“Peek of the Week”
Market Commentary
January 27, 2020
The Markets
Markets
hunkered down last week.
News
of the coronavirus outbreak in Wuhan, China unsettled investors around the
world. The respiratory infection is related to severe acute respiratory
syndrome (SARS) and Middle East respiratory syndrome (MERS), reported WebMD.
Previous
virus outbreaks have affected global economic growth. Research into pandemic
preparedness suggests extreme events can reduce global annual income by 0.6
percent per year (including mortality and income loss). Lower income often is
equated with slower economic growth.
Viruses
can also affect companies and share values. However, not every investment will move
in the same direction at the same time, and not every country or industry will
be affected in the same way. Barron’s reported:
“SARS
infected more than 8,000 people in 2003, killing more than 770. The outbreak
occurred between November 2002 and July 2003. Stocks of U.S. airlines – a proxy
for travel-related shares – dropped more than 30 percent from pre-SARS highs
during that outbreak, about twice the decline of the broader S&P 500 index.
All stocks, it appears, were impacted by the outbreak. It took about three
months for shares to bottom and another three months to achieve previous
highs.”
China
responded to the outbreak by imposing a transportation lockdown, and that could
affect China’s economic growth. S&P Global explained:
“The
coronavirus is hitting China during Lunar New Year, a period when households
tend to spend more on travel, entertainment, and gifts. Even if the virus is
contained fairly quickly, the initial stages of high uncertainty are likely to
affect spending.”
In
addition, the city of Wuhan, where the outbreak began, is a major
transportation hub and a center for auto production. It is China’s sixth
largest city, home to 11 million people, and responsible for 1.6 percent of the
country’s economic growth.
Major
stock indices in the United States moved lower last week.
Data as of
1/24/20
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic Stocks)
|
-1.0%
|
2.0%
|
24.7%
|
13.1%
|
9.8%
|
11.6%
|
|
Dow Jones Global ex-U.S.
|
-1.1
|
0.4
|
13.2
|
6.2
|
3.1
|
3.0
|
|
10-year Treasury Note (Yield Only)
|
1.7
|
NA
|
2.7
|
2.5
|
1.8
|
3.6
|
|
Gold (per ounce)
|
0.4
|
2.7
|
21.9
|
8.7
|
4.1
|
3.6
|
|
Bloomberg Commodity Index
|
-3.1
|
-4.4
|
-3.6
|
-4.5
|
-5.2
|
-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.
a
decade of words. Time Magazine puts a ‘Person of the Year’ on its cover. ESPN
awards ESPYs to athletes annually. Nobel and Ig Nobel committees recognize
the worthy and the unsuspecting. Merriam Webster selects a ‘Word of the
Year.’ It is the word dictionary users searched for more than they had in
previous years. Here are the words of the year from the last decade:
2010: Austerity, noun, “The quality or
state of being austere, a stern and serious quality, a plain and simple
quality.”
2011: Pragmatic, adjective, “Relating
to matters of fact or practical affairs often to the exclusion of intellectual
or artistic matters: practical as opposed to idealistic.”
2012: Socialism, noun, “Any of various
economic and political theories advocating collective or governmental ownership
and administration of the means of production and distribution of goods,” tied
with Capitalism.
Capitalism, noun, “An economic system
characterized by private or corporate ownership of capital goods, by
investments that are determined by private decision, and by prices, production,
and the distribution of goods that are determined mainly by competition in a
free market.”
2013: Science, noun, “The state of
knowing: knowledge as distinguished from ignorance or misunderstanding.”
2014: Culture, noun, “The customary
beliefs, social forms, and material traits of a racial, religious, or social
group, also the characteristic features of everyday existence (such as
diversions or a way of life) shared by people in a place or time.”
2015: -ism, noun suffix, “Manner of
action or behavior characteristic of a (specified) person or thing, or
prejudice or discrimination on the basis of a (specified) attribute.” (The most
looked up words were socialism, fascism, racism, feminism, communism,
capitalism, and terrorism.)
2016: Surreal, adjective, “Marked by
the intense irrational reality of a dream.”
2017: Feminism, noun, “The theory of
the political, economic, and social equality of the sexes; organized activity
on behalf of women's rights and interests.”
2018: Justice, noun, “The maintenance
or administration of what is just especially by the impartial adjustment of
conflicting claims or the assignment of merited rewards or punishments.”
2019: They, pronoun, “Those ones:
those people, animals, or things.” The definition was expanded to, “Used to
refer to a single person whose gender identity is nonbinary.”
The short-list of words for 2019 included:
quid pro quo, impeach, crawdad, egregious, clemency, the, snitty, tergiversation
(“evasion of straightforward action or clear-cut statement”), camp, and exculpate.
Weekly Focus – Think About It
“We think
of English as a fortress to be defended, but a better analogy is to think of
English as a child. We love and nurture it into being, and once it gains gross
motor skills, it starts going exactly where we don't want it to go: it heads
right for the…electrical sockets. We dress it in fancy clothes and tell it to
behave, and it comes home with its underwear on its head and wearing someone
else's socks. As English grows, it lives its own life, and this is right and
healthy. Sometimes English does exactly what we think it should; sometimes it
goes places we don't like and thrives there in spite of all our worrying. We
can tell it to clean itself up and act more like Latin; we can throw tantrums
and start learning French instead. But we will never really be the boss of it.
And that's why it flourishes.”
--Kory Stamper, Lexicographer and author
Best regards,
Leif
M. Hagen
Leif
M. Hagen, CLU ChFC
LPL Financial Advisor
LPL Financial Advisor
P.S. Please feel free to forward this commentary
to family, friends, or colleagues. If you would like us to add them to the
list, please reply to this email with their email address and we will ask for
their permission to be added.
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.
*
To unsubscribe from the “Peek of the Week” please reply to this email with
“Unsubscribe” in the subject line or write us at: Hagen Financial Network,
Inc,; 4640 Nicols Rd – Suite #203; Eagan, MN 55122
Sources:
https://www.barrons.com/articles/stocks-catch-a-cold-after-fed-stops-expanding-its-balance-sheet-51579916069?mod=hp_DAY_1 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/01-27-20_Barrons-Stocks_Catch_a_Cold_After_Fed_Stops_Expanding_its_Balance_Sheet-Footnote_1.pdf)
https://www.barrons.com/articles/travel-stocks-coronavirus-china-airlines-health-care-51579714639 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/01-27-20_Barrons-Coronavirus_has_Hit_the_Stock_Market-Heres_What_History_Says_Comes_Next-Footnote_5.pdf)
