Market Commentary – February 10, 2020

Market Commentary – February 10, 2020

Weekly Financial Market Commentary

February 10, 2020

Our Mission Is To Create And Preserve Client Wealth

Last week, major U.S. indices posted strong gains. That’s welcome news, but the drivers behind share price appreciation appear to have little to do with company fundamentals.

Fourth quarter earnings season is underway. During earnings season, companies let investors know how profitable they were during the previous quarter. With 45 percent of companies in the Standard & Poor’s 500 (S&P 500) Index reporting, earnings are slightly down. If the trend continues, this will be the fourth consecutive quarter of year-over-year earnings declines, according to FactSet.

Falling company profits, in tandem with rising share prices, have made U.S. stocks relatively expensive. The price-to-earnings ratio of the S&P 500 Index was 25.04 on Friday. That’s significantly higher than its long-term average of 15.78.

Expectations for economic growth may have been behind last week’s gains. Axios reported, “U.S. economic data had been strengthening ahead of the [coronavirus] outbreak – last month the all-important services sector notched its best reading since September, a private payrolls survey showed the highest job growth in five years, and consumer confidence held at historically high levels.”

The Economist Intelligence Unit (EIU) estimates U.S. economic growth will be 1.7 percent in 2020, although the coronavirus could create issues that slow growth.

Economic growth also could be inhibited by the national debt. The Federal Reserve Bank of St. Louis showed U.S. debt at about 105 percent of gross domestic product (GDP) at the end of the third quarter of 2019 (GDP is the value of all goods and services produced by the United States). According to the Council on Foreign Relations, high levels of debt can slow economic growth and divert investment from infrastructure, education, and research.

Ben Levisohn of Barron’s suggested last week’s gains might have been the result of limited supply and high demand for U.S. stocks, “…because the world’s problems might actually make U.S. markets more attractive.” Stock market gains may also owe something to supportive central bank policies.

During the next few weeks, stay calm and expect some volatility.

DO you know a financial two-timer? 
In an online poll conducted by YouGov, CreditCards.com asked people how open and honest they are with their spouses and partners about money. The survey discovered financial infidelity is not uncommon. Respondents cheat financially in a variety of ways, including:

34 percent have spent more than their spouse/partner would approve
12 percent have secret debt
10 percent have secret credit card accounts
  9 percent have secret savings accounts
  8 percent have secret checking accounts

Respondents had a variety of reasons for secretive financial dealings:
36 percent said privacy and control were important
27 percent said they never felt the need to share
26 percent were embarrassed by the way they handle money (frequently cited by wealthiest respondents.)

Janice Wood of PsychCentral wrote, “Financial infidelity can take as big a toll on relationships as sexual infidelity and emotional dishonesty…A few things that couples can do to prevent financial infidelity is to talk more, get on the same page regarding both joint and individual goals they might have, and also budget for some occasional indulgences along the way of achieving their long-term financial goals…”

If you’re looking for a great Valentine’s Day gift, talking with your spouse or partner about money is a choice that could deliver long-term rewards.

Weekly Focus – Think About It
“It is better to be hated for what you are than to be loved for what you are not.”
–Andre Gide, Author and Nobel Prize winner

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.

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.

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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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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.
* 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.
* 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-jones-industrial-average-gains-846-points-in-comeback-week-51581124626?mod=hp_DAY_3 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/02-10-20_Barrons-Coronavirus-Slower_Growth-The_Dow_Just_Had_A_Spectacular_Week-Footnote_1.pdf)
https://www.factset.com/hubfs/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_013120.pdf
https://www.investopedia.com/terms/e/earnings.asp
https://www.multpl.com/s-p-500-pe-ratio
https://www.axios.com/newsletters/axios-markets
https://country.eiu.com/united-states
https://country.eiu.com/article.aspx?articleid=148994798&Country=United%20States&topic=Economy (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/02-10-20_TheEconomist-Fed_Continues_Delicate_Balancing_Act-Footnote_7.pdf)
https://fred.stlouisfed.org/series/GFDEGDQ188S
https://www.cfr.org/backgrounder/national-debt-dilemma
https://www.cfr.org/global/global-monetary-policy-tracker/p37726
https://www.creditcards.com/credit-card-news/financial-infidelity-cheating-poll.php
https://psychcentral.com/news/2019/12/31/financial-infidelity-can-take-a-toll-on-relationships/152583.html
https://www.goodreads.com/quotes/tag/love

Operation Valentine

Operation Valentine

To some people, the practice of exchanging valentines is great for children in elementary school, but it’s hardly something for adults. Right?

