by Jack Reutemann | Feb 2, 2017 | Weekly Stock Market Commentary
Weekly Market Commentary
January 30, 2017
The Markets
An historic moment for U.S. stock markets…
The Dow Jones Industrial Average surpassed 20,000 last week. Barron’s cautioned investors not to make too much of the milestone since, “There are only 30 stocks in the index so each one carries a lot of weight.”
Regardless of the significance of the Dow’s move, U.S. stock markets generally were upbeat about President Trump’s first week in office. Financial Times reported ‘animal spirits’ – a term British economist John Maynard Keynes used to describe the emotions that drive consumer and investor confidence – returned as rapid executive action indicated the new President would follow through on campaign promises, including infrastructure spending.
“However, the Trump trade – reflecting hopes of tax cuts, higher infrastructure spending, and an easing in business regulation – that had dominated financial markets since November also underwent a subtle shift this week. While financial shares still shone, it was sectors that will benefit from infrastructure spending and cope with higher inflation that led the way. Up 3.4 percent, the materials sector was the best performer on the S&P 500 with miners also seeing gains.”
Concerns about trade protectionism and rising inflation lingered.
U.S. stocks upward move was also supported by earnings growth. At the end of each quarter, companies report their earnings (which indicate how much profit they made during the period). FactSet reported 34 percent of companies in the Standard & Poor’s 500 Index have reported fourth quarter earnings, so far. Altogether, earnings are 2.7 percent above the estimates, although they remain below the five-year average.
Markets could be in for a bumpy ride next week as investors weigh in on President Trump’s immigration ban. Bloomberg reported one large technology company, “…inserted language in a securities filing on Thursday on the issue, cautioning investors that immigration restrictions ‘may inhibit our ability to adequately staff our research and development efforts.’”
|
Data as of 1/27/17 |
1-Week |
Y-T-D |
1-Year |
3-Year |
5-Year |
10-Year |
| Standard & Poor’s 500 (Domestic Stocks) |
1.0% |
2.5% |
21.9% |
8.8% |
11.8% |
4.9% |
| Dow Jones Global ex-U.S. |
1.6 |
4.1 |
15.3 |
-1.0 |
2.3 |
-0.9 |
| 10-year Treasury Note (Yield Only) |
2.5 |
NA |
2.0 |
2.8 |
1.9 |
4.9 |
| Gold (per ounce) |
-1.3 |
2.2 |
6.2 |
-2.0 |
-7.3 |
6.3 |
| Bloomberg Commodity Index |
-0.5 |
0.5 |
15.6 |
-11.2 |
-9.7 |
-5.8 |
| DJ Equity All REIT Total Return Index |
-0.8 |
0.0 |
14.4 |
12.3 |
10.5 |
4.3 |
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; 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.
ARE YOUR CHILDREN SMART SHOPPERS? Science Daily reported a meta-analysis of 73 studies nationwide evaluated parenting styles and children’s buying habits. The findings suggest, “children raised by parents who set limits and explain the reason behind these limits are most likely to develop into wise consumers.”
The study, which was conducted by the Society for Consumer Psychology, looked at the ways parents raise and communicate with their children. It defined four basic parenting styles:
- Authoritative parents generally tell children what to do and also explain why the children should do it. “These parents tend to relate quite effectively with their children and expect them to act maturely and follow family rules, while also allowing a certain degree of autonomy.”
- Authoritarian parents are restrictive, too. They tell children what to do, but don’t often explain why it should be done. These parents are “…not as likely to exhibit as much warmth in their communications.”
- Neglecting parents don’t offer much guidance or actively monitor children’s activities. “They neither seek nor use parental power and control and, as a result, communication between Neglecting parents and their children is generally strained and minimized.”
- Indulgent parents often “…give children adult rights without concomitant responsibilities while maintaining an open communication environment with children.” These parents are described as “lenient, compliant, accepting, affirmative, and non-punitive.”
