“Peek
of the Week”
Weekly Market Commentary
Weekly Market Commentary
February 11, 2019
The Markets
Central
banks take a turn.
At
its first policy meeting of 2019, the U.S. Federal Reserve changed direction. After
four rate increases in 2018, Chair Jerome Powell announced interest rates were
on hold. Last week, banks in the United Kingdom, Australia, and India followed
suit by either reducing rates or cautioning rate reductions were likely,
reported Sam Fleming and Jamie Smyth of Financial
Times.
The
dovish tone of central banks owes much to slowing global growth. January’s International Monetary Fund World Economic
Outlook lowered global growth estimates for 2019 and 2020. Changing
expectations were fueled both by factors that slowed momentum in the second
half of 2018 and by issues that pose a potential risk to continued economic
growth. These included:
- The negative effects of higher tariffs
- New auto emission standards in Germany
- A slowdown in domestic demand in Italy
- Economic contraction in Turkey
- High levels of public and private debt
- Escalating trade tensions
- A no-deal British exit from the European Union
- A severe slowdown in China
These
issues have had limited effect on the U.S. economy; however, global risks are
affecting the performance of some U.S. companies. Financial Times explained:
“The
U.S. domestic economy has continued to put in a robust performance, with the
number of new jobs in January coming in well ahead of Wall Street expectations
and wage growth running comfortably above inflation. But corporate giants in
the S&P 500 index, which generate over a third of their earnings overseas,
are sounding the alarm about faltering overseas demand in markets including
China, where the government has been battling against a slowdown. Smaller U.S.
firms are feeling the global chill as well.”
Randall
Forsyth at Barron’s reported major
U.S. benchmarks finished last week higher, while the yield on 10-year U.S.
Treasuries hit a 13-month low. Outside the United States, some global stock
markets moved lower.
Data as of
2/8/19
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500 (Domestic Stocks)
|
0.1%
|
8.0%
|
4.9%
|
13.5%
|
8.5%
|
12.0%
|
Dow Jones Global ex-U.S.
|
-1.2
|
5.7
|
-9.6
|
7.7
|
0.5
|
5.6
|
10-year Treasury Note (Yield Only)
|
2.6
|
NA
|
2.9
|
1.7
|
2.7
|
3.0
|
Gold (per ounce)
|
-0.3
|
2.6
|
-0.1
|
3.3
|
0.6
|
3.9
|
Bloomberg Commodity Index
|
-1.1
|
4.4
|
-8.0
|
2.0
|
-8.9
|
-3.4
|
DJ Equity All REIT Total
Return Index
|
1.6
|
12.6
|
22.3
|
11.8
|
9.9
|
15.4
|
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.
AT THE INTERSECTION OF
ECONOMICS AND VALENTINE’S DAY…Author
and illustrator Liz Fosslien has thought a lot about economics and Valentine’s
Day. In ‘14 Ways an Economist Says I Love You,’ she offers this advice:
“Give
your loved one a nerdy Valentine and they'll be yours forever! Why? Because if
you give them diamonds/cufflinks this year, anything you get them next year
will fall short. Give them [a nerdy Valentine] and anything they receive next
year will be a step up. It's called expectation management and is the key to a
long and happy relationship.”
Fosslien
suggests a variety of approaches to saying, ‘I love you,’ in economic terms.
(Each is accompanied by an illustrative chart or graph at Fosslien.com/heart.)
If you’re looking for a way to express the magnitude or enduring nature of your
feelings, you could try:
- I don’t think your great, / I think you’re fantastic, / For what you’re supplying, / My demand’s inelastic.
- The monopoly you have on my heart is all natural.
- Our risk of default is zero.
- The S&P was in the red, / But I wasn’t blue, / Because I shorted the market, / And went long on you.
- The marginal returns of spending time with you will never diminish.
- Irrational, asymmetric, / Love is so foolish. / But I could not care less, / If you’re the stock then I’m bullish.
If
the dismal science of economics doesn’t deliver the level of romance your
relationship requires, you can always go for the cufflinks or the diamonds.
Weekly Focus – Think About
It
“Taking
in the good, whenever and wherever we find it, gives us new eyes for seeing and
living.”
--Krista
Tippett, American journalist
Best regards,
Leif M. Hagen
Leif M. Hagen, CLU, ChFC
LPL Financial Advisor
Leif M. Hagen, CLU, ChFC
LPL Financial Advisor
P.S. Please feel free to forward this commentary
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Securities
offered through LPL Financial, Member FINRA/SIPC.
*
These views are those of Carson 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 Coaching. Carson 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.ft.com/content/24508f0e-2b91-11e9-88a4-c32129756dd8
(or go
to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-11-19_FinancialTimes-Global_Economy-Why_Central_Bankers_Blinked-Footnote_1.pdf)
https://www.barrons.com/articles/the-global-slowdown-could-soon-hit-the-u-s-51549676496
(or go
to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-11-19_Barrons-The_Global_Slowdown_Could_Soon_Hit_Home-Footnote_3.pdf)