Well, one of the toughest, most resilient men you’ll ever meet doesn’t think that valentines are silly. And he should know – after all, he just received over 20,000 of them.1

The Oldest Marine

Major Bill White is a 104-year-old veteran of World War II, and perhaps the oldest Marine alive.1   He’s a Purple Heart recipient who fought at Iwo Jima, and later served in the Korean War as well.  These days, Major White lives in an assisted care facility in California and spends much of his time collecting memorabilia of the incredible life he has lived.

But as he looked over his collection, he decided there was something missing.  Something he dearly wanted to add.

He wanted a valentine.

So, another facility resident put a call out on social media.  Would anyone like to send this hero a card for Valentine’s Day?

Operation Valentine had begun.

Within days, the responses started pouring in.  Blankets, quilts, candy, and of course, cards. Many were homemade, with simple, heartfelt messages.  Some thanked Major White for his service.  Others described how their family members had served in the military, and why it meant the world to show their love for someone similar. Some cards came from the elderly; others were sent by children.  At first, his facility hoped for a few thousand cards.  They were blown away when they received tens of thousands.

Major White intends to save every single one.

“I’ll save every one of them…and they’ll be a personal part of my history,” he explains.2

When you look past the flower bouquets, candy hearts, and boxes of chocolate, I think this is what Valentine’s Day is really all about.  It’s a chance to tell someone, anyone, that they are loved, needed, and valued.  And while it’s true that we have 364 other days to do that, we all know busy life gets.  How demanding the world can be.  We all know how easy it is to let time go by.

So, sometimes, it’s good to have a day on the calendar to remind ourselves to send someone a valentine.  It could be a spouse or partner.  It could be a neighbor, teacher, or a local policeman. Or it could be the nearest 104-year-old Marine you can find. Because when you think about it, what is a valentine, really?  It’s more than a heart cut out of construction paper.  It’s more than a card in an envelope.

A valentine is love.

As for Major Bill White, he remains as tough as ever. He still wears the same uniform he’s had for over 60 years, and in his mind, he’s never stopped serving.

“I’ve been a Marine for 85 years now,” he says.  “So, if they feel like it, they could call me back on active duty anytime.  I’m still on the list.”1

On behalf of everyone at Research Financial Strategies, we hope you have a wonderful Valentine’s Day!

 

P.S.  If you want to send Major White a valentine, you can address it to:
Operation Valentine
ATTN: Hold for Maj Bill White, USMC (Ret) The Oaks at Inglewood
6725 Inglewood Ave.
Stockton, CA 95207

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“104-year-old WWII vet receives thousands of cards for Valentine’s Day,” USA Today, January 26, 2020.  https://www.usatoday.com/story/news/nation/2020/01/25/wwii-vet-california-receives-nearly-100-k-valentines-day-   cards/4562457002/
“104-year-old Marine Corps veteran collecting Valentine’s Day cards,” Fox40, January 9, 2020.  https://fox40.com/2020/01/09/104-year-old-marine-corps-veteran-collecting-valentines-day-cards/

Market Commentary – February 10, 2020

Market Commentary – February 3, 2020

Weekly Financial Market Commentary

February 3, 2020

Our Mission Is To Create And Preserve Client Wealth

Prepare yourself. There is a good chance markets will be volatile in the coming weeks.
Precautions designed to slow the spread of the coronavirus may also slow Chinese economic growth and, by extension, global economic growth.

On Thursday, the World Health Organization declared the coronavirus to be an international health emergency. The U.S. State Department issued a travel advisory for China, and major U.S. airlines suspended flights to the nation, reported Forbes.

In six Chinese provinces, factories and businesses are shuttered until at least February 10. The closures have created issues for global supply chains, and Financial Times reported, “Companies from luxury retailers to airlines and banks are reeling as the disease accelerates.”

Events sparked a bond rally as investors shifted assets into safe haven investments. The Economist wrote that previous viruses have not had lasting effects on economic growth. “Other recent epidemics have reinforced the impression that economists should not be overly worried, so long as good doctors are on the job. Neither avian flu in 2006 nor swine flu in 2009 dimmed the global outlook. Yet even flint-hearted investors are wondering whether the new epidemic might be worse. Stocks in Hong Kong have fallen by nearly 10 percent as reported infections have steadily increased. Tremors have also rippled through global markets.”

China’s government is prepared to step into the breach. On Saturday, Reuters reported, “Chinese authorities have pledged to use various monetary policy tools to ensure liquidity remains reasonably ample and to support firms affected by the virus epidemic…” The Chinese central bank is expected to begin offering support on February 3 before the Chinese stock market reopens for the first time since January 23.

