“Peek of the Week”
Market Commentary
July 29, 2019
The Markets
It
has been said there are two sides to every story. Just look at world financial
markets. Stock markets and bond markets are telling very different stories.
In
the United States, stock markets were blue ribbon winners last week.
The
Standard & Poor’s 500 Index rebounded to a record high. The Nasdaq
Composite also set a new record. Barron’s
reported U.S. stock markets were supported by abundant optimism inspired by
expectations for solid earnings growth and a Federal Reserve rate cut in July.
Optimism
pushed stocks higher in Europe last week, too. CNBC reported investors were receptive to news suggesting the European
Central Bank would ease monetary policy to support the European economy. A
significant number of national stock indices in Europe, the Middle East, and
Asia finished last week higher, according to Barron’s.
Bond
markets have been telling a less optimistic story.
In
many regions of the world, bond yields have sunk below zero, and bond buyers
have been locking in losses by investing in bonds with negative yields.
In
the United States, the 10-year Treasury yield remains positive, but it has
dropped from 3.2 percent in November 2018 to 2.1 percent at the end of last
week.
So,
what are bond markets saying? Barron’s
suggested some possibilities:
“…bond
buyers locking in subzero yields aren’t doing it, of course, for love of
losses. They might think that the certainty of small losses will prove a better
deal in the years ahead than whatever stocks provide…There’s something else
that negative yields could be telling us. Investors need bonds for things like
diversification and setting aside money at known rates to offset known
liabilities. For an investor who must buy bonds, a purchase here with negative
yields isn’t necessarily a bet against stocks. It could just be a wager that bond
yields won’t get much better – that slow growth and meager inflation will loom
for many years.”
Time
will tell.
Data as of
7/26/19
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic Stocks)
|
1.7%
|
20.7%
|
6.6%
|
11.7%
|
8.9%
|
11.9%
|
|
Dow Jones Global ex-U.S.
|
-0.4
|
11.0
|
-4.3
|
5.3
|
-0.2
|
3.5
|
|
10-year Treasury Note (Yield Only)
|
2.1
|
NA
|
3.0
|
1.6
|
2.5
|
3.7
|
|
Gold (per ounce)
|
-1.3
|
10.8
|
15.6
|
2.4
|
1.7
|
4.1
|
|
Bloomberg Commodity Index
|
-0.8
|
2.6
|
-7.3
|
-2.0
|
-9.5
|
-4.4
|
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; 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.
music, earworms, and data storage. Anyone
who has ever suffered an earworm (known in scientific circles as Involuntary
Musical Imagery) understands the power of music. Some tunes that repeatedly pop
into people’s heads may include:
·
It’s a Small World
(Disney)
·
Don’t Stop
Believing (Journey)
·
Who Let the Dogs Out?
(Baha Men)
·
Silver Bells
(Bing Crosby)
·
We are the
Champions (Queen)
Let’s
face it. Music can be potent. In The
Power of Music, Elena Mannes writes, “…science today is showing that music
is in fact encoded in our bodies and brains.” She discusses research suggesting
music may be able to help people heal, change behavior, and treat neurological
disorders.
It
may be used in other ways, too. Soon, you may experience a new music phenomenon
called Imperceptible Audio Communication. That’s when data is secretly coded
into music. You won’t be able to hear it, but your smartphone and other devices
will.
At
the 44th IEEE (Institute of Electrical and Electronics Engineers) International
Conference on Acoustics, Speech and Signal Processing, a pair of doctoral
students shared their work, which focuses on storing data in music.
Imagine,
someday you may be:
·
Walking through an
airport, not really listening to the piped-in sounds, when your phone picks up
a data feed from the music and lets you know your flight is delayed.
·
Pushing your cart
down a grocery aisle and Muzak® advises your smartphone cauliflower
is on sale.
·
Checking into a
hotel and having the lobby music send the Wi-Fi password and other check-in
data directly to your smartphone.
·
Dancing in a club
and having your smartphone flash a drink special.
The
times – they are changing.
Weekly Focus – Think About
It
“Any sufficiently advanced technology is
indistinguishable from magic.”
--Arthur C. Clarke, British writer and
inventor
Best regards,
Leif
M. Hagen
Leif
M. Hagen, CLU, ChFC
LPL Financial Advisor
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 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/why-some-investors-are-buying-bonds-that-lose-money-51564179385?mod=hp_DAY_2 (or
go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/07-29-19_Barrons-Why_Some_Investors_are_Buying_Bonds_that_Lose_Money-Footnote_1.pdf)
https://www.barrons.com/articles/the-s-p-500-hit-a-new-high-because-the-market-still-expects-the-federal-reserve-to-cut-interest-rates-51564195482?mod=hp_DAY_3 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/07-29-19_Barrons_The_S_and_P_Hit_a_New_High_Because_the_Market_Still_Expects_the_Federal_Reserve_to_Cut_Interest_Rates-Footnote_2.pdf)
https://www.barrons.com/market-data/stocks/emea?mod=md_usstk_view_emea (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/07-29-19_Barrons-UK_FTSE_100_Stock_Index-Footnote_4.pdf)
https://www.barrons.com/market-data/stocks/asia?mod=md_emeastk_view_asia (or
go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/07-29-19_Barrons-Hong_Kong_Hang_Seng_Stock_Index-Footnote_5.pdf)
https://www.amazon.com/Poamazon%20Power%20of%20Musicwer-Music-Pioneering-Discoveries-Science/dp/0802719961/ref=sr_1_1?keywords=Elena+Mannes+POwer+of&qid=1564244240&s=dmusic&sr=8-1 (or
go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/07-29-19_Book_Excerpt-The_Power_of_Music-Footnote_7.pdf)
