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Weekly Market Commentary (July 30, 2019)

Weekly Market Commentary (July 30, 2019)
 
 The Markets
 
It has been said there are two sides to every story. Just look at world financial markets. Stock markets and bond markets are telling very different stories.
 
In the United States, stock markets were blue ribbon winners last week.
 
The Standard & Poor's 500 Index rebounded to a record high. The Nasdaq Composite also set a new record. Barron's reported U.S. stock markets were supported by abundant optimism inspired by expectations for solid earnings growth and a Federal Reserve rate cut in July.
 
Optimism pushed stocks higher in Europe last week, too. CNBC reported investors were receptive to news suggesting the European Central Bank would ease monetary policy to support the European economy. A significant number of national stock indices in Europe, the Middle East, and Asia finished last week higher, according to Barron's.
 
Bond markets have been telling a less optimistic story.
 
In many regions of the world, bond yields have sunk below zero, and bond buyers have been locking in losses by investing in bonds with negative yields.
 
In the United States, the 10-year Treasury yield remains positive, but it has dropped from 3.2 percent in November 2018 to 2.1 percent at the end of last week.
 
So, what are bond markets saying? Barron's suggested some possibilities:
 
"...bond buyers locking in subzero yields aren't doing it, of course, for love of losses. They might think that the certainty of small losses will prove a better deal in the years ahead than whatever stocks provide...There's something else that negative yields could be telling us. Investors need bonds for things like diversification and setting aside money at known rates to offset known liabilities. For an investor who must buy bonds, a purchase here with negative yields isn't necessarily a bet against stocks. It could just be a wager that bond yields won't get much better - that slow growth and meager inflation will loom for many years."
 
Time will tell.
 

Data as of 7/26/19
1-Week
Y-T-D
1-Year
3-Year
5-Year
10-Year
Standard & Poor's 500 (Domestic Stocks)
1.7%
20.7%
6.6%
11.7%
8.9%
11.9%
Dow Jones Global ex-U.S.
-0.4
11.0
-4.3
5.3
-0.2
3.5
10-year Treasury Note (Yield Only)
2.1
NA
3.0
1.6
2.5
3.7
Gold (per ounce)
-1.3
10.8
15.6
2.4
1.7
4.1
Bloomberg Commodity Index
-0.8
2.6
-7.3
-2.0
-9.5
-4.4
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; 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, 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.
 
MUSIC, EARWORMS, AND DATA STORAGE. Anyone who has ever suffered an earworm (known in scientific circles as Involuntary Musical Imagery) understands the power of music. Some tunes that repeatedly pop into people's heads may include:
 
  • It's a Small World (Disney)
  • Don't Stop Believing (Journey)
  • Who Let the Dogs Out? (Baha Men)
  • Silver Bells (Bing Crosby)
  • We are the Champions (Queen)
 
Let's face it. Music can be potent. In The Power of Music, Elena Mannes writes, "...science today is showing that music is in fact encoded in our bodies and brains." She discusses research suggesting music may be able to help people heal, change behavior, and treat neurological disorders.
 
It may be used in other ways, too. Soon, you may experience a new music phenomenon called Imperceptible Audio Communication. That's when data is secretly coded into music. You won't be able to hear it, but your smartphone and other devices will.
 
At the 44th IEEE (Institute of Electrical and Electronics Engineers) International Conference on Acoustics, Speech and Signal Processing, a pair of doctoral students shared their work, which focuses on storing data in music.
 
Imagine, someday you may be:
 
  • Walking through an airport, not really listening to the piped-in sounds, when your phone picks up a data feed from the music and lets you know your flight is delayed.
  • Pushing your cart down a grocery aisle and Muzak® advises your smartphone cauliflower is on sale.
  • Checking into a hotel and having the lobby music send the Wi-Fi password and other check-in data directly to your smartphone.
  • Dancing in a club and having your smartphone flash a drink special.
 
The times - they are changing.
 
Weekly Focus - Think About It
 
"Any sufficiently advanced technology is indistinguishable from magic."
--Arthur C. Clarke, British writer and inventor
 
Best regards,
 
Lee Barczak
President
 
* 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. * 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 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.
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Weekly Market Commentary (July 8, 2019)

Weekly Market Commentary (July 8, 2019)
 
What will the Federal Reserve do now?
 