The European Union may also be in need of economic stimulus. Financial Times reported the Eurozone economy came to a virtual standstill (up 0.1 percent) in the fourth quarter and grew just 1.2 percent during 2019. Economies in France and Italy, the second and third largest in the region, both contracted during the fourth quarter.

Major U.S. stock indices moved lower last week.

The Things We Do For Pets. While there is some debate about how many American households include pets – The Washington Post reports estimates from the American Pet Products Association are about 11 percent higher than those of the American Veterinary Medical Association – there is little debate about how much people love their pets.

With Valentine’s Day coming up soon, you may be wondering how to show your pet you care. Here are a few ideas:

  • Doggie playlists and podcasts. Want to make certain your pup doesn’t get lonely (or into too much trouble) when left at home alone? One major media company is making canine playlists and podcasts. Reuters reported the podcasts feature, “…soothing music, ‘dog-directed praise,’ stories, and messages of affirmation and reassurance narrated by actors to alleviate stress…”
  • Video chat or…bark? Wouldn’t it be great to take a break and chat with your pet during lunch hour? One social media user, cited by The Insider, thought so. “I taught my dog to acceptcalls through my laptop at home while I’m at work. Then, we just talk.”
  • Travel somewhere fun. Millions of people travel with their pets, according to Forbes. One travel magazine publishes a pet-friendly article each month. The LA Travel Magazine archive includes titles like, ‘TopDawg’ Resorts in the U.S. and The Pawfect Guide to Dog Beaches in SoCal.
  • Just don’t supersize it. A pet owner, cited by the Odyssey, occasionally indulges her pets with people food. “When we go out for [fast food] or something, my mom and I buy them each their own burger and sometimes include fries so they can have a meal.”

 

On Valentine’s Day, remember to do something nice for the people you love, too. 

Weekly Focus – Think About It
“The more cats you have, the longer you live. If you have a hundred cats, you’ll live ten times longer than if you have ten. Someday this will be discovered, and people will have a thousand cats and live forever.”
–Charles Bukowski, Poet and novelist

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.

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.

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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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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.
* 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.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

Sources:
https://www.forbes.com/sites/sergeiklebnikov/2020/01/31/markets-plummet-dow-drops-over-600-points-as-coronavirus-infections-outpace-sars/#5e9264725ddc
https://travel.state.gov/content/travel/en/traveladvisories/traveladvisories/china-travel-advisory.html
https://www.ft.com/content/b8027b84-4514-11ea-aeb3-955839e06441 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/02-03-20_FinancialTimes-Apple_Shuts_42_China_Retail_Stores_Due_to_Coronavirus-Footnote_3.pdf)
https://www.ft.com/content/f3fcdc5a-4119-11ea-bdb5-169ba7be433d (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/02-03-20_FinancialTimes-The_Impact_of_Coronavirus_Across_Industry_and_Finance-Footnote_4.pdf)
https://www.economist.com/international/2020/01/30/chinas-coronavirus-semi-quarantine-will-hurt-the-global-economy (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/02-03-20_TheEconomist-Chinas_Coronavirus_Semi-Quarantine_will_Hurt_the_Global_Economy-Footnote_5.pdf)
https://www.reuters.com/article/us-china-health-cenbank/china-central-bank-to-inject-174-billion-via-reverse-repos-on-february-3-idUSKBN1ZW074
https://www.ft.com/content/f3088ca8-43f9-11ea-abea-0c7a29cd66fe (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/02-03-20_FinancialTimes-Eurozone_Grows_Just_0.1_Percent_as_France_and_Italy_Shrink-Footnote_7.pdf)
https://www.washingtonpost.com/science/2019/01/31/how-many-americans-have-pets-an-investigation-into-fuzzy-statistics/
https://www.reuters.com/article/us-odd-spotify-dogs/spotify-launches-playlists-for-dogs-left-home-alone-idUSKBN1ZE1D8
https://www.insider.com/ways-people-spoil-their-pets-2018-10#they-taught-their-dog-how-to-facetime-1
https://www.forbes.com/sites/michaelgoldstein/2019/02/22/americans-spending-billions-on-pet-travel-and-boarding/#40c74baa24f7
https://latravelmagazine.com/activities/pet-friendly/
https://www.theodysseyonline.com/14-strangest-things-people-do-with-their-pets
https://www.goodreads.com/work/quotes/44216022-on-cats

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