Weekly Market Commentary – May 29, 2018

Geopolitical uncertainty didn’t dent U.S. stocks last week.
Geopolitics is the intersection of geography, economics, and politics. Last week, there were some fine examples of the ways geopolitical events can create uncertainty. Barron’s reported: “President Donald Trump began the week suggesting that a trade war with China was on hold, before later ordering his administration to explore penalties on imported automobiles. The president also canceled talks with North Korea. Italy’s bond market melted down following the emergence of a Euroskeptic government, while Turkey’s lira tumbled over concerns that President Tayyip Erdogan would take control of its central bank, raising concerns about emerging markets.”

Uncertainty caused major indices across Europe to finish lower last week. A majority of Asian-Pacific indices moved south, too, as did Canadian and Mexican indices. Despite pessimism elsewhere, investors in the United States remained unfazed and major U.S. stock market indices finished the week higher. The Standard & Poor’s (S&P) 500 Index was up 0.3 percent.  The strong performance of U.S. markets last week was remarkable because the S&P 500 moved higher on news that would seem to inspire uncertainty. It was also remarkable because U.S. stocks gained less when S&P 500 companies reported first quarter profits were better than expected.

First quarter’s earnings season – when companies report how profitable they were during the first quarter – is almost over. A majority of S&P 500 companies did better than expected, according to FactSet. However, companies with stronger than expected earnings saw share prices increase 0.2 percent on average, less than share prices increased last week.  During the past five years, companies with higher-than-expected profits have realized share price gains of 1.1 percent.

Data as of 5/25/18 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) 0.3% 1.8% 12.7% 9.0% 10.4% 7.0%
Dow Jones Global ex-U.S. -1.1 -1.6 8.9 2.5 3.5 0.0
10-year Treasury Note (Yield Only) 2.9 NA 2.3 2.1 2.1 3.9
Gold (per ounce) 1.2 0.5 3.7 3.2 -1.1 3.7
Bloomberg Commodity Index 0.6 3.1 8.6 -4.0 -7.2 -8.3
DJ Equity All REIT Total Return Index 2.4 -4.3 0.1 5.7 6.3 6.5

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.

 

Working out the bugs. There was a lot of news about new inventions last week. Some devices appear to have potential while others have been delivering unexpected results. Take a look at recent innovation news:

  • Droning on. Remember the vehicles Galactic storm troopers rode into battle against the Ewoks in Star Wars? They’re now available on Earth. Hover bikes look a lot like a super-sized drone that can carry a person. They can travel up to 13 miles or 20 minutes, at speeds up to 43 miles an hour, before recharging is needed.
  • It’s listening. Smart speakers made the news last week after it was widely reported that one had recorded a family’s conversation and sent it to someone on their contact list. A writer for MIT Technology Review investigated further, checking her smart speaker history. She found:  “…in the past several months it has also tuned in, frequently several times a day, for no obvious reason. It’s heard me complain to my dad about something work-related, chide my toddler about eating dinner, and talk to my husband – the kinds of normal, everyday things you say at home when you think no one else is listening.”
  • Diagnosed by math. There’s a new algorithm in town. The U.S. Food and Drug Administration (FDA) just gave the thumbs-up to artificial intelligence that helps surgeons detect wrist fractures, reported MIT Technology Review. In fact, the FDA is “writing new rules to speed up approvals for AI-based devices and tools.”
  • Folding wingtips. It seems like poor design, but some planes’ wingspans are too wide for standard airport gates. Instead of asking airports to build special gates, the Federal Aviation Administration approved folding wingtips on Friday.

 

We know change is constant. Adapting to change is the challenge.

 

Weekly Focus – Think About It
“Our flag does not fly because the wind moves it. It flies with the last breath of each soldier who died protecting it.”
–Unknown

 

Best regards,
John F. Reutemann, Jr., CLU, CFP®

P.S.  Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added.

 

Investment advice offered through Research Financial Strategies, a registered investment advisor.
*  This newsletter and commentary expressed should not be construed as investment advice.

* 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.

* 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.

* Consult your financial professional before making any investment decision.

* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

 

Sources:

https://www.barrons.com/articles/dow-ticks-higher-but-beware-a-summer-storm-1527292801 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/05-29-18_Barrons-Dow_Ticks_Higher_but_Beware_a_Summer_Storm-Footnote_1.pdf

http://www.barrons.com/mdc/public/page/9_3063-economicCalendar.html (Click on U.S. & Intl Recaps, then click on “Shadows over the financial markets”) (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/05-29-18_Barrons-Global_Stock_Market_Recap-Footnote_2.pdf

https://insight.factset.com/market-did-not-reward-sp-500-companies-reporting-positive-eps-surprises-again-in-q1

https://www.hoversurf.com/scorpion-3

https://www.technologyreview.com/s/611216/yes-alexa-is-recording-mundane-details-of-your-life-and-its-creepy-as-hell/

https://www.technologyreview.com/the-download/611215/another-ai-powered-device-gets-the-fdas-blessing/

https://www.technologyreview.com/the-download/611179/boeings-folding-wings-are-cleared-for-takeoff/

https://www.countryliving.com/life/g4398/memorial-day-quotes/?slide=11

Weekly Market Commentary – May 21, 2018

Too much? Too little? Or just right?
U.S. stock markets were relatively calm, although they finished the week lower. U.S. Treasury yields hit a 7-year high and finished the week above 3 percent. While these were notable, the most remarkable events last week occurred beyond our borders. These include:

  • The Vatican publishing a position paper on financial markets. Its opening was, “Economic and financial issues draw our attention today as never before because of the growing influence of financial markets on the material well-being of most of humankind. What is needed, on the one hand, is an appropriate regulation of the dynamics of the markets and, on the other hand, a clear ethical foundation that assures a well-being realized through the quality of human relationships rather than merely through economic mechanisms that by themselves cannot attain it.”
  • The royal wedding boosting the British economy. A normal Britain wedding costs about £18 thousand and includes about 80 guests. Prince Harry’s nuptials were a bit more lavish. A wedding planning company estimated the cost of hosting 600 or more guests at £32 million ($43 million in U.S. dollars). The largest component of the cost was £30 million for security, which included drone destroyers.
  • Venezuela’s oil-based economy continuing to collapse as oil prices rise. “Venezuela leads the world in two things: oil reserves and incompetence,” opined The Washington Post. Poor management of the state-run oil industry has caused production to drop 23 percent since December. The country’s declining production helped push oil prices higher last week. Prices are at levels last seen in 2014, reported Financial Times. Regardless of the country’s economic woes, this weekend’s election is not expected to oust President Nicolás Maduro.

Rising oil prices have pushed the cost of gas higher, but that’s not expected to deter Memorial Day travelers, according to USA Today. We wish you safe travels during the holiday weekend.

Data as of 5/18/18 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) -0.5% 1.5% 14.7% 8.4% 10.2% 6.6%
Dow Jones Global ex-U.S. -0.9 -0.5 11.9 2.7 3.2 -0.2
10-year Treasury Note (Yield Only) 3.1 NA 2.2 2.2 2.0 3.8
Gold (per ounce) -2.7 -0.6 2.6 1.7 -1.0 3.6
Bloomberg Commodity Index 0.4 2.5 8.4 -4.9 -7.4 -8.3
DJ Equity All REIT Total Return Index -3.0 -6.5 -0.4 4.3 4.8 5.9

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.

 

Did you know there’s a billionaire census? Last week, the fifth edition of the Billionaire Census was released. Apparently, the wealth of billionaires increased by 24 percent during 2017. In addition, the billionaire population, which had suffered reduced numbers since 2015, expanded. It now includes 2,754 individuals. The previous high was 2,473 in 2015. According to Wealth-X:

  • 816 live in the Asia-Pacific region
  • 884 live in the Americas
  • 1,054 live in Europe, the Middle East, and Africa

There is a bit of disagreement about the size of the ‘Three-Comma Club’ and the rate at which its wealth is increasing. In March 2018, Forbes reported there were “…2,208 billionaires from 72 countries and territories including the first ever from Hungary and Zimbabwe. This elite group is worth $9.1 trillion, up 18 percent since last year. Their average net worth is a record $4.1 billion. Americans lead the way with a record 585 billionaires, followed by Mainland China with 373.”
Two hundred and fifty-six women made the list, including 42 new additions.

The Giving Pledge is another exclusive group that some billionaires have joined. The objective of the Pledge is to “…help address society’s most pressing problems by inviting the world’s wealthiest individuals and families to commit more than half of their wealth to philanthropy or charitable causes either during their lifetime or in their will.”  As of February 2018, 175 billionaires from 22 countries had joined.