The researchers concluded children whose parents take an authoritative approach to parenting tend to make better choices. The children choose to consume healthier foods (like fruits and vegetables), make better safety decisions (such as wearing a bike helmet), develop self-esteem, and offer viable opinions with regards to family consumption decisions.
Weekly Focus – Think About It
“Americans of all ages, all conditions, all minds constantly unite. Not only do they have commercial and industrial associations in which all take part, but they also have a thousand other kinds: religious, moral, grave, futile, very general and very particular, immense and very small; Americans use associations to give fêtes, to found seminaries, to build inns, to raise churches, to distribute books, to send missionaries to the antipodes; in this manner they create hospitals, prisons, schools. Finally, if it is a question of bringing to light a truth or developing a sentiment with the support of a great example, they associate.”
–Alexis de Tocqueville, Author of ‘Democracy in America’
Best regards,
John F. Reutemann, Jr., CLU, CFP
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* These views are those of Peak Advisor Alliance, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.
* Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.
* 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 indices 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.
* 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.
* To unsubscribe from the Weekly Markey Commentary please reply to this e-mail with “Unsubscribe” in the subject line.
Sources:
http://www.barrons.com/articles/are-you-ready-for-dow-20-000-1481662531
http://www.economicshelp.org/blog/glossary/animal-spirits/
https://www.ft.com/content/bfb966b4-e3e5-11e6-8405-9e5580d6e5fb (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/01-30-17_FinancialTimes-Trump_Trade_Picks_Up_Speed_in_Presidents_First_Week-Footnote_3.pdf)
http://insight.factset.com/hubfs/Resources/Research%20Desk/Earnings%20Insight/EarningsInsight_012717.pdf (Page 5)
https://www.bloomberg.com/news/articles/2017-01-28/google-recalls-some-staff-to-u-s-after-trump-immigration-order
https://www.sciencedaily.com/releases/2016/12/161215175329.htm
https://www.journals.elsevier.com/journal-of-consumer-psychology/forthcoming-articles/meta-analysis-parental-style-and-consumer-socialization
http://www.press.uchicago.edu/Misc/Chicago/805328.html
by Jack Reutemann | Jan 23, 2017 | Weekly Stock Market Commentary
The Markets
Markets weren’t quite sure which direction to move last week.
The Trump rally, which lost some steam, gained momentum early in the week. The Standard & Poor’s 500 Index finished January 19, the day before the inauguration, with its biggest election-to-inauguration gain since Bill Clinton won a second term in 1996, according to MarketWatch, and the Dow Jones Industrial Average remained within striking distance of 20,000, according to Yahoo!Finance.
On Friday, President Trump delivered his inauguration address, but it didn’t resolve the uncertainty that has been nagging investors. The speech mentioned infrastructure activity, brushed over stimulus spending and tax cuts, and leaned heavily into protectionism. Mr. Trump said:
America will start winning again, winning like never before. We will bring back our jobs. We will bring back our borders. We will bring back our wealth. And we will bring back our dreams. We will build new roads, and highways, and bridges, and airports, and tunnels, and railways all across our wonderful nation. We will get our people off of welfare and back to work – rebuilding our country with American hands and American labor. We will follow two simple rules; buy American and hire American.
The market response to Friday’s speech was subdued, according to Financial Times:
“…with U.S. stocks edging higher, Treasuries putting in mixed performances and the dollar easing back against its main rivals. Oil prices rose sharply amid hopes that producers would show compliance to a global deal to cut output. Gold initially struggled for traction but held above the $1,200 an ounce mark.
All major U.S. stock markets finished the week slightly lower, and 10-year Treasury yields finished the week slightly higher.
|
Data as of 01/20/2017
|
1-Week
|
YTD |
1-Year |
3-Year |
5-Year |
10-Year
|
| Standard & Poor’s (Domestic Stocks) |
-0.2%
|
1.5% |
22.2% |
7.2% |
11.5% |
4.8%
|
| Dow Jones Global ex-US |
-0.5
|
2.5 |
18.2 |
-2.6 |
2.3 |
-1.1
|
| 10-Year Treasury Note (Yield Only) |
2.5
|
N/A |
2.0 |
2.8 |
2.0 |
4.8
|
| Gold (per ounce) |
0.9
|
3.6 |
9.0 |
-1.5 |
-6.2 |
6.5
|
| Bloomberg Commodity Index |
-0.2 |
1.0 |
21.3 |
-10.9 |
-9.0 |
-5.8 |
| DJ Equity All REIT Total Return Index |
0.7 |
0.8 |
18.8 |
11.8 |
11.3 |
4.7 |
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.
