“Peek of the Week”
Market Commentary
July 22, 2019
The Markets
Did
last week mark the start of a new policy for the Federal Reserve?
The
U.S. Federal Reserve has a reputation for providing little transparency about
the timing and direction of potential rate changes. That reputation was
challenged last week.
In
back-to-back speeches, two of the three most influential members of the Federal
Open Market Committee (FOMC) – Federal Reserve Vice-Chairman Richard Clarida
and Fed Bank of New York President John Williams – made a case for lowering the
Fed funds rate to support economic growth, reported Financial Times.
When
asked about Fed officials’ comments, a currency strategist cited by Financial Times said, “…the
communication we received seemed in many ways to be a coordinated attempt to
signal the market given its timing and context…”
The
magnitude of the change remains a mystery.
Barron’s reported debate remains over whether the Fed will cut rates by
0.25 or 0.50 of a percentage point. On Saturday, the CME FedWatch Tool reported a 77.5 percent probability of the former.
There
was some positive economic data last week, including an uptick in U.S. consumer
spending and positive manufacturing data from the Philadelphia Fed’s July
survey, reported Barron’s. However,
the Conference Board Leading Economic
Index® declined, indicating growth may remain slow during the second half
of the year. The index combines 10 individual leading indicators in an effort
to reveal patterns in economic data.
The
Standard & Poor’s 500 Index was down 1.2 percent last week.
Data as of
7/19/19
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500 (Domestic Stocks)
|
-1.2%
|
18.7%
|
6.1%
|
11.2%
|
8.6%
|
12.1%
|
Dow Jones Global ex-U.S.
|
0.0
|
11.5
|
-2.2
|
5.7
|
0.1
|
3.9
|
10-year Treasury Note (Yield Only)
|
2.1
|
NA
|
2.9
|
1.6
|
2.5
|
3.6
|
Gold (per ounce)
|
2.3
|
12.3
|
18.3
|
2.7
|
1.9
|
4.2
|
Bloomberg Commodity Index
|
-2.0
|
3.5
|
-4.4
|
-2.5
|
-9.3
|
-4.2
|
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.
how hot was it last week? If you were in a region of the United States that
didn’t experience some of the hottest and most humid weather in years over the
weekend, count your lucky stars.
The
Washington Post reported, “The heat wave…comes
in the midst of what may turn out to be the hottest month Earth has recorded
since instrument records began in the late 19th century…”
So,
how hot was it?
It
was so hot:
·
The National
Weather Service staff in Nebraska attempted to bake biscuits inside a car,
reported UPI. The biscuits didn’t
bake through, but the tops were crispy. The temperature in the pan reached 185
degrees Fahrenheit.
·
Paved roads were
melting in France and Germany. Deteriorating road conditions caused Germany to
impose speed limits on the Autobahn, which usually has no limits at all,
reported Bloomberg.
·
Bicycles melted
and police were called to restore order at public pools in Berlin, Germany, according
to tweets cited by Buzzfeed.
The
U.S. heat event is expected to end by Tuesday. Forecasters were warning the
heat index could rise as high as 115 degrees. If you are in an area afflicted
by extreme heat, the National Weather Service advises staying out of the sun,
remaining in air-conditioned places, drinking plenty of water, and checking on
older or disabled friends and relatives.
Weekly Focus – Think About
It
“Hold
yourself responsible for a higher standard than anybody else expects of you.
Never excuse yourself. Never pity yourself. Be a hard master to yourself – and
be lenient to everybody else.”
--Henry Ward Beecher, American minister and speaker
Best regards,
Leif
M. Hagen
Leif M. Hagen, CLU, ChFC
LPL Financial Advisor
Leif M. Hagen, CLU, ChFC
LPL Financial Advisor
P.S. Please feel free to forward this commentary
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Securities
offered through LPL Financial Member FINRA/SIPC.
*
These views are those of Carson Coaching, and not the presenting Representative
or the Representative’s Broker/Dealer, and should not be construed as
investment advice.
*
This newsletter was prepared by Carson Coaching. Carson Coaching is not
affiliated with the named broker/dealer.
*
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. Unmanaged index returns do not reflect
fees, expenses, or sales charges. Index performance is not indicative of the
performance of any investment.
*
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 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.
*
You cannot invest directly in an index.
*
Stock 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/15c2d8c6-aa39-11e9-b6ee-3cdf3174eb89 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/07-22-19_FinancialTimes-Fed_Comes_Under_Fire_from_Wall_Street_Over_Rate_Confusion-Footnote_1.pdf)
https://www.barrons.com/articles/stock-market-gauges-barely-budge-as-fed-decision-looms-51563592175?mod=hp_DAY_3 (or
go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/07-22-19_Barrons-Stock_Market_Gauges_Barely_Budge_as_Fed_Decision_Looms-Footnote_2.pdf)
https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/07-22-19_CMEGroup-Probabilities_of_FOMC_Rate_Moves-Footnote_3.pdf)