 

Weekly Focus – Think About It
“Philanthropy is almost the only virtue which is sufficiently appreciated by mankind.”
–Henry David Thoreau, American essayist and naturalist

 

Best regards,
John F. Reutemann, Jr., CLU, CFP®

 

P.S.  Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added.

Investment advice offered through Research Financial Strategies, a registered investment advisor.

*  This newsletter and commentary expressed should not be construed as investment advice.

* 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.

* 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.

* Consult your financial professional before making any investment decision.

* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

 

Sources:

https://www.ft.com/content/584a9610-5ab8-11e8-b8b2-d6ceb45fa9d0 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/05-21-18_FinancialTimes-US_Stocks_Mixed_Treasuries_Rally_as_Markets_Eye_Trade_Talks-Footnote_1.pdf)

http://press.vatican.va/content/salastampa/en/bollettino/pubblico/2018/05/17/180517a.html

https://bridebook.co.uk/article/harry-and-meghan-royal-wedding-cost

https://www.washingtonpost.com/amphtml/news/wonk/wp/2018/05/18/oil-was-the-only-thing-keeping-venezuela-afloat-now-the-government-is-too-dysfunctional-to-even-pump-it/?noredirect=on

https://www.ft.com/content/1e4ae576-5ac4-11e8-b8b2-d6ceb45fa9d0 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/05-21-18_FinancialTimes-The_Week_in_Energy-Regulations_Unintended_Consequences-Footnote_5.pdf)

https://www.ft.com/content/a4049438-5aa0-11e8-bdb7-f6677d2e1ce8 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/05-21-18_FinancialTimes-Disillusioned_Venezuelans_Set_to_Shun_Election-Footnote_6.pdf)

https://www.msn.com/en-us/travel/news/aaa-415m-travelers-for-memorial-day-weekend-a-5-25-hike-despite-higher-gas-prices/ar-AAxgCMK

https://www.wealthx.com/report/the-wealth-x-billionaire-census-2018/?utm_campaign=billionaire-census-2018&utm_source=press&utm_medium=referral&utm_term=bc-2018-press&utm_source=press&utm_medium=referral&mod=article_inline

https://www.forbes.com/billionaires/#1d1efa68251c

https://www.forbes.com/sites/jenniferwang/2018/03/06/richest-women/#446741af81f1

https://www.givingpledge.org/About.aspx (Click on “How many people have joined the Giving Pledge, and where are they from?”)

http://www.philanthropicpeople.com/2013/10/14/10-inspiring-philanthropy-quotes/

 

Weekly Market Commentary – May 14, 2018

Splash!
How do employers lure staff in a tightening labor market? The curly tail grubs and spinnies of the business world are higher wages and better benefits. During the past decade, the employment picture in the United States has shifted dramatically. In mid-2009, 15.4 million unemployed Americans were chasing 2.2 million available jobs. At the end of 2017, just 6.6 million Americans were unemployed, and employers were casting eagerly to fill 6.6 million open jobs, reports Barron’s.

Bloomberg offered some colorful examples:
“Want ads for truck drivers to haul crude oil in Texas are touting salaries as high as $150,000 a year. Some nurses are getting $25,000 signing bonuses. The U.S. unemployment rate just fell to 3.9 percent, one tick away from its lowest since the 1960s. And, on May 8, the Bureau of Labor Statistics reported there are 6.5 million unfilled jobs in the United States, the most on record. Some employers say they’re feeling the squeeze.”
Clearly, wages are moving higher for some types of jobs, but they’re not increasing everywhere. Last week, the Bureau of Labor Statistics reported real average hourly earnings for all employees were flat from March to April. ‘Real wages’ mean wages after inflation is subtracted.

The National Federation of Independent Business’ Small Business Optimism Index hit a record high in April, as small companies reported record profits. It was the 17th consecutive month of record optimism.

Major U.S. stock market indices moved higher last week as did many global stock market indices.

Data as of 5/11/18 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) 2.4% 2.0% 13.9% 9.0% 10.8% 6.9%
Dow Jones Global ex-U.S. 1.7 0.4 12.8 3.3 3.5 0.2
10-year Treasury Note (Yield Only) 3.0 NA 2.4 2.3 1.9 3.8
Gold (per ounce) 1.1 2.2 8.3 3.7 -1.5 4.1
Bloomberg Commodity Index 0.1 2.1 8.3 -4.5 -7.4 -8.3
DJ Equity All REIT Total Return Index 1.2 -3.7 3.1 6.0 5.8 6.4

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.