There was unexpected economic news last week. On Friday, the Bureau of Labor Statistics announced 224,000 new jobs were added in June, which was more than analysts had anticipated. The gains were offset a bit by reductions in April and May employment estimates. However, overall, the pace of jobs growth during second quarter was fairly consistent with jobs growth during the first quarter, reported Matthew Klein of Barron's.
 
Strong employment numbers invigorated some investors. As a result, the Standard & Poor's 500 Index, Dow Jones Industrial Average, and Nasdaq Composite finished the week near record highs.
 
Not everyone was jumping for joy, however.
 
The performance of the bond market continued to indicate some investors are worried about the possibility of recession. The yield curve remained inverted last week with the 10-year Treasury note trading at lower yields than 3-month Treasury bills. Yield curve inversions have been harbingers of recession in the past, reported Ben Levisohn of Barron's.
 
Time may provide greater clarity about the strength of the American economy. April Joyner of Reuters reported,
 
"It will likely take several months of economic data - along with results from the corporate earnings season later this month - to clarify the picture, investors say. In contrast to Friday's upbeat employment report, data earlier this week showed U.S. manufacturing and service activity in June declined to multi-year lows... Future data...may end up either confirming recession fears or altogether dashing the hopes for interest-rate cuts that have buoyed stocks."
 
In its July meeting, the Federal Reserve will examine economic data and decide whether to lower rates. Investors have been anticipating a rate cut, reported Greg Robb of MarketWatch. If it doesn't happen, stock markets could be a bit volatile.
 

Data as of 7/5/19
1-Week
Y-T-D
1-Year
3-Year
5-Year
10-Year
Standard & Poor's 500 (Domestic Stocks)
1.7%
19.3%
9.3%
12.7%
8.6%
12.8%
Dow Jones Global ex-U.S.
0.7
12.2
-0.8
6.9
-0.1
4.6
10-year Treasury Note (Yield Only)
2.1
NA
2.8
1.4
2.6
3.5
Gold (per ounce)
-1.4
8.4
10.6
0.9
1.1
4.2
Bloomberg Commodity Index
-0.7
3.1
-7.5
-3.3
-9.8
-3.9
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; 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, 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.
 
SUCCUMBING TO THE POWER OF DIGITAL PERSUASION OR NOT. A lot has been written about Americans and smartphones - the crowd favorite among mobile devices. Eighty-five percent of U.S. participants in the 2018 Deloitte Global Mobile Survey owned smartphones and checked their phones about 14 billion times a day.
 
Which amounts to approximately 52 times each. If you figure Americans are awake about 960 minutes each day, they check their phones every 18 minutes.
 
Almost three-in-ten Americans say that what they see on social media influences their decisions to buy or not buy. The percent rises to five-in-ten for millennials, according to the UPS Pulse of the Online Shopper Survey™.
 
It is little wonder social media influencers have become a staple of digital marketing.
 
What are influencers? The Influencer Marketing Hub describes an influencer like this:
 
"An influencer is an individual who has the power to affect purchase decisions of others because of his/her authority, knowledge, position or relationship with his/her audience."
 
Influencing has become a bona fide career path, a job with has its own set of Federal Trade Commission guidelines. For example, truth in advertising requires influencers to indicate when they've being paid to promote a product and also when they've received the product for free. Consumers should see the letters #ad before a comment or tweet when the influencer is promoting a brand or product.
 
Not everyone is impressed with the influence of influencers. CBC reported the owner of a Los Angeles ice cream truck got fed up with requests for free ice cream in exchange for online exposure. His solution was to start charging influencers twice the going rate.
 
The lesson may be that influence should be used judiciously.
 
Weekly Focus - Think About It
 
"One thing I've learned through all the ups and downs is that if you're doing things right, then you have a core group of people. Not just a core group like your homies or your buddies, but a group of people that has a good influence on you, who you respect and admire, and you know that if they're on your side, you're doing something right."
 
