Peek of the Week
Market Commentary
March 4, 2019
The Markets
Is
it a soft landing?
Economists
use aviation metaphors to describe the results of central banks’ efforts to manage
rapidly growing economies. If the Federal Reserve lifts rates enough to prevent
the economy from overheating without jolting it into recession, then it has
engineered a soft landing, according to Investopedia.
(Rate increases that drop a country into recession are hard landings.)
Ben
Levisohn of Barron’s thinks recent
Fed actions may have produced the second soft landing in the history of the
United States:
“…the
Federal Reserve might have engineered a soft landing for the U.S. economy…When
Chairman Jerome Powell abruptly decided that he would hold off on further rate
hikes, the market responded as if a recession was no longer in the offing. And
it probably isn’t…There are also signs that the Fed, simply by taking a
breather, has eased monetary conditions. The evidence: The yield curve is
steepening. The difference between 30-year and two-year Treasury yields – the
spread most correlated to money supply – has risen to about 0.6 percentage
point, the highest since June…”
Not
everyone agrees.
Last
week, Economist Robert Shiller told Bloomberg,
“The economy has been growing pretty smoothly…There are some signs there might
be things amiss. The housing market is soaring and the stock market is high.
It’s been a long time that we’ve been in this recovery period and it wouldn’t
surprise me at all if there was a recession.”
The
Standard & Poor’s 500 Index and Nasdaq Composite delivered slight gains
last week, while the Dow Jones Industrial Average was flat.
Data as of
3/1/19
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500 (Domestic Stocks)
|
0.4%
|
11.8%
|
4.7%
|
12.3%
|
8.7%
|
14.9%
|
Dow Jones Global ex-U.S.
|
0.1
|
9.1
|
-8.0
|
7.3
|
0.7
|
7.8
|
10-year Treasury Note (Yield Only)
|
2.8
|
NA
|
2.8
|
1.8
|
2.6
|
2.9
|
Gold (per ounce)
|
-1.5
|
2.4
|
0.3
|
2.0
|
0.5
|
3.4
|
Bloomberg Commodity Index
|
-1.4
|
5.5
|
-8.2
|
2.1
|
-9.8
|
-2.3
|
DJ Equity All REIT Total
Return Index
|
-1.6
|
11.9
|
19.6
|
8.7
|
9.1
|
19.6
|
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.
here’s a blast from the past. Depending on your age, the 1980s may be a nostalgic
chapter in your life or the wellspring of amusing photos of your Miami-Vice
clad, lace-gloved parents. The 80s are known for more than MTV, yuppies, sci-fi
movies, and cell phones the size of shoeboxes, though. The decade marked the
start of a new era in geopolitics as the Cold War ended and the Berlin Wall was
dismantled.
The
1980s also brought a wealth of innovative new products that disrupted markets
and changed the way people perform everyday tasks. Entrepreneur Magazine recently identified some of the decade’s notable
inventions, including:
- The First Artificial Human Heart. Dr. Robert Jarvik’s invention was used as a temporary
solution for many people who were waiting for a human heart to become available
for transplant.
· - Compact Disc (CD) Players. The first compact disc ever pressed was ABBA’s ‘The
Visitors’ reported Time Magazine. Not many people listened to
CDs early on because of the cost. However, CDs eventually disrupted the market
for vinyl records.
· - DNA Fingerprinting. This discovery enabled a person to be identified from just a few hair,
skin, or blood cells which revolutionized forensic investigation.
· - Personal Computers and Software. At the start of the decade, technology visionaries
Bill Gates and Steve Jobs – still in their twenties – were figuring out how to
make computing accessible. Personal computers became more prevalent, along with
floppy disks and CD-ROMs.
While
the fashions have become obsolete, along with camcorders and CD players, many
of the decade’s inventions have proven more durable – and some have completely
changed the way people interact with the world.
Which
of this decade’s inventions do you think could have a similar impact?
Weekly Focus – Think About
It
“Don't
let anyone rob you of your imagination, your creativity, or your curiosity.
It's your place in the world; it's your life. Go on and do all you can with it,
and make it the life you want to live.”
--Mae
Jemison, American engineer, physician, and NASA astronaut
Best regards,
Leif M. Hagen
Leif M. Hagen, CLU, ChFC
LPL Financial Advisor
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 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.barrons.com/articles/the-dow-just-had-its-best-two-months-in-years-and-there-could-be-more-to-come-51551493199?refsec=the-trader (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-04-19_Barrons-The_Dow_Just_Had_Its_Best_Two_Months_in_Years-and_There_Could_be_More_to_Come-Footnote_3.pdf)
https://www.bloomberg.com/news/videos/2019-02-26/yale-s-shiller-says-u-s-due-for-recession-sees-housing-market-slowing-video (Time stamp 0:21 seconds)
https://www.computerhistory.org/timeline/ (See 1980, 1981, and 1984)
