“Peek of the Week”
Market Commentary
Market Commentary
April 15, 2019
The Markets
Investors took an intermission.
The curtain appeared to close on the first
act of 2019 last week – and what an impressive act it was. The Standard &
Poor’s 500 Index delivered some dramatic returns and is less than 1 percent
away from a new all-time high.
Despite relatively few shares changing hands,
major U.S. indices eked out gains. Ben Levisohn of Barron’s explained:
“Trading volume was tepid at best. This past
Monday, fewer shares changed hands than on any day since December 24 – when the
market closed early for Christmas. Tuesday’s volume was lower than Monday’s,
Wednesday’s was lower than Tuesday’s, and...well, you get the point. That was
just another sign that no one wanted to place any big bets on the market this
past week – in either direction.”
Investors were complacent even though news suggested
trade talks with China were progressing well. They remained unruffled in the
face of a Presidential tweet suggesting the United States will impose tariffs
on Europe in retaliation for illegal subsidies to a European aerospace firm.
There was another interesting development in
the United States last week. It was widely reported that a number of companies
in retail and banking sectors increased entry-level hourly wages to levels well
above the national minimum wage of $7.25 an hour. The companies are paying $13
to $20 an hour, according to Renae Merle of The
Washington Post and a report from Reuters.
That is good news for workers, but not such
good news for investors since higher wages could lead to lower corporate
profits, reported Joe Wallace and Akane Otani of The Wall Street Journal.
Data as of
4/12/19
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic
Stocks)
|
0.5%
|
16.0%
|
9.1%
|
12.1%
|
9.7%
|
13.0%
|
|
Dow Jones Global ex-U.S.
|
0.3
|
11.9
|
-6.3
|
6.3
|
1.0
|
5.9
|
|
10-year Treasury Note (Yield Only)
|
2.6
|
NA
|
2.8
|
1.8
|
2.6
|
2.9
|
|
Gold (per ounce)
|
0.5
|
1.0
|
-3.5
|
1.0
|
-0.5
|
3.9
|
|
Bloomberg Commodity Index
|
0.4
|
7.8
|
-7.2
|
0.7
|
-9.7
|
-3.1
|
|
DJ Equity All REIT Total Return Index
|
0.3
|
18.7
|
24.2
|
8.3
|
10.3
|
16.5
|
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, 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.
Thought required. People make everyday decisions based on the information
they possess at any given moment, explained The
Economist. As understanding of an issue changes, so do the decisions people
make.
For example, a lot of people dislike plastic
grocery bags. Many shoppers choose to take cloth bags to the grocery store rather
than use plastic bags provided by the store. In fact, some 240 cities and
counties have laws that ban or tax plastic bags, according to Planet Money, and there is a national
movement afoot to ban the bags.
However, the economics of plastic grocery
bags is not as straightforward as many believe. Banning plastic bags appears to
be an effective solution to a serious environmental issue. Unfortunately, it is
not. An Australian economist studied the effects of plastic bag bans and
discovered bans helped and hurt the environment:
· The good news: Cities with bans
used fewer plastic bags, and 40 of those cities generated about 40 million
fewer pounds of plastic trash annually.
· The bad news: Sales of plastic
garbage bags increased by 120 percent after the ban, possibly because people
reused grocery bags to line trashcans and clean up after dogs. Since trash bags
are made of heavier plastic than grocery bags, about 30 percent of the plastic trash
gains associated with the bans were lost.
In addition, paper
bag use rose, creating 80 million pounds of paper trash annually. Paper is
biodegradable and can be composted; however, producing paper bags requires water,
fuel, and trees, so that should be considered as well, reported Stanford Magazine.
A separate study conducted by the Danish
government found, “The most environment-friendly way to carry groceries is to
use the same bag over and over again…the best reusable ones are made from
polyester or plastics like polypropylene.”
Weekly Focus – Think About
It
Monday, April 15 is tax day in the United
States. Below is an excerpt from a radio show:
“Vanek
Smith: Joe and his California tax team are eating lunch and talking shop.
And they tell Joe they have this idea, an idea they think would save California
a bunch of money and time and help taxpayers. They say, most people in
California have really simple taxes. They get all of their income from a
regular paycheck, and taxes are already withheld from those paychecks.
Bankman: So their idea was –
why don't we start off giving them a tax return that's already filled out with
the income we know they have? And then they can make corrections on it. That
was their idea…
Vanek
Smith:
So they did a pilot program in California. In the 2004 tax season, they sent [completed
forms] out to about 11,000 taxpayers along with this little survey.
Bankman: So we asked people,
do you think you'd like to use this again next year? And 99 percent of the
people said yes. Ninety-nine percent of people don't say yes to anything.”
--Joseph Bankman, Stanford Professor of Law and Business
and
Stacey Vanek Smith, Planet Money radio host
Best
regards,
Leif M. Hagen
Leif M. Hagen, CLU, ChFC
Leif M. Hagen, CLU, ChFC
P.S. Please feel free to forward this commentary
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*
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.
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This newsletter was prepared by Carson Coaching. Carson Coaching is not
affiliated with the named broker/dealer.
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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.
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The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ
system.
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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.
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Yahoo! Finance is the source for any reference to the performance of an index
between two specific periods.
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Opinions expressed are subject to change without notice and are not intended as
investment advice or to predict future performance.
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Economic forecasts set forth may not develop as predicted and there can be no
guarantee that strategies promoted will be successful.
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Past performance does not guarantee future results. Investing involves risk,
including loss of principal.
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You cannot invest directly in an index.
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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.
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There is no guarantee a diversified portfolio will enhance overall returns or
outperform a non-diversified portfolio. Diversification does not protect
against market risk.
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Asset allocation does not ensure a profit or protect against a loss.
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Sources:
https://www.barrons.com/articles/stocks-near-record-highs-as-investors-sit-tight-51555121334?mod=hp_DAY_3 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-15-19_Barrons-Stocks_Near_Record_Highs_as_Investors_Sit_Tight-Footnote_1.pdf)
https://www.wsj.com/articles/investors-brace-for-hit-to-profits-as-costs-rise-11554283800 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-15-19_WSJ-Investors_Brace_for_Hit_to_Profits_as_Costs_Rise-Footnote_5.pdf)
https://www.economist.com/finance-and-economics/2019/04/04/simple-interactions-can-have-unpredictable-consequences (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-15-19_TheEconomist-Simple_Interactions_Can_Have_Unpredictable_Consequences-Footnote_6.pdf)
