PEEK OF THE WEEK
September 10, 2018
Leif Hagen & Donna Roberts
The Markets
Remember: Volatility is normal.
Major U.S. stock market indices
climbed into record territory during August. They gave back some gains last
week. Peter Wells of Financial Times
explained:
“Speculation about a fresh round of
tariffs on Chinese imports from the Trump administration weighed on U.S.
stocks, handing the S&P 500 its first four-day losing streak in a month. A
strong jobs report only hardened expectations that the Federal Reserve views the
U.S. economy as healthy enough to withstand a probable interest rate rise later
this month.”
Strong economic growth and
rising wages have the potential to push inflation – increases in prices of
everyday goods – higher than the Fed’s 2 percent target. The Fed battles
inflation and promotes financial stability by raising the Fed funds rate.
Usually, higher rates make borrowing more expensive and slow economic growth,
reported Katherine Reynolds Lewis at Bankrate.com.
Rising rates in the United
States have an effect on emerging markets, too. Colin Dwyer of National Public Radio reported higher
interest rates in the United States have enticed investors and they have moved
money out of riskier emerging markets investments.
Last week The Wall Street Journal reported, “Emerging markets tipped into
bear territory…The MSCI Emerging Markets Index’s 0.3 percent decline Thursday,
led by selloffs in Russia and the Philippines, pushed that gauge of stocks in
poorer countries 20 percent below its recent peak, the common definition of a
bear market.”
Data as of 9/7/18
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500
(Domestic Stocks)
|
-1.0%
|
7.4%
|
16.5%
|
13.4%
|
11.4%
|
8.5%
|
|
Dow Jones Global ex-U.S.
|
-3.0
|
-8.0
|
-3.0
|
6.1
|
2.0
|
1.6
|
|
10-year Treasury Note (Yield
Only)
|
2.9
|
NA
|
2.1
|
2.2
|
2.9
|
3.7
|
|
Gold (per ounce)
|
-0.3
|
-7.5
|
-10.8
|
2.3
|
-2.9
|
4.0
|
|
Bloomberg Commodity Index
|
1.9
|
-3.3
|
-0.4
|
-1.1
|
-8.1
|
-7.1
|
|
DJ Equity All REIT Total
Return Index
|
-1.2
|
3.4
|
4.4
|
10.9
|
10.6
|
7.5
|
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.
why are nordic countries at the top of the world
happiness report? It’s a question Freakonomics Radio explored in August. They asked Jeff Sachs, a
professor at Columbia University, who is also a special adviser to the United
Nations Secretary General on the Sustainable Development Goals.
The World Happiness Report
ranks 156 countries by the happiness of their citizens. The countries that top
the list tend to have high scores in all six of the variables considered to
measure well-being. These include income, healthy life expectancy, social
support, freedom, trust, and generosity.
Currently, the happiest countries in the world are:
1.
Finland
2.
Norway
3.
Denmark
4.
Iceland
5.
Switzerland
6.
Netherlands
7.
Canada
8.
New
Zealand
9.
Sweden
10.
Australia
The United States is ranked
number 18. That has something to do with our priorities, according to the
interview with Sachs. “We have the paradox that income per person rises in the
United States, but happiness does not…the United States is falling behind other
countries, because we are not pursuing dimensions of happiness that are
extremely important: our physical health, the mental health in our community,
the social support, the honesty in government.”
Helen Russell, author of The Year of Living Danishly, also
participated in the interview. She offered this example to illustrate a key
difference between the United States and Denmark:
“…there was a story, in New York a
few years ago, of a Danish woman who was there, who left her child sleeping
outside in a pram, which is what you do in Denmark, and was arrested for child
neglect. And lots of people in Denmark didn’t understand why it was such a
fuss, because in Denmark people trust most people. And this plays into
everything. You are not anxious if you trust the people around you, you’re not
scared they’re going to rob you to put food on their table.”
What makes you happy?
Weekly Focus – Think About
It
“If I were to ask all of you to
try and come up with a brand of coffee – a type of coffee, a brew – that made
all of you happy, and then I asked you to rate that coffee, the average score
in this room for coffee would be about 60 on a scale of 0 to 100. If, however,
you allowed me to break you into coffee clusters, maybe three or four coffee
clusters, and I could make coffee just for each of those individual clusters,
your scores would go from 60 to 75 or 78. The difference between coffee at 60
and coffee at 78 is a difference between coffee that makes you wince and coffee
that makes you deliriously happy. That is the final, and I think most beautiful
lesson…that in embracing the diversity of human beings, we will find a surer
way to true happiness.”
--Malcolm Gladwell, Journalist and author
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:
https://www.ft.com/content/7628f254-b2d7-11e8-8d14-6f049d06439c
(or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/09-10-18_FinancialTimes-Wall_St_Sinks_on_Tariff_Talk-Tech_Stocks_the_Weeks_Big_Losers-Footnote_2.pdf)
https://www.wsj.com/articles/investors-weed-out-weakest-links-in-emerging-market-tumult-1536233901
(or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/09-10-18_WSJ-Emerging-Market_Stocks_Enter_Bear_Territory-Footnote_6.pdf)