 

What do you wish you had known before you became a parent?  Mother’s Day is behind us and Father’s Day is ahead.  It seems like a good time to consider the challenges and responsibilities of parenting.  National Public Radio’s Science Desk introduced a new series called, ‘How To Raise A Human.’ They kicked off the show by asking bloggers, “What’s the one thing you wish someone had told you before you became a parent?” Here are a few of the answers:
“I wish someone told me that there are going to be moments where you’re playing chess with speed metal music in your ears. You’re trying to make intricate choices but there’s so much chaos.”
–Alan Lawrence, That Dad Blog

“I wish someone had told me to block out the outside voices that come when you become a parent – and pay more attention to the children and what their needs are.”
–Saira Siddiqui, Confessions of a Muslim Mom

“I wish someone had told me that even though your life changes when you become a parent, you still get to create the path you want.”
–Drea Duclos, OhDearDrea

“Parents always told me to brace myself for the teen years, because that’s when they’ll hate you, be disrespectful to you, be sassy, talk back to you, be rude, be generally awful people. But I wish that someone had told me that’s completely wrong.”
–Karen Walrond, Chookooloonks

One of the many challenges parents face is helping their children understand financial issues. If you would like some ideas about how to talk with your children about money, contact your financial professional.


Weekly Focus – Think About It
“I’m relieved I don’t work at SNL [right now]…The level of outrage is so high. It feels like talking to anyone, anywhere in 2018 is just landmine hopscotch.”
–Tina Fey, American actress, comedian, writer, and producer

 

Best regards,

John F. Reutemann, Jr., CLU, CFP®

 

P.S.  Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added.

Investment advice offered through Research Financial Strategies, a registered investment advisor.

 

*  This newsletter and commentary expressed should not be construed as investment advice.

* 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.

* 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.

* Consult your financial professional before making any investment decision.

* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

 

Sources:

http://www.barrons.com/mdc/public/page/9_3063-economicCalendar.html?mod=BOL_Nav_MAR_other (Click on U.S. & Intl Recaps, then click on “The unemployment lines are shrinking”; for market performance, click on “Iran and Korea overshadow economics”)

https://www.bloomberg.com/news/articles/2018-05-11/no-the-u-s-economy-isn-t-overheating

https://www.bls.gov/news.release/realer.nr0.htm?mod=article_inline

https://www.economicshelp.org/blog/2637/economics/real-wages-in-uk/

http://www.nfib.com/surveys/small-business-economic-trends/

https://www.npr.org/sections/goatsandsoda/2018/05/11/609470215/your-turn-what-do-you-wish-youd-known-before-becoming-a-parent

https://www.thewrap.com/tina-fey-screwed-up-charlottesville-rally-snl-weekend-update/

 

Weekly Market Commentary – May 7, 2018

Weekly Market Commentary - May 7, 2018

What in the world?
A lot happened last week. Some of the notable events included:

  • Trade talks between the United States and China. The talks were described as “frank, efficient, and constructive,” although significant issues have yet to be resolved.
  • A Federal Open Market Committee meeting. The Federal Reserve indicated it expects to raise rates during 2018, but did not do so last week.
  • Low unemployment in the United States. U.S. unemployment fell to 3.9 percent, which is the lowest it has been since 2000. Typically, low employment is a sign of a strong economy.
  • Sky-high rates in Argentina. In an effort to shore up the nation’s currency, Argentina’s central bank “…hiked rates to 40 percent from 33.25 percent, a day after they were raised from 30.25 percent.”
  • Katy Perry roasted Warren Buffett. Katy Perry revealed the ‘Left Shark’ – a backup dancer famous for being out of sync during Perry’s 2015 Super Bowl performance – was Warren Buffett.*

What do asset managers and researchers make of the current state of world economies and markets? A portfolio manager cited by Barron’s said, “…until proved otherwise, we remain in a long bull market, and there is an absence of indicators outside of the equity market itself (most notably in credit markets or financial conditions) to suggest this has ended.”

Michael Wilson, Chief U.S. Equity Strategist at Morgan Stanley has a different opinion. “Even strong earnings results haven’t been able to boost most stocks into positive territory. Why? Because rising interest rates have reached a point at which they have become a constraint on valuations.”

