PEEK OF THE WEEK
August 27, 2018
Leif Hagen & Donna Roberts
The Markets
Tick, Tock.
Not everybody loves meetings and
even fewer enjoy reading the minutes, but investors make an exception with the
Federal Reserve. This week the Fed published the minutes from its August 1
meeting. While no changes were made to interest rates, the minutes did
provide insight to how the Fed sees the U.S. economy.
Key Insights:
·
The
economy is strong. The economy is poised for its best annual growth in a
decade due to stimulation from tax cuts and federal spending. The current
nine-year bull market is about to be the longest bull market in history and the
stock market hit a new high last week. Inflation is back to the 2 percent
range, after missing for several years, and the already tight labor market
continues to tighten, reported The Wall
Street Journal.
While
the Fed remains concerned about the risks of inflation, it also is concerned
about slowness in the housing market. Home building has declined due to a labor
shortage and to higher cost in materials from tariffs, according to The New York Times.
·
When will
the Fed stop raising rates? The Fed is all but guaranteed to raise rates in
September, with market odds at a 96 percent probability and a 60 percent
probability for another hike in December. The Fed will continue its gradual
interest rate increases for now as long as economic activity is consistently
expanding at a sustainable rate. The minutes revealed the Fed governors will
soon revise its policy stance from “accommodative to neutral,” reported MarketWatch.
·
What does
the Fed think about tariffs? The Fed is aware tariffs could derail their
initial plan of steady rate hikes. Although concerned about President Trump’s
tariffs, they are waiting for economic data to assess the damage. They did,
however, say tariffs would have “adverse effects on business sentiment,
investment spending, and employment. Moreover, wide-ranging tariff increases
would also reduce the purchasing power of U.S. households,” reported The New York Times.
The Fed is content, for now,
with their current policy stance of steady rate hikes, but are on edge as they
wait to see how fiscal policy plays out in the data. The Fed is more likely to
raise rates two more times this year given the strength of the economy.
Data as of 8/24/18
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500
(Domestic Stocks)
|
0.9%
|
7.5%
|
17.9%
|
14.9%
|
11.6%
|
8.3%
|
|
Dow Jones Global ex-U.S.
|
1.5
|
-5.5
|
1.4
|
7.2
|
2.8
|
1.4
|
|
10-year Treasury Note (Yield
Only)
|
2.8
|
NA
|
2.2
|
2.0
|
2.8
|
3.9
|
|
Gold (per ounce)
|
1.6
|
-7.6
|
-7.1
|
0.9
|
-2.8
|
3.8
|
|
Bloomberg Commodity Index
|
0.4
|
-5.1
|
0.2
|
-0.9
|
-8.5
|
-8.0
|
|
DJ Equity All REIT Total
Return Index
|
-0.9
|
3.9
|
6.7
|
10.4
|
10.4
|
8.0
|
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; the DJ
Equity All REIT Total Return Index does include reinvested dividends 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, Barron’s, 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 would you ask for a raise? When CNBC
asked business author Suzy Welch how someone should ask for a raise she
explained, “The key…is an approach that includes research and emphasizes your
achievements.” She recommended three basic steps:
1.
Time your
request right. Ask after a big win, a positive performance review, or when
being asked to accept more responsibility.
2.
Prove
your case. Be prepared to explain why you deserve a raise, including your
achievements and results.
3.
Establish
a time frame for action. If your boss isn’t prepared to provide an answer
immediately, end your meeting by asking when you can expect a response.
This is sound advice.
When Willy Appelman of Fast Company asked children at the
Underhill Playground how they would ask a boss for a raise, the kids believed
the keys to success were good manners, hard work, baked goods, and physical
appearance. Here are some of their recommendations:
·
“Ask them politely and say: Can I please have a
raise because I’ve been really working hard this week.”
·
“Go up to your boss and say: Is it okay if I
have some more money?”
·
“Be confident and try your best.”
·
“I would give them desserts, like pastry and
cookies.”
·
“Make sure you look weaker than your employer so
they have power and they might feel merciful...”
If you recently received a raise
or a bonus (or expect to), you may want to give some serious thought to how you
will to use the additional income – spend it, save it, or do some of both – and
how your choices will affect your taxes. If you’d like to discuss your options,
give us a call.
Weekly Focus – Think About
It
“The tax advisor had just read
the story of Cinderella to his four-year-old daughter for the first time. The
little girl was fascinated by the story, especially the part where the pumpkin
turns into a golden coach. Suddenly she piped up, ‘Daddy, when the pumpkin
turned into a golden coach, would that be classed as income or a long-term
capital gain?’”
Best
Regards,
Leif M. Hagen
Leif M. Hagen, CLU, ChFC
LP Financial Advisor
Securities offered through LPL Financial Inc., Member FINRA/SIPC.
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* This newsletter was
prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with
the named broker/dealer.
* 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.
* The Standard & Poor’s
500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect
fees,
expenses, or sales charges.
Index performance is not indicative of the performance of any investment.
* 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.
* 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.
* Consult your financial
professional before making any investment decision.
* Stock investing involves
risk including loss of principal.
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Sources:
https://www.wsj.com/articles/as-central-bankers-meet-economic-uncertainties-weigh-on-sunny-outlook-1535029200
(or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-27-18_WSJ-As_Central_Bankers_Meet_Economic_Uncertainties_Weigh_on_Sunny_Outlook-Footnote_2.pdf)
https://www.fastcompany.com (In the Video section, click on ‘Advice On How To Get
A Raise... From Kids’; responses occurred at 29, 33, 44, 51, and 54 seconds
from the start of the video)
