“Peek of the Week”
Market Commentary
November 18, 2019
The Markets
The
longest bull market in history showed no signs of slowing last week.
U.S.
stock markets climbed higher for the sixth week straight – the longest rally in
U.S. markets in two years – and the Dow Jones Industrial Average surpassed
28,000 for the very first time, reported Bloomberg.
The
Economist reported, “It has been a
year of mood swings in financial markets. In the spring and summer, anxious
investors piled into the safety of government bonds, driving yields down
sharply. Yields have recovered in recent weeks…Equity prices in America have
reached a new peak. But what is more striking is the performance of cyclical
stocks relative to defensive ones. Within America’s market the prices of
industrial stocks, which do well in business-cycle upswings, have risen
relative to the prices of utility stocks, a safer bet in hard times.”
Last
week, Federal Reserve Chair Jerome Powell confirmed the United States appears
to be in good economic shape. The U.S. economic outlook remains favorable
despite weakening business investment, which has slowed because of sluggish
global growth and uncertainty surrounding trade. The unemployment rate remains
low and more people are returning to the workforce, which is a positive
development. Overall, Powell and his colleagues believe economic expansion is
likely to continue.
A similar phenomenon has occurred in European
markets.
Randall
Forsyth of Barron’s cited a source who stated, “…the global economic
backdrop has, for the first time in 18 months, begun to improve.” Forsyth went
on to explain, “It’s not just because of prospects of a trade deal. Recession
risks have, well, receded. Growth may slow to a 1 percent annual rate in the
current quarter, but odds of falling into an outright recession have slid.”
Whenever
investors are happy and markets are moving higher, contrarians begin to ask
questions. For example, a leading contrarian indicator is the Investors
Intelligence Sentiment Survey. The survey queries investors and investment
professionals about whether they are feeling bullish or bearish. When the ratio
of bulls to bears is above 1.0, the market may be overly bullish. When it is
less than 1.0, it may be too bearish.
Yardeni Research reported the ratio stood at 3.22
last week; 57 percent bulls and 18 percent bears
Data as of
11/15/19
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor’s 500 (Domestic Stocks)
|
0.9%
|
24.5%
|
14.3%
|
12.7%
|
8.9%
|
10.9%
|
Dow Jones Global ex-U.S.
|
-0.3
|
14.0
|
9.2
|
6.9
|
2.0
|
2.3
|
10-year Treasury Note (Yield Only)
|
1.8
|
NA
|
3.1
|
2.2
|
2.3
|
3.3
|
Gold (per ounce)
|
0.2
|
14.5
|
21.1
|
6.1
|
4.4
|
2.6
|
Bloomberg Commodity Index
|
-1.0
|
3.1
|
-4.5
|
-1.7
|
-7.6
|
-5.3
|
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.
In
case you missed it, the winner was #435. For the last five years, Katmai National Park and Preserve in Western Alaska
has hosted ‘Fat Bear Week’ to celebrate bears as they prepare for hibernation. The
participants are coastal brown bears who live along Alaska’s Brooks River.
The
event helps people better understand hibernation. You may not have realized it,
but bears spend the summer fattening up because they lose about one-third of
their body weight during the winter. It’s an interesting scientific phenomenon.
The Katmai National Park Service website explained:
“Hibernation
is a state of dormancy that allows animals to avoid periods of famine. It takes
many forms in mammals but is particularly remarkable in bears…After a summer
and fall spent gorging on food, a bear’s physiology and metabolism shifts in
rather incredible ways to help them survive several months without food or
water.”
In
Katmai, conservancy media rangers select twelve participants from among the
park’s 2,000 bears and post before-and-after photos on social media to showcase
the effects of summer feasting. People near and far can participate by watching
bear cams. There is even an ursine madness bracket where voters choose the fat
bear that wins each pairing, and the crowd favorite moves on to the next
match-up.
This
year, the Fat Bear Week champion was number 435, a.k.a. Holly. The Katmai
announcement touting 435’s win stated, “All hail Holly whose healthy heft will
help her hibernate until the spring. Long live the Queen of Corpulence!”
Weekly Focus – Think About It
“If we had
no winter, the spring would not be so pleasant: if we did not sometimes taste
of adversity, prosperity would not be so welcome.”
--Anne Bradstreet, Poet
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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This newsletter was prepared by Carson Coaching. Carson Coaching is not
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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.
*
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.
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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.
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There is no guarantee a diversified portfolio will enhance overall returns or
outperform a non-diversified portfolio. Diversification does not protect
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Sources:
https://www.economist.com/finance-and-economics/2019/11/14/the-improved-mood-in-financial-markets (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/11-18-19_TheEconomist-The_Improved_Mood_in_Financial_Markets-Footnote_2.pdf)
https://www.barrons.com/articles/next-stop-dow-30-000-it-could-happen-51573871667?mod=hp_DAY_1 (or
go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/11-18-19_Barrons-Next_Stop-Dow_30000-It_Could_Happen-Footnote_4.pdf)
https://www.yardeni.com/pub/stmktbullbear.pdf (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/11-18-19_Yardeni-Stock_Market_Indicators-Bull_Bear_Ratios-Footnote_6.pdf)
