Market Commentary
February 4, 2020
The Markets
Prepare yourself. There is a
good chance markets will be volatile in the coming weeks.
Precautions designed to slow
the spread of the coronavirus may also slow Chinese economic growth and, by extension,
global economic growth.
On Thursday, the World Health
Organization declared the coronavirus to be an international health emergency.
The U.S. State Department issued a travel advisory for China, and major U.S.
airlines suspended flights to the nation, reported Forbes.
In six Chinese provinces,
factories and businesses are shut until at least February 10. The closures
have created issues for global supply chains, and Financial Times reported,
“Companies from luxury retailers to airlines and banks are reeling as the
disease accelerates.”
Events sparked a bond rally
as investors shifted assets into safe haven investments. The Economist
wrote that previous viruses have not had lasting effects on economic growth. “Other
recent epidemics have reinforced the impression that economists should not be
overly worried, so long as good doctors are on the job. Neither avian flu in
2006 nor swine flu in 2009 dimmed the global outlook. Yet even flint-hearted
investors are wondering whether the new epidemic might be worse. Stocks in Hong
Kong have fallen by nearly 10 percent as reported infections have steadily
increased. Tremors have also rippled through global markets.”
China’s government is
prepared to step into the breach. On Saturday, Reuters reported,
“Chinese authorities have pledged to use various monetary policy tools to
ensure liquidity remains reasonably ample and to support firms affected by the
virus epidemic…” The Chinese central bank is expected to begin offering support
on February 3 before the Chinese stock market reopens for the first time since
January 23.
The European Union may also
be in need of economic stimulus. Financial Times reported the Eurozone
economy came to a virtual standstill (up 0.1 percent) in the fourth quarter and
grew just 1.2 percent during 2019. Economies in France and Italy, the second
and third largest in the region, both contracted during the fourth quarter.
Major U.S. stock indices
moved lower last week.
Data as of
1/31/20
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard &
Poor's 500 (Domestic Stocks)
|
-2.1%
|
-0.2%
|
19.3%
|
12.3%
|
9.8%
|
11.5%
|
Dow Jones Global
ex-U.S.
|
-3.1
|
-2.7
|
7.2
|
5.0
|
2.6
|
2.9
|
10-year Treasury
Note (Yield Only)
|
1.5
|
NA
|
2.6
|
2.5
|
1.7
|
3.7
|
Gold (per ounce)
|
1.3
|
4.0
|
19.7
|
9.3
|
4.5
|
3.8
|
Bloomberg Commodity Index
|
-3.2
|
-7.5
|
-7.3
|
-5.1
|
-5.9
|
-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.
The Things We
Do For Pets. While there is some debate about how many American households include
pets – The Washington Post reports estimates from the American Pet
Products Association are about 11 percent higher than those of the American
Veterinary Medical Association – there is little debate about how much people
love their pets.
With Valentine’s Day coming up soon, you may be wondering how to show
your pet you care. Here are a few ideas:
·
Doggie playlists and podcasts. Want to make certain
your pup doesn’t get lonely (or into too much trouble) when left at home alone?
One major media company is making canine playlists and podcasts. Reuters
reported the podcasts feature, “…soothing music, ‘dog-directed praise,’
stories, and messages of affirmation and reassurance narrated by actors to
alleviate stress…”
·
Video chat or…bark? Wouldn’t it be great to take a break
and chat with your pet during lunch hour? One social media user, cited by The
Insider, thought so. “I taught my dog to accept [video] calls through my
laptop at home while I'm at work. Then, we just talk.”
·
Travel somewhere fun. Millions of people travel with their
pets, according to Forbes. One travel magazine publishes a pet-friendly
article each month. The LA Travel Magazine archive includes titles like,
‘TopDawg’ Resorts in the U.S. and The Pawfect Guide to Dog Beaches in
SoCal.
·
Just don’t supersize it. A pet owner, cited
by the Odyssey, occasionally indulges her pets with people food. “When
we go out for [fast food] or something, my mom and I buy them each their own
burger and sometimes include fries so they can have a meal.”
On Valentine’s Day, remember to do something nice for the people you
love, too.
Weekly Focus – Think About It
“The more
cats you have, the longer you live. If you have a hundred cats, you’ll live ten
times longer than if you have ten. Someday this will be discovered, and people
will have a thousand cats and live forever.”
--Charles Bukowski, Poet and novelist
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, 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.ft.com/content/b8027b84-4514-11ea-aeb3-955839e06441 (or
go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/02-03-20_FinancialTimes-Apple_Shuts_42_China_Retail_Stores_Due_to_Coronavirus-Footnote_3.pdf)
https://www.ft.com/content/f3fcdc5a-4119-11ea-bdb5-169ba7be433d (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/02-03-20_FinancialTimes-The_Impact_of_Coronavirus_Across_Industry_and_Finance-Footnote_4.pdf)
https://www.economist.com/international/2020/01/30/chinas-coronavirus-semi-quarantine-will-hurt-the-global-economy (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/02-03-20_TheEconomist-Chinas_Coronavirus_Semi-Quarantine_will_Hurt_the_Global_Economy-Footnote_5.pdf)
https://www.ft.com/content/f3088ca8-43f9-11ea-abea-0c7a29cd66fe (or
go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/02-03-20_FinancialTimes-Eurozone_Grows_Just_0.1_Percent_as_France_and_Italy_Shrink-Footnote_7.pdf)
https://www.insider.com/ways-people-spoil-their-pets-2018-10#they-taught-their-dog-how-to-facetime-1
