rate of 8 percent each year.
While it’s important to
understand timing options for Social Security benefits, choosing when to take
benefits may not be the most important decision you make, especially if you’re
married.
There are several different
claiming strategies that may help married couples optimize their benefits and
the benefits available for children who are minors or have special needs. These options should be carefully
considered before filing for benefits.
Your filing decision may also be
affected by your work status and income. If you file early while still working,
and your earnings exceed established limits, then a portion of your benefit may
be withheld. In addition, your income will help determine whether your Social
Security benefit is taxable.
If you would like to discuss
your options for claiming Social Security benefits, give us a call.
Weekly Focus – Think About
It
“Take time for all things: great
haste makes great waste.”
--Benjamin Franklin, Founding Father
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.
* To unsubscribe from the
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Sources:
https://www.ft.com/content/686f156c-9a36-11e8-9702-5946bae86e6d
(or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-13-18_FinancialTimes-Turkey-How_Investors_Turned_On_Erdogan-Footnote_2.pdf)
https://www.economist.com/europe/2018/08/11/turkeys-diplomatic-crisis-is-hastening-an-economic-one (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-13-18_TheEconomist-Turkeys_Diplomatic_Crisis_is_Hastening_an_Economic_One-Footnote_4.pdf)
https://www.ft.com/content/7e1ddc8e-9c77-11e8-ab77-f854c65a4465
(or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-13-18_FinancialTimes-Turkeys_Deepening_Crisis_Triggers_Retreat_from_Equities-Footnote_5.pdf)
