“Peek of the Week”
Market Commentary
January 28, 2019
The Markets
Like
competitors who’ve completed a difficult section in an endurance race, U.S.
stock investors took a breather last week.
The
Standard & Poor’s 500 Index, which has gotten off to its best start since
1987, ended the week with a slight loss, while the Dow Jones Industrial Average
and Nasdaq Composite finished slightly higher, reported Ben Levisohn of Barron’s.
News
the U.S. government shutdown would end, albeit temporarily, appeared to be of
little interest to investors. Barron’s
suggested the markets’ muted response to the government reopening was in
balance with its response to the shutdown – there wasn’t much of one. In fact,
the S&P 500 has gained 10 percent since the federal government closed.
Despite
apparent disinterest, the shutdown could negatively affect sentiment, according
to Sam Fleming and Brooke Fox of Financial
Times. They reported:
“The record-breaking US government shutdown is triggering
ripple effects across the US economy and risks denting confidence among
companies that have already been fretting about trade disputes and stock market
turbulence. Shutdowns have historically had only fleeting economic effects, but
Jay Powell, the Federal Reserve chairman, warned last week that a dispute that
outlasts past impasses could begin to change the picture for the worse.”
Last week, stock investors weren’t all that impressed by earnings,
either. Earnings indicate how profitable companies were in the previous
quarter. At the end of last week, 22 percent of companies in the S&P 500
had reported earnings and, overall, they were 3 percent above estimates,
according to John Butters at FactSet.
However, indications the Federal Reserve may decide to keep more
Treasuries on its balance sheet than originally anticipated gave U.S. stocks a
boost late in the week, reported Nick Timiraos of The Wall Street Journal. The Fed began shrinking its balance sheet
in 2017 by letting Treasury and mortgage bonds mature. We’ll know more after
this week’s Fed meeting.
Data as of
1/25/19
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic Stocks)
|
-0.2%
|
6.3%
|
-6.2%
|
12.4%
|
8.4%
|
12.3%
|
|
Dow Jones Global ex-U.S.
|
0.7
|
5.9
|
-16.7
|
7.5
|
0.6
|
5.9
|
|
10-year Treasury Note (Yield Only)
|
2.8
|
NA
|
2.7
|
2.0
|
2.8
|
2.6
|
|
Gold (per ounce)
|
0.8
|
1.0
|
-4.5
|
5.4
|
-0.7
|
3.6
|
|
Bloomberg Commodity Index
|
-0.4
|
5.7
|
-10.4
|
2.9
|
-8.4
|
-3.4
|
|
DJ Equity All REIT Total
Return Index
|
1.4
|
7.7
|
6.3
|
8.8
|
9.7
|
15.2
|
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, MarketWatch, 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.
what is going on across the pond? Last November, BBC
commentator Chris Mason reflected the frustration of a nation with his report
on the rapidly approaching deadline for the British exit from the European
Union (EU). He said:
“So,
where are we in all of this Brexit process…people like me are paid, aren’t we,
to have insights and foresights and hindsight about these things, to be able to
project where we’re going to go. To be quite honest, looking at things right
now, I haven’t got the foggiest idea what is going to happen in the coming
weeks. Is the prime minister going to get
a deal with the EU? Dunno. Is she going to be able to get it through the
Commons? Don’t know about that, either.”
The
report went viral.
Since
then, we’ve gotten some answers. The Prime Minister did indeed negotiate a deal
with the EU and, on January 15, the British Parliament soundly rejected it. Heather
Stewart of The Guardian reported it
was, “…the heaviest parliamentary defeat of any British prime minister in the
democratic era.”
The
lack of an agreement in combination with a looming Brexit deadline – it’s just
9 weeks out – has created tremendous uncertainty about the future of British
trade with the EU. One response has been stockpiling goods. Last week, Sarah
Butler of The Guardian reported
three-fourths of warehouse space in the United Kingdom is at capacity.
One
intrepid entrepreneur has been marketing Brexit survival kits that provide 30
days of food rations for £295 ($380). Reuters reported the kit includes, “…60
portions of freeze-dried British favorites: Chicken Tikka, Chili Con Carne,
Macaroni Cheese and Chicken Fajitas, 48 portions of dried mince and chicken,
firelighter liquid, and an emergency water filter.”
As
they say, necessity is the mother of invention.
Weekly Focus – Think About
It
“Courage
is like – it’s a habitus, a habit, a virtue: you get it by courageous acts.
It’s like you learn to swim by swimming. You learn courage by couraging.”
--Marie M.
Daly, Chemist
Best regards,
Leif M. Hagen
Leif M. Hagen, CLU, ChFC
LPL Financial Advisor
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Securities
offered through LPL Financial, Member FINRA/SIPC.
*
These views are those of Carson Group Coaching, and not the presenting
Representative or the Representative’s Broker/Dealer and should not be
construed as investment advice.
*
This newsletter was prepared by Carson Group Coaching. Carson Group Coaching is
not affiliated with the named broker/dealer.
*
Government bonds and Treasury Bills are guaranteed by the U.S. government as to
the timely payment of principal and interest and, if held to maturity, offer a
fixed rate of return and fixed principal value.
However, the value of fund shares is not guaranteed and will fluctuate.
*
Corporate bonds are considered higher risk than government bonds but normally
offer a higher yield and are subject to market, interest rate and credit risk
as well as additional risks based on the quality of issuer coupon rate, price,
yield, maturity, and redemption features.
*
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.
*
All indexes referenced are unmanaged. Unmanaged index returns do not reflect
fees, expenses, or sales charges. Index performance is not indicative of the
performance of any investment.
*
The Dow Jones Global ex-U.S. Index covers approximately 95% of the market
capitalization of the 45 developed and emerging countries included in the
Index.
*
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.
*
The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an
index representing 30 stock of companies maintained and reviewed by the editors
of The Wall Street Journal.
*
The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ
system.
*
International investing involves special risks such as currency fluctuation and
political instability and may not be suitable for all investors. These risks
are often heightened for investments in emerging markets.
*
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.
*
Stock investing involves risk including loss of principal.
* The foregoing information has
been obtained from sources considered to be reliable, but we do not guarantee
it is accurate or complete.
*
There is no guarantee a diversified portfolio will enhance overall returns or
outperform a non-diversified portfolio. Diversification does not protect
against market risk.
*
Asset allocation does not ensure a profit or protect against a loss.
*
Consult your financial professional before making any investment decision.
*
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Sources:
https://www.barrons.com/articles/the-s-p-500-goes-nowhere-after-its-big-runup-51548462969?mod=hp_DAY_8
(or go
to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/01-28-19_Barrons-The_S_and_P_500_Goes_Nowhere_After_Its_Big_Runup-Footnote_1.pdf)
https://www.ft.com/content/b4970904-1907-11e9-9e64-d150b3105d21 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/01-28-19_FinancialTimes-Government_Shutdown_Begins_to_Harm_US_Economy-Footnote_2.pdf)
https://www.wsj.com/articles/fed-officials-weigh-earlier-than-expected-end-to-bond-portfolio-runoff-11548412201 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/01-28-19_WSJ-Fed_Officials_Weigh_Earlier-Than-Expected_End_to_Bond_Portfolio_Runoff-Footnote_4.pdf)
https://www.washingtonpost.com/world/2018/11/14/bbc-reporter-replaced-his-brexit-analysis-with-exasperated-noises-now-hes-hero/?utm_term=.d696c195120b (Watch brief video)
