“Peek of the Week”
Market Commentary
Market Commentary
May 20, 2019
The Markets
Trade war trade-off.
There was some good news on trade, last week. The United States
took steps to reduce trade friction with the European Union, Canada, Mexico,
and Japan.
“The United States on Friday reached an agreement with Canada
and Mexico to remove steel and aluminum tariffs, which had been a persistent
source of friction across North America over the past year. The deal on
metals came as Mr. Trump decided not to press ahead immediately with
levies on EU and Japanese automotive products – despite declaring that foreign
car and vehicle imports represented a threat to U.S. national security,” reported
James Politi, Jude Webber, and Jim Brunsden of Financial Times.
There was some bad news, too. Trade tensions escalated between the
United States and China. The United States doubled tariffs on $200 billion of
Chinese goods and threatened tariffs on an additional $325 billion of goods.
The United States imports about $539 billion worth of goods from China each
year, reported the BBC.
In addition, President Trump signed an executive order preventing
U.S. companies from using telecommunications equipment made by firms believed
to pose a risk to national security. The move is expected to affect the ability
of a large Chinese telecoms firm to conduct business in the United States,
reported David Lawder and Susan Heavey of Reuters.
China currently has tariffs on $110 billion of American goods and
they announced plans to hike tariffs on $60 billion of these goods. In total, China
imports $120 billion worth of goods overall from the United States each year.
While the relatively small amount of American goods imported by
China would seem to give the United States an advantage in a trade war, China
has other means of gaining leverage. The country holds about 7 percent of U.S.
debt, which is more than any other nation, reported Jeff Cox of CNBC. If China were to slow purchases of
Treasuries, yields on U.S. government bonds may move higher.
A source cited by Reshma Kapadia of Barron’s suggested it is unlikely the Chinese will stop buying
Treasuries. “Where would they put the trillions of dollars? Ten-year German
Bunds are below Japanese 10-year yields; there aren’t a lot of options…They
also don’t want their currency to appreciate, so that handcuffs them…China
tends to find things to hurt adversaries without hurting themselves.”
The Standard & Poor’s 500 Index finished the week lower.
Data as of
5/17/19
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic Stocks)
|
-2.2%
|
14.9%
|
5.8%
|
11.4%
|
8.7%
|
12.2%
|
|
Dow Jones Global ex-U.S.
|
-3.1
|
8.3
|
-9.5
|
5.2
|
-0.1
|
4.4
|
|
10-year Treasury Note (Yield Only)
|
2.5
|
NA
|
3.0
|
1.8
|
2.7
|
3.2
|
|
Gold (per ounce)
|
0.7
|
0.4
|
-2.4
|
0.6
|
-0.2
|
3.5
|
|
Bloomberg
Commodity Index
|
-1.5
|
2.5
|
-13.1
|
-1.9
|
-10.4
|
-4.2
|
|
DJ
Equity All REIT Total Return Index
|
NA
|
NA
|
NA
|
NA
|
NA
|
NA
|
S&P 500, Dow Jones Global ex-US, Gold, and Bloomberg
Commodity Index returns exclude reinvested dividends (gold does not pay a
dividend) and the three-, five-, and 10-year returns are annualized. The
10-year Treasury Note is simply the yield at the close of the day on each of
the historical time periods.
The DJ Equity All REIT Total Return Index is
currently unavailable.
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.
Which Cities offer the best quality of
life? In March, Mercer published its 21st Quality of Living Survey. The
goal is to help multinational corporations with data that can help them
optimize their global operations. The survey considers factors like safety,
housing, recreation, economics, public transport, consumer goods, and more. For
2019, the cities offering the highest quality of life were:
1. Vienna, Austria
2. Zurich, Switzerland
3. Vancouver, Canada
4. Munich, Germany
5. Auckland, New Zealand
6. Düsseldorf, Germany
7. Frankfurt, Germany
8. Copenhagen, Denmark
9. Geneva, Switzerland
10. Basel, Switzerland
Thirteen
of the world’s top-20 cities were in Europe. The safest cities in Europe were
Luxembourg, Basel, Bern, Helsinki, and Zurich. The least safe, as far as
personal safety goes, were Moscow and St. Petersburg.
In
North America, Canadian cities generally did better than U.S. cities. The
highest ranked city in the United States was San Francisco, which came in at 34th.
Boston ranked 36th and Honolulu 37th. The safest cities
in North America were Vancouver, Toronto, Montreal, Ottawa, and Calgary.
Dubai
offers the best quality of life in the Middle East. Dubai and Abu Dhabi were
the safest cities, while Damascus was the least safe – in the Middle East and
the world.
Singapore,
Tokyo, and Kobe had the highest quality of life rankings among Asian cities.
Cities in Australia and New Zealand also did quite well, overall.
Weekly Focus – Think About
It
“You
are all there, the people in the city. I can't believe I was ever among you.
When you are away from a city it becomes a fantasy. Any town, New York,
Chicago, with its people, becomes improbable with distance. Just as I am
improbable here, in Illinois, in a small town by a quiet lake. All of us
improbable to one another because we are not present to one another.”
--Ray
Bradbury, American author
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 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.
*
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/9aca49e0-78a3-11e9-be7d-6d846537acab (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/05-20-19_FinancialTimes-Donald_Trump_Eases_Tariffs_for_Allies_as_He_Focuses_on_China-Footnote_1.pdf)
https://www.barrons.com/articles/trade-war-stock-market-outlook-51558120641 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/05-20-19_Barrons-The_Trade_War_Will_Make_Stocks_Scary-5_Reasons_Not_to_Panic-Footnote_5.pdf)
https://mobilityexchange.mercer.com/Insights/quality-of-living-rankings (Click on 2019 City Ranking, Show/Hide full ranking)
