“Peek of the Week”
Market Commentary
May 6, 2019
The Markets
The Standard & Poor’s 500 Index is off to its best start in 20
years.
Despite the exceptional performance of U.S. stock markets
year-to-date, and data that suggest economic growth remains steady, some analysts
and investors have been pecking at Federal Reserve Chair Jerome Powell. They’re
keen for the Fed to implement a rate cut, which could stimulate economic growth
and help push stock markets higher, because inflation is lower than ideal,
reported Howard Schneider and Ann Saphir of Reuters.
Recent data suggest core inflation is at 1.6 percent. That’s below
the Fed’s target rate of 2 percent. Fed leaders have said they think low inflation
may be temporary. Until a trend has been established to their satisfaction,
they intend to do nothing. The Reuters
article explained, “…preemptive…rate moves in either direction appear off the
table for now, absent some unexpected event that raises new risks or shocks the
economy into a higher or lower gear.”
Second-guessing the Fed is not new. In 1955, the ninth Chairman of
the Federal Reserve, William McChesney Martin, offered this insight to the
Fed’s work:
“Those who have the task of making [credit and monetary] policy
don't expect you to applaud. The Federal Reserve…is in the position of the
chaperone who has ordered the punch bowl removed just when the party was really
warming up.”
On Friday, jobs data suggested U.S. economic growth continues
apace. The Bureau of Labor Statistics
report showed unemployment was at a 49-year low. The news made investors happy,
and the Nasdaq Composite and S&P 500 finished the week higher.
Data as of
5/3/19
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic Stocks)
|
0.2%
|
17.5%
|
12.0%
|
12.6%
|
9.3%
|
12.5%
|
|
Dow Jones Global ex-U.S.
|
0.3
|
11.8
|
-5.3
|
6.1
|
0.6
|
5.1
|
|
10-year Treasury Note (Yield Only)
|
2.5
|
NA
|
3.0
|
1.8
|
2.6
|
3.2
|
|
Gold (per ounce)
|
-0.4
|
-0.2
|
-2.8
|
-0.4
|
-0.4
|
3.5
|
|
Bloomberg
Commodity Index
|
-1.1
|
4.1
|
-11.0
|
-1.5
|
-10.2
|
-3.7
|
|
DJ
Equity All REIT Total Return Index
|
1.1
|
18.3
|
20.3
|
8.3
|
9.3
|
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.
overlooked economic indicators. Last week, the
Federal Reserve Open Market Committee statement indicated inflation
was below target levels. The report stated, “On a 12-month basis, overall
inflation and inflation for items other than food and energy have declined and
are running below 2 percent.”
A
less respected economic indicator is telling a similar story about inflation.
The Tooth Fairy Index confirms the
value of a baby tooth isn’t what it used to be. For the second consecutive
year, the average monetary gift left behind by the Tooth Fairy was less
generous. In 2018, it fell 43 cents to $3.70, on average.
There
are regional differences. West Coast Tooth Fairies are, typically, more
generous than Midwest tooth fairies. The regional numbers for 2018 looked like
this:
·
$4.19 was the
average payout on the West Coast. That’s down 66 cents from $4.85 in 2017.
·
$3.91 was the
average payout in the South. That’s down 21 cents from $4.12 in 2017.
·
$3.75 was the
average payout in the Northeast. That’s down 60 cents from $4.35 in 2017.
·
$2.97 was the
average payout in the Midwest. That’s down 47 cents from $3.44 in 2017.
The
first baby tooth lost continues to command a higher value than other teeth. It
was worth $4.96, on average, across the country.
The
non-monetary benefits of impending Tooth Fairy visits can be significant. They
may include: 1) early bedtime in anticipation of the visit; 2) joy when
compensated for a lost tooth; 3) a chance to discuss the importance of oral
hygiene; and 4) the opportunity to teach kids about saving.
Weekly Focus – Think About
It
“Joy,
feeling one's own value, being appreciated and loved by others, feeling useful
and capable of production are all factors of enormous value for the human soul.”
--Maria
Montessori, Italian physician and educator
Best regards,
Leif M. Hagen
Leif M. Hagen, CLU, ChFC
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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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