Some researchers are concerned about growth outside the United States. Alvise Marino, an FX strategist for Credit Suisse told The Wall Street Journal, “This is really a Goldilocks [U.S. employment] report…But investors are worried that global growth is not as strong as some had thought.”

We’re tracking events and their potential impact on markets, and we’ll keep you informed.

* Warren Buffet wasn’t really the Left Shark. Her comments were part of a humorous video.

Data as of 5/4/18 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) -0.2% -0.4% 11.5% 8.0% 10.5% 6.6%
Dow Jones Global ex-U.S. -0.9 -1.2 11.6 2.7 3.2 0.0
10-year Treasury Note (Yield Only) 2.9 NA 2.4 2.1 1.8 3.9
Gold (per ounce) -0.9 1.0 6.6 3.0 -1.9 4.1
Bloomberg Commodity Index 0.7 2.1 9.5 -4.6 -7.6 -8.2
DJ Equity All REIT Total Return Index 1.2 -4.8 1.7 5.2 5.7 6.2

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; 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.

Myth Busted! Founders of new companies aren’t who many people think they are. Sure, you’ve read stories about entrepreneurs who leave college to found companies that become behemoths. In fact, The Thiel Fellowship encourages young people to skip college and, “Pursue ideas that matter instead of mandatory tests. Take on big risks instead of big debt.”

While helping young people pursue new ideas is admirable, research from the Massachusetts Institute of Technology (MIT) and the National Bureau of Economic Research (NBER) suggest a different age group is more likely to found successful fast-growth companies: “Our primary finding is that successful entrepreneurs are middle-aged, not young. Taking numerous measures to identify potentially high-growth firms as well as studying ex-post growth of each firm, we find no evidence to suggest that founders in their 20s are especially likely to succeed. Rather, all evidence points to founders being especially successful when starting businesses in middle age or beyond…Across the 2.7 million founders in the U.S. between 2007-2014 who started companies that go on to hire at least one employee, the mean age for the entrepreneurs at founding is 41.9. The mean founder age for the 1 in 1,000 highest growth new ventures is 45.0. The most successful entrepreneurs in high technology sectors are of similar ages. So, too, are the most successful founders in the entrepreneurial regions of the U.S.”

Almost one-fourth of new entrepreneurs are ages 55 to 64, reports Entrepreneur.com. They often have financial stability, professional support networks, and experience – all things The Thiel Fellowship tries to provide to younger founders.

What’s the point of this story? Age is just a number. People of all ages have great ideas and great potential.

Weekly Focus – Think About It

“The critical ingredient is getting off your butt and doing something. It’s as simple as that. A lot of people have ideas, but there are few who decide to do something about them now. Not tomorrow. Not next week. But today. The true entrepreneur is a doer, not a dreamer.”

–Nolan Bushnell, Entrepreneur

Best regards,

John F. Reutemann, Jr., CLU, CFP®

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Sources:
http://www.barrons.com/mdc/public/page/2_3064-485653.html (Click on “U.S. & Intl Recaps,” then “Keeping up with the facts”)
https://www.washingtonpost.com/news/wonk/wp/2018/05/02/federal-reserve-keeps-interest-rates-unchanged-but-sees-moderate-growth-and-rising-inflation-ahead/?noredirect=on&utm_term=.2876d51ebc37
https://www.investopedia.com/news/downside-low-unemployment/
http://www.bbc.com/news/business-44001450
https://www.wsj.com/livecoverage/berkshire-hathaway-2018-annual-meeting-analysis (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/05-07-18_WSJ-Warren_Buffett_Holds_Court_at_Berkshire_Hathaways_Annual_Woodstock_for_Capitalists-Footnote_5.pdf
https://www.barrons.com/articles/a-sampling-of-advisory-opinion-1525478403 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/05-07-18_Barrons-A_Sampling_of_Advisory_Opinion-Footnote_6.pdf
https://www.morganstanleyfa.com/public/projectfiles/onthemarkets.pdf
https://www.wsj.com/livecoverage/april-2018-jobs-report-analysis
http://thielfellowship.org (Click on down arrow)
http://mitsloan.mit.edu/uploadedFilesV9/180325%20Age%20and%20Successful%20Entrepreneurship.pdf (Page 5)
https://www.entrepreneur.com/article/294799

https://www.entrepreneur.com/slideshow/300234#1