January 21, 2020
The Markets
The new trade deals are here!
The United States and China
signed a preliminary trade deal last week. The next day, the United
States-Mexico-Canada Agreement was approved by the Senate.
The phase-one deal between
the United States and China has been analyzed, applauded, disparaged, and
questioned. Here is a sampling of what’s being said:
“The
eight-part deal includes protections for trade secrets and intellectual
property, mechanisms for enforceability, and commitments by Beijing to increase
purchases of U.S. goods and services by $200 billion over the next two years.
It also broadens U.S. companies’ access to China’s markets…”
-- Barron’s
“While
the deal isn’t insignificant – China has promised $200 billion in purchases…The
sweeping U.S. goals to change the way China’s economy functions, from shrinking
state-funded industries to strengthening intellectual property laws, are either
absent from the deal or described in vague terms.”
-- Foreign Policy
“A
truly grand pact between the two countries is some way off – and indeed, may
never arrive. But this modest trade agreement shows how much the status quo has
changed. Tariffs on hundreds of billions of dollars…of imports into both countries
remain in place, with an ever-present threat of more. This is not trade peace,
but rather a trade truce – and a tense one at that.”
-- The Economist
“Moreover,
some countries are worried that $200bn of Chinese purchases of US goods
that are part of the agreement will enshrine ‘managed trade’ between the
world’s two largest economies, possibly flouting market forces, discriminating
against their companies and violating WTO commitments.”
-- Financial Times
“One
aspect that most have not addressed is that this is only a two-year agreement.
What happens at the end of the two years is not defined…China has pledged to
purchase $36.5 billion in ag products in 2020 and $43.5 billion in 2021. But
the issues are no one believes either side will keep up their end of the
bargain.”
-- AgWeek
Despite a diversity of
opinion about the deal, investors were happy. The Dow Jones Industrial Average
surpassed 29,000 for the first time and was up 2.8 percent for the year through
last Friday, reported Barron’s.
Data as of
1/17/20
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic Stocks)
|
2.0%
|
3.1%
|
26.3%
|
13.7%
|
10.5%
|
11.2%
|
|
Dow Jones Global ex-U.S.
|
1.0
|
1.5
|
15.3
|
6.8
|
3.7
|
2.6
|
|
10-year Treasury Note (Yield Only)
|
1.8
|
NA
|
2.8
|
2.3
|
1.8
|
3.7
|
|
Gold (per ounce)
|
0.3
|
2.3
|
20.7
|
8.6
|
4.1
|
3.2
|
|
Bloomberg Commodity Index
|
-1.1
|
-1.3
|
-0.8
|
-3.6
|
-4.7
|
-5.4
|
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.
Culinary trends
of the 2010s…The way we eat
changed during the past 10 years. The Auguste Escoffier School of the
Culinary Arts pointed out sales of American cheese have fallen because
younger generations prefer artisanal cheeses. Unprocessed cheese isn’t the only food
trending last decade.
·
Shoot it while it’s
hot! Social media has delayed a few meals. More than
one-in-four people told Influence.com they had been asked to delay a
meal so someone could take a perfect shot to whet followers’ appetites.
·
Look at all the rainbows and unicorns. People indulged in
rainbow bagels smeared with birthday cake frosting and rainbow grilled cheese
sandwiches. If cupcakes, toast, or coffee was sparkly, bright, or shaped – it
may have had ‘unicorn’ before its name. Why, you ask? Scientific studies suggest
people perceive bright and/or sparkly food to be tastier and less boring than
naturally colored food.
·
Avocado toast persisted. From simple avocado mashed on
crunchy bread to 20-plus ingredient gourmet extravaganzas, avocado toast became
a social media sensation. There are even
competing origin stories. Was the first avocado (a.k.a. alligator pear) toast
created and consumed in Australia? California? Mexico?
·
Meatless meat. Vegetables are delicious. They’re
versatile, and now they’re masquerading as meat. America has become passionate
about plant-based meat products. There is a catch. Vox reported,
“…nutritionists who have conducted analyses have largely found that the
meatless meat burgers are, well, fine – not any better for you than a beef
burger but not worse, with the specific details depending on which health
priorities you have.”
What is your favorite food trend from the last decade? Putting an egg on
top? Meal kits? Kale? Macarons? Fermentation?
Weekly Focus – Think About It
“There's a
rebel lying deep in my soul. Anytime anybody tells me the trend is such and
such, I go the opposite direction. I hate the idea of trends. I hate imitation;
I have a reverence for individuality.”
― Clint Eastwood, Actor
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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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.
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as well as additional risks based on the quality of issuer coupon rate, price,
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All indexes referenced are unmanaged. The volatility of indexes could be
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an index.
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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
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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.
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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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are often heightened for investments in emerging markets.
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Sources:
https://www.barrons.com/articles/china-trade-deal-looks-like-a-modest-positive-but-uncertainties-remain-51579303201 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/01-21-20_Barrons_China_Trade_Deal_Looks_Like_A_Modest_Positive_But_Uncertainties_Remain2.pdf )
https://www.economist.com/finance-and-economics/2020/01/16/the-new-us-china-trade-deal-marks-an-uneasy-truce (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/01-21-20_Economist-The_New_US_China_Trade_Deal_Hypothetical_Trump_Lie_He3.pdf )
https://www.ft.com/content/6a6b5548-3877-11ea-a6d3-9a26f8c3cba4 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/01-21-20_FinancialTimes-Content_5.pdf )
https://www.barrons.com/articles/the-dow-jones-industrial-average-is-headed-for-30-000-51579311984?mod=hp_HERO (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/01-21-20_Barrons_The_Dow_Jones_Industrial_Average_Is_Headed_For_30_000_7.pdf )