--Hope Solo, former United States national soccer team goalkeeper
 
Best regards,
 
Lee Barczak
President
 
* 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. * 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 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.
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Weekly Market Commentary (May 20, 2019)

Weekly 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,
 
Lee Barczak
President
 

 

* 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. * 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 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.
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Weekly Market Commentary (May 17, 2019)

Weekly Market Commentary (May 17, 2019)
 
The Markets
 
Trade talk trouble took a toll last week.
 
Major U.S. stock indices moved lower when trade talks between the United States and China broke down. The Standard & Poor's (S&P) 500 Index, Nasdaq Composite, and Dow Jones Industrial Index all finished the week down between 2 percent and 3 percent, reported Ben Levisohn of Barron's.
 
The deadline to settle U.S.-China trade issues was Friday. When it passed without any resolution, the U.S. increased tariffs on Chinese goods to 25 percent, reported the BBC.
 
The economic impact of higher tariffs may be relatively small; however, the impact on business confidence and global markets could be significant, reported Capital Economics.
 
"We think that the direct effects of President Trump's threatened tariff hikes could reduce Chinese GDP by up to 0.4 percent and that the associated retaliation would have only a marginal direct impact on the United States. The effects on business confidence and financial markets around the world could be more significant, potentially adding to reasons for renewed policy loosening...In theory, if all else were unchanged, the increase in tariffs would amount to a small fiscal tightening in China and the United States. But both governments have avoided this by spending the proceeds on aid for the most affected parties."
 
Bond markets reflected uncertainty, too. The yield curve, which has been flirting with inversion for some time, inverted briefly on Thursday, reported Alex Harris of Bloomberg. A persistent inverted yield curve - featuring a lower yield for 10-year Treasuries than for three-month Treasuries - sometimes signals recession.
 
David Lynch and Heather Long of The Washington Post reported tariffs imposed on other countries have yet to be removed, including those on steel and aluminum imported from Mexico and Canada.
 
Trade negotiations between the United States and China are expected to continue.
 

Data as of 5/10/19
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
-0.7
17.5
16.5
6.7
8.9
15.5
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, 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.
 
INDEPENDENT THINKING IS IMPORTANT. In The Wisdom of Crowds, James Surowiecki shared a story about Francis Galton, a Victorian-era statistician and scientist whose "...experiments left him with little faith in the intelligence of the average person."
 
Jacob Goldstein and David Kestenbaum of Planet Money summarized the story like this:
 
"One day, Galton goes to a country fair. This was about a hundred years ago in England. And there's this contest going on at the fair - guess the weight of the ox. Galton's a scientist and a statistician. And he figures, hey, I can do an experiment here, right? He figures, I'm going to take everyone's guesses, take the average and compare that to the actual weight of the ox...The ox weighed 1,198 pounds."
 
The average of the estimates was 1,197 pounds. The result surprised Galton and it surprises other people who hear the story, too.
 
Goldstein and Kestenbaum decided to replicate the experiment by visiting a fair, weighing a cow, posting a picture of the cow online (next to a photo of Goldstein that shared his weight), and asking people to estimate the cow's weight.
 
More than 17,000 people responded.
 
After removing outliers, the average estimate of the cow's weight came in at 1,287 pounds. The cow weighed 1,355 pounds.
 
How can a group of people, few of whom knew anything about cows, get so close to a correct answer? The key is that each guess is made independently:
 
"...Every person's guess is contributing some new, little piece of information. Everybody is different. Everybody thinks slightly differently when they're trying to guess the cow's weight. Maybe one person studies that photo of the cow from the side. Some people are probably trying to figure out how many Jacobs would fit in the cow. Someone else might know how much a horse weighs and kind of go from there."
 
That's not to say collective thinking is always accurate. There are terms in our vocabulary - mob mentality, herd thinking, groupthink, and others - that often are used to describe groups getting it wrong.
 
Consider the stock market. You don't need to look far to find examples of what can happen when people push a company's share price or a stock market to an unreasonable level.
 
Apparently, the wisdom of the crowd is found in thinking independently, together.
 
