Peek of the Week
Weekly Market Commentary
Weekly Market Commentary
March 25, 2019
The Markets
Wonder
what the Federal Reserve’s 40-yard dash time is?
On
Wednesday, the Fed juked like an NFL running back and left investors wondering
whether they should buy or sell. Heather Long of The Washington Post
reported the U.S. central bank:
1. Lowered its 2019 estimate for U.S. economic growth to
2.1 percent
2. Announced its intention not to raise rates in 2019
3. Indicated it will stop shrinking its balance sheet in
September
Fed
Chair Jerome Powell explained, “My colleagues and I have one overarching goal:
to sustain the economic expansion with a strong job market and stable prices
for the benefit of the American people. The U.S. economy is in a good place and
we will continue to use our monetary policy tools to keep it there…We continue
to expect that the American economy will grow at solid pace in 2019, although
slower than the very strong pace of 2018.”
The
Fed’s decision to adopt a looser monetary policy was informed by a variety of
factors, including slower economic growth in the United States, China, and
Europe, as well as unresolved policy issues like Brexit and ongoing trade
negotiations.
Investors
weren’t sure what to make of the Fed’s moves. Initially, major U.S. stock
indices trended higher as investors celebrated the benefits of accommodative
monetary policy. By the end of the week, though, many investors had changed
their minds and fled to ‘safe haven’ investments, pushing long-term Treasury
rates lower. Alexandra Scaggs of Barron’s
reported:
“When
short-term yields rise above long-term yields, it’s known as an inverted yield
curve, which is seen even by central bankers as a sign that an economic
contraction could be on the way…Benchmark 10-year Treasuries rallied Friday
morning, driving their yields below those of the three-month U.S. Treasury.”
So,
is recession imminent in the United States? It’s possible but unlikely. According
to a source cited by Barron’s, the
last six times the yield curve inverted for 10 days or longer, recession
occurred within the next two years.
No
matter how the economy and/or markets perform, it may not be a good idea to
make sudden portfolio changes. If you’re feeling uncertain, give us a call. We
can discuss changes you may want to make to your portfolio.
Data as of
3/22/19
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500 (Domestic Stocks)
|
-0.8%
|
11.7%
|
5.9%
|
11.0%
|
8.5%
|
13.0%
|
Dow Jones Global ex-U.S.
|
-0.2
|
9.7
|
-7.2
|
5.7
|
1.1
|
6.3
|
10-year Treasury Note (Yield Only)
|
2.5
|
NA
|
2.8
|
1.9
|
2.7
|
2.7
|
Gold (per ounce)
|
0.6
|
2.3
|
-1.3
|
1.5
|
0.0
|
3.3
|
Bloomberg Commodity Index
|
0.2
|
6.6
|
-6.1
|
0.2
|
-9.3
|
-3.3
|
DJ Equity All REIT Total
Return Index
|
0.7
|
15.6
|
19.7
|
8.3
|
10.1
|
17.6
|
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.
scandinavia sweeps again. The 2019 United
Nation’s World Happiness Report was published last week. The Finns remain
the happiest people in the world. In fact, happiness in Finland has been
trending higher since 2014.
People
in Denmark and Norway also are happier than they were previously. The average
score for the Danes increased by more than the average score for the
Norwegians, so Denmark is now second and Norway third.
The
report’s authors explained, “…the top countries tend to have high values for
most of the key variables that have been found to support well-being: income,
healthy life expectancy, social support, freedom, trust, and generosity.”
The
10 happiest countries in the world, according to the report, which aggregated data
on 156 countries from Gallup World Polls, are:
1. Finland (7.769)
2. Denmark (7.600)
3. Norway (7.554)
4. Iceland (7.494)
5. Netherlands (7.488)
6. Switzerland (7.480)
7. Sweden (7.343)
8. New Zealand (7.307)
9. Canada (7.278)
10. Austria (7.246)
Since
the report began, happiness has increased most dramatically in Benin (#102),
Nicaragua (#45), Bulgaria (#97), Latvia (#53), and Togo (#139).
The
United States came in at #19. Overall, happiness levels in the U.S. have
declined by almost 0.5 since the report was first issued. The report stated:
“Several
credible explanations have been posited to explain the decline in happiness
among adult Americans, including declines in social capital and social support
(Sachs, 2017) and increases in obesity and substance abuse (Sachs, 2018)…I
suggest another, complementary explanation: that Americans are less happy due
to fundamental shifts in how they spend their leisure time…the way adolescents
socialize has fundamentally shifted, moving toward online activities and away
from face-to-face social interaction.”
Weekly Focus – Think About
It
“The
human race has only one really effective weapon and that is laughter.”
--Mark Twain,
American author
Best regards,
Leif M. Hagen
Leif M. Hagen, CLU, ChFC
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.federalreserve.gov/newsevents.htm (Video timestamp 0:15 to 3:00 minutes)
https://finance.yahoo.com/quote/^DJI?p=^DJI&.tsrc=fin-srch (5-day chart or historical pricing)
https://finance.yahoo.com/quote/^IXIC?p=^IXIC (5-day chart or historical pricing)
https://finance.yahoo.com/quote/%5EGSPC?p=%5EGSPC (5-day chart or historical pricing)
https://www.barrons.com/articles/the-yield-curve-just-inverted-that-doesnt-mean-sell-stocks-51553267161?mod=hp_BRIEF&mod=article_inline (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-25-19_Barrons-The_Yield_Curve_Just_Inverterted-Thats_Not_as_Scary_as_You_Think-Footnote_6.pdf)
https://s3.amazonaws.com/happiness-report/2019/WHR19.pdf (Pages 22-27, 34-37, and 88-89)
