“Peek of the Week”
Market Commentary
Market Commentary
December 2, 2019
The Markets
It’s
a shopping revolution!
Sometime,
probably not so long ago, comedian Dave Barry wrote, “Once again, we come to
the Holiday Season, a deeply religious time that each of us observes, in his
own way, by going to the mall of his choice.”
Not
so much anymore.
On
Black Friday 2019, many shoppers didn’t venture any farther than their favorite
digital device. CNBC reported, “The pullback in brick-and-mortar stores
mirrored a surge in Black Friday online shopping, which hit $7.4 billion, an
all-time record for the day, according to Adobe Analytics.” There was some good
news for brick-and-mortar stores. In-store sales on Thanksgiving Day were up
2.3 percent from a year ago.
Despite
relatively strong retail sales, overall, major stock indices in the United
States dipped on Friday for reasons unrelated to evolving business models in
the retail industry. Indices trended lower for the same reason they have on
numerous occasions this year: Investors were worried about a setback in
U.S.-China trade talks. Barron’s explained:
“The
Dow Jones Industrial Average, the S&P 500 index, and the Nasdaq Composite
dipped on the final day of a boffo November. U.S. legislation supporting Hong
Kong’s pro-democracy protesters, to which Beijing reacted furiously, dampened
hopes that the highly anticipated phase-one trade deal with China would be
inked soon.”
Despite
losses on Friday, major U.S. indices were up for the week and the month,
reported The Wall Street Journal. In November, U.S. stocks posted the strongest
monthly performance since June.
U.S.
government bonds have been delivering positive returns, too. Interest rates on
30-year Treasuries have fallen over the course of the year and were down again last
week. When bond rates fall, bond prices move higher. When bond rates begin to
move higher, prices will fall.
It’s
remarkable when stock and bond markets move in the same direction at the same
time. Often, strong performance in one market is accompanied by weaker
performance in the other.
Data as of
11/29/19
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic Stocks)
|
1.0%
|
25.3%
|
14.7%
|
12.5%
|
8.9%
|
11.1%
|
|
Dow Jones Global ex-U.S.
|
0.2
|
13.7
|
7.8
|
6.6
|
1.7
|
2.5
|
|
10-year Treasury Note (Yield Only)
|
1.8
|
NA
|
3.0
|
2.3
|
2.2
|
3.2
|
|
Gold (per ounce)
|
-0.3
|
13.9
|
19.1
|
7.2
|
4.1
|
2.2
|
|
Bloomberg Commodity Index
|
-2.1
|
0.5
|
-6.7
|
-2.9
|
-7.7
|
-5.6
|
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; 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.
What
makes a billionaire a billionaire? During the five years through the end of 2018,
the population of billionaires around the globe increased by 350 people to 2,101.
The wealth of billionaires grew, too. After a 4.3 percent loss overall in 2018,
billionaires’ wealth increased by 34.5 percent during the past five years.
According
to The Billionaire Effect, which was released by UBS and PWC last month,
three specific personality traits explain the success of many billionaires. It
seems the typical exceptionally rich person is a smart risk-taker, focused on
business, and determined to succeed. If that describes someone you know who has
not yet reached billionaire status, perhaps it’s the industry. The only field
where billionaire wealth increased during 2018 was Technology.
Women
are becoming billionaires at a faster rate than men (46 percent versus 39
percent during the past five years), although there are still significantly
fewer women (233) among the superrich.
Most
of these exceptionally wealthy folks are found in Asia and the Americas:
·
There are 754
billionaires in the Asia Pacific region with 436 in China.
·
There are 749 in
the Americas with 652 in North America.
·
There are 598 in
Emerging Markets, the Middle East, and Africa with 397 in Western Europe and
151 in Eastern Europe.
While
personality traits may influence success, what really makes billionaires is the
success of their companies. The report stated:
“Over
the 15 years to the end of 2018, billionaire-controlled companies listed on the
equity market returned 17.8 percent versus the 9.1 percent of the MSCI [All
Country World Index (ACWI)], almost twice the annualized average performance of
the market. Their companies are also more profitable, earning an average return
on equity of 16.6 percent over the last 10 years, compared to the 11.3 percent
of the MSCI ACWI.”
Weekly Focus – Think About It
“Human
greatness does not lie in wealth or power, but in character and goodness.
People are just people, and all people have faults and shortcomings, but all of
us are born with a basic goodness.”
--Anne Frank, Diarist
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, the Representative’s Broker/Dealer, or Registered Investment
Advisor, and should not be construed as investment advice.
*
This newsletter was prepared by Carson Coaching. Carson Coaching is not
affiliated with the named firm.
*
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. The volatility of indexes could be
materially different from that of a client’s portfolio. Unmanaged index returns
do not reflect fees, expenses, or sales charges. Index performance is not
indicative of the performance of any investment. You cannot invest directly in
an index.
*
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.
* 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-next-best-stocks-to-buy-could-be-small-caps-51575071290?mod=hp_DAY_1 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/12-02-19_Barrons-The_Stock_Markets_Next_Breakout_Stars-Footnote_3.pdf)
https://www.wsj.com/articles/stocks-edge-down-ahead-of-start-to-u-s-shopping-season-11575023295 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/12-02-19_WSJ-US_Stocks_Notch_Best_Month_Since_June-Footnote_4.pdf)
https://www.marketwatch.com/investing/bond/tmubmusd30y?countrycode=bx&mod=md_bond_overview_quote (Choose 5-year and YTD time periods at top of chart)
https://www.ubs.com/global/en/wealth-management/uhnw/billionaires-report.html (For the number of billionaires, click on ‘By year’ and
choose 2014 and 2018. For the quote, click on download report and go to page 6)
(or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/12-02-19_UBS-Billionaires_Insights-Footnote_8.pdf)