TREMENDOUS. AWE-INSPIRING. GROUNDBREAKING. OVERWHELMING.
Those were just a few of the adjectives used to describe 2017’s Consumer Electronics Show (CES), which showcased all kinds of new technology. This year, gadgets and gizmos included wall-sized televisions that are as thin as house keys, computers that scan 2D and 3D objects, and beds that read biometric clues to warm your feet and reduce snoring. Here are a few notable trends that captured media attention:
Smart cars. Black Enterprise reported, “If there was one, star attraction at CES this year, arguably it was vehicles…Artificial intelligence is the power behind the new crop of autonomous, assistive vehicles. These cars not only self-drive, they can read your emotions, make snap decisions in the presence of danger on the road, and can even tell you about the flora and fauna at your destination site.”
Smarter homes. CNET Magazine wrote, “For…years, we’ve been saying the “real” smart home is just around the corner. But at CES 2017, it finally felt more tangible than ever before…Whether it’s lighting, DVRs, refrigerators, robot vacuums, home security systems, phones, or cars – to name just a few – the list of stuff you’ll be able to interact with…is set to explode in the coming months. And with such networked integration now becoming the rule rather than the exception in major appliances…there’s no turning back.”
Even smarter routers. Popular Science liked a new Wi-Fi router that “…rather than protecting each of your devices individually…will use…software to protect up to 20 laptops, computers, tablets, or smartphones – and an unlimited number of IoT devices – in one fell swoop…You’ll be able to monitor…all devices connected to the router, through a smartphone app…You can even tell the router to turn off internet access to certain devices – or devices linked to a particular profile – at certain times. So, you can make sure little Johnny isn’t up all night watching YouTube videos on any of his devices (except for his phone, maybe, but that’s your own dang fault for getting the kid a data plan).”
Of course, trends in technology are just one American story. Another trend, in some states, is the growing popularity of rural, sustainable, off-the-grid properties, according to NPR. “Despite the remoteness of these homes, they’re not backwoods shacks with sagging metal roofs. Some… listings sell for more than $1 million if there’s a lot of land and if water rights are included. The one with the helicopter pad is a spiffy, two-story log home with a wraparound porch.”
Weekly Focus – Think About It
When I dare to be powerful, to use my strength in the service of my vision, then it becomes less and less important whether I am afraid. –Audre Lorde, African American writer
by Jack Reutemann | Jan 17, 2017 | Weekly Stock Market Commentary
The Markets
Around the world in a few paragraphs…
The post-election adrenaline rush may be over in the United States. Barron’s reported:
The new year began with high hopes, with the bulls expecting the rally that began with Donald J. Trump’s election victory to continue into 2017, while the bears salivated at the opportunity presented by a market that had gotten way ahead of itself. Instead, the market has failed to break up or down…At his press conference last week, Trump covered a lot of ground…But he didn’t cover the three subjects investors especially wanted to hear about – namely taxes, fiscal policy, and infrastructure. As a result, some of the primary beneficiaries of the Trump trade stalled: The S&P 500 Financials index declined 0.1 percent, while the energy sector dropped 1.9 percent.
Investors in the Asia Pacific region were less optimistic last week, too. Disappointing economic and international trade data from China unsettled markets, as did uncertainty about the global trade policies the new U.S. administration will pursue. National indices for Australia, Japan, China, Indonesia, Malaysia, and the Philippines finished the week lower.