Weekly Focus - Think About It
 
"In a basic agricultural society, it's easy enough to swap five chickens for a new dress or to pay a schoolteacher with a goat and three sacks of rice. Barter works less well in a more advanced economy. The logistical challenges of using chickens to buy books on Amazon.com would be formidable."
--Charles Wheelan, American Journalist
 
Best regards,
Lee Barczak
President
 
* 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. * 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 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.
Continue reading
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Weekly Market Commentary (May 8, 2019)

Weekly Market Commentary (May 8, 2019)
 
 
The Markets
 
Data suggests economic growth remains steady and some analysts and investors have been pecking at Federal Reserve Chair Jerome Powell. They're keen for the Fed to implement a rate cut, which could stimulate economic growth and help push stock markets higher, because inflation is lower than ideal, reported Howard Schneider and Ann Saphir of Reuters.
 
Recent data suggest core inflation is at 1.6 percent. That's below the Fed's target rate of 2 percent. Fed leaders have said they think low inflation may be temporary. Until a trend has been established to their satisfaction, they intend to do nothing. The Reuters article explained, "...preemptive...rate moves in either direction appear off the table for now, absent some unexpected event that raises new risks or shocks the economy into a higher or lower gear."
 
Second-guessing the Fed is not new. In 1955, the ninth Chairman of the Federal Reserve, William McChesney Martin, offered this insight to the Fed's work:
 
"Those who have the task of making [credit and monetary] policy don't expect you to applaud. The Federal Reserve...is in the position of the chaperone who has ordered the punch bowl removed just when the party was really warming up."
 
On Friday, jobs data suggested U.S. economic growth continues apace. The Bureau of Labor Statistics report showed unemployment was at a 49-year low. The news made investors happy, and the Nasdaq Composite and S&P 500 finished the week higher.
 

Data as of 5/3/19
1-Week
Y-T-D
1-Year
3-Year
5-Year
10-Year
Standard & Poor's 500 (Domestic Stocks)
0.2%
17.5%
12.0%
12.6%
9.3%
12.5%
Dow Jones Global ex-U.S.
0.3
11.8
-5.3
6.1
0.6
5.1
10-year Treasury Note (Yield Only)
2.5
NA
3.0
1.8
2.6
3.2
Gold (per ounce)
-0.4
-0.2
-2.8
-0.4
-0.4
3.5
Bloomberg Commodity Index
-1.1
4.1
-11.0
-1.5
-10.2
-3.7
DJ Equity All REIT Total Return Index
1.1
18.3
20.3
8.3
9.3
15.2
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, 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.
 
OVERLOOKED ECONOMIC INDICATORS. Last week, theFederal Reserve Open Market Committee statement indicated inflation was below target levels. The report stated, "On a 12-month basis, overall inflation and inflation for items other than food and energy have declined and are running below 2 percent."
 
A less respected economic indicator is telling a similar story about inflation. The Tooth Fairy Index confirms the value of a baby tooth isn't what it used to be. For the second consecutive year, the average monetary gift left behind by the Tooth Fairy was less generous. In 2018, it fell 43 cents to $3.70, on average.
 
There are regional differences. West Coast Tooth Fairies are, typically, more generous than Midwest tooth fairies. The regional numbers for 2018 looked like this:
 
  • $4.19 was the average payout on the West Coast. That's down 66 cents from $4.85 in 2017.
 
  • $3.91 was the average payout in the South. That's down 21 cents from $4.12 in 2017.
 
  • $3.75 was the average payout in the Northeast. That's down 60 cents from $4.35 in 2017.
 
  • $2.97 was the average payout in the Midwest. That's down 47 cents from $3.44 in 2017.
 
The first baby tooth lost continues to command a higher value than other teeth. It was worth $4.96, on average, across the country.
 
The non-monetary benefits of impending Tooth Fairy visits can be significant. They may include: 1) early bedtime in anticipation of the visit; 2) joy when compensated for a lost tooth; 3) a chance to discuss the importance of oral hygiene; and 4) the opportunity to teach kids about saving.
 
Weekly Focus - Think About It
 
"Joy, feeling one's own value, being appreciated and loved by others, feeling useful and capable of production are all factors of enormous value for the human soul."
--Maria Montessori, Italian physician and educator
 
Best regards,
 Lee Barczak
President
 
* 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. * 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 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.
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