In the United Kingdom, the FTSE 100 gained for the 14th consecutive day, closing at an all-time high for the 12th time in as many days, according to Trading Economics. Bloomberg reported European shares eked out a gain for the third straight week. Financials led the way after a large industry firm reported better-than-expected profits, inciting optimism about fourth quarter’s earnings season.
|
Data as of 01/13/2017
|
1-Week
|
YTD |
1-Year |
3-Year |
5-Year |
10-Year
|
| Standard & Poor’s (Domestic Stocks) |
-0.1%
|
1.6% |
20.3% |
7.7% |
12.0% |
4.7%
|
| Dow Jones Global ex-US |
1.0
|
2.9 |
12.2 |
-2.3 |
3.2 |
-0.9
|
| 10-Year Treasury Note (Yield Only) |
2.4
|
N/A |
2.1 |
2.8 |
1.9 |
4.8
|
| Gold (per ounce) |
1.2
|
2.7 |
9.4 |
-1.6 |
-6.2 |
6.6
|
| Bloomberg Commodity Index |
-0.2 |
-0.2 |
14.0 |
-11.3 |
-9.3 |
-5.7 |
| DJ Equity All REIT Total Return Index |
-1.8 |
0.1 |
14.2 |
12.3 |
11.7 |
4.7 |
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.
Burgernomics: Here’s A Big Mac Index Update
The Economist invented the Big Mac index in 1986 as an entertaining way to assess whether currencies were at the “correct” levels. The index reflects the idea that countries’ exchange rates should balance so the same product (in this case, a hamburger) costs the same in two different countries when the price is denominated in the same currency. After updating the index on January 11, 2017, The Economist reported the “all-meaty” dollar was stronger than usual:
The dollar is now trading at a 14-year high in trade-weighted terms. Emerging-world economies may struggle to pay off dollar-denominated debts. American firms may find themselves at a disadvantage against foreign competition. And, American tourists will get more burgers for their buck in Europe.
A Big Mac in the United States cost about $5.06 last week. In the Euro area, the price was about $4.06 and in Britain $3.73. A Big Mac is cheapest in Russia ($2.15) and most expensive in Switzerland ($6.35). Here are the prices of a Big Mac (a.k.a. the Maharaja Mac in India) in a few other locales:
Norway $5.67
Sweden $5.26
Brazil $5.12
Japan $3.26
China $2.83
India $2.49
Mexico $2.23
It should be noted the Big Mac index is not a perfect measurement tool. The price of a burger should be less in countries with lower labor costs and more in countries with higher labor costs. When prices are adjusted for labor (using gross domestic product per person), the Brazilian real is the world’s most overvalued currency, followed by Pakistan and Thailand. The most undervalued currencies include Egypt, Malaysia, and Hong Kong.
Weekly Focus – Think About It
The charm of fishing is that it is the pursuit of what is elusive but attainable, a perpetual series of occasions of hope. –John Buchan, Former Governor General of Canada
Sources:
- http://www.barrons.com/articles/stocks-grow-weary-of-the-trump-trade-1484381416?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/01-17-17_Barrons-Stocks_Grow_Weary_of_the_Trump_Trade-Footnote_1.pdf)
- http://www.barrons.com/mdc/public/page/9_3063-economicCalendar.html (Click on U.S. & Intl Recaps, “Still unknowns,” scroll down to Global Stock Market Recap chart) (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/01-17-17_Barrons-Global_Stock_Market_Recap-Footnote_2.pdf)
- http://www.tradingeconomics.com/united-kingdom/stock-market
- https://www.bloomberg.com/news/articles/2017-01-13/european-stocks-rise-as-carmakers-health-care-shares-rebound
- http://www.economist.com/content/big-mac-index (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/01-17-17_TheEconomist-The_Big_Mac_Index-Footnote_5.pdf)
- http://www.economist.com/news/finance-and-economics/21714392-emerging-market-currencies-and-euro-look-undervalued-against-dollar-our-big (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/01-17-17_TheEconomist-Our_Big_Mac_Index_of_Global_Currencies_Reflects_the_Dollars_Strength-Footnote_6.pdf)
- http://www.saltstrong.com/articles/funny-fishing-quotes/
