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Weekly Market Commentary (September 22, 2020)

 
The Markets
 
Investors weren't happy with central banks last week.
 
After the Federal Open Market Committee (FOMC) meeting, Federal Reserve Chair Jerome Powell confirmed the economy is recovering more quickly than anticipated:
 
"With the reopening of many businesses and factories and fewer people withdrawing from social interactions, household spending looks to have recovered about three-quarters of its earlier decline...The recovery has progressed more quickly than generally expected, and forecasts from FOMC participants for economic growth this year have been revised up since our June Summary of Economic Projections. Even so, overall activity remains well below its level before the pandemic and the path ahead remains highly uncertain...We remain committed to using our full range of tools to support the economy in this challenging time."
 
Investors weren't satisfied. Colby Smith of Financial Times reported stocks, "sold off sharply during Mr. Powell's press conference on Wednesday, and again on Thursday," because the FOMC did not provide information about "how it might adapt its balance sheet policy to generate...inflation and aid the U.S. economic recovery."
 
The Bank of England (BOE) also delivered news that unsettled markets last week. Minutes from the BOE's latest meeting noted it was studying negative interest rates. Some banks and analysts interpreted this to mean the bank intends to implement negative rates. Eva Szalay and Chris Giles of Financial Times reported, "People familiar with the matter said the preparations now under way were aimed more at fully understanding the effects of negative rates, rather than at seeking to implement them."
 
It's possible the BOE wants to better understand negative rates so it's prepared for a worst-case scenario, such as the economic impact of COVID-19 containment measures combined with failure to reach a trade agreement with the European Union (EU), reported David Goodman and Lucy Meakin of Bloomberg. The EU trade deadline is fast approaching and, currently, no deal seems likely.
 
In the face of uncertainty, markets are likely to remain volatile.
 

Data as of 9/18/20
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) -0.6% 2.8% 10.4% 9.9% 11.1% 11.3%
Dow Jones Global ex-U.S. 1.1 -4.0 3.3 -0.3 3.6 2.2
10-year Treasury Note (Yield Only) 0.7 NA 1.8 2.2 2.1 2.7
Gold (per ounce) 0.2 28.1 29.8 14.1 11.3 4.3
Bloomberg Commodity Index 2.0 -9.8 -8.2 -5.0 -3.6 -6.3
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; 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.
 
IT'S IG NOBEL TIMEOn September 17, the 30th First Annual Ig Nobel Prize Ceremony was broadcast online. Here's a fun fact: The 1995 Ig Nobel Ceremony was one of the first events videocast on the Internet.
 
The Ig Nobel Prizes "celebrate the unusual, honor the imaginative - and spur people's interest in science, medicine, and technology." The ceremony is organized by the magazine, Annals of Improbable Research, and is co-sponsored by the Harvard-Radcliffe Society of Physics Students and the Harvard-Radcliffe Science Fiction Association.
 
This year's winning research explored ideas that make people laugh and think. The winning research included:
  • Arachnophobic Entomologists: When Two More Legs Makes a Big Difference, "for collecting evidence that many entomologists (scientists who study insects) are afraid of spiders, which are not insects."
  • A Chinese alligator in heliox: formant frequencies in a crocodilian, "for inducing a female Chinese alligator to bellow in an airtight chamber filled with helium-enriched air."
  • Eyebrows cue grandiose narcissism, "for devising a method to identify narcissists by examining their eyebrows."
  • National Income Inequality Predicts Cultural Variation in Mouth to Mouth Kissing, "for trying to quantify the relationship between different countries' national income inequality and the average amount of mouth-to-mouth kissing."
  • Misophonia: Diagnostic Criteria for a New Psychiatric Disorder, "for diagnosing a long-unrecognized medical condition: Misophonia, the distress at hearing other people make chewing sounds."
Anyone can learn more about why the researchers were exploring these ideas. Alternatively, 24/7 Ig Nobel lectures are available during which the winners explain their topics twice. First, they are asked to deliver complete technical descriptions in 24 seconds. Then, they try to offer clear summaries that anyone can understand in just seven words.
 
Weekly Focus - Think About It
 
"...I'm dejected, but only momentarily, when I can't get the fifth vote for something I think is very important. But then you go on to the next challenge and you give it your all. You know that these important issues are not going to go away. They are going to come back again and again. There'll be another time, another day."
                                                                                                                                                                                                                    --Ruth Bader Ginsburg, Supreme Court Justice
 
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 (September 15, 2020)

 
 Last week, the Nasdaq Composite Index set another record.
 
So far, 2020 has been memorable for many reasons, not the least of which is the incredible speed at which some events have been occurring in financial markets. This year, we've experienced:
 
  • The end of the longest U.S. stock bull market in history
  • A global stock market crash
  • The shortest U.S. stock bear market in history
  • Multiple record highs for major U.S. stock indices
 
Last week, we witnessed the swiftest correction on record as the Nasdaq fell by 10 percent in just three days. By the end of the week, the Index had recouped some losses and finished down 4.1 percent. The Standard & Poor's 500 Index and Dow Jones Industrial Average also finished the week lower.
 
It would be gratifying if the recent drop in share price steadied U.S. stock markets. However, we are likely to see stocks remain volatile through the end of 2020. The Economist explained:
 
"Because of the influential role of turbocharged retail investment, prices can be expected to remain choppy. Moreover, the market is entering a period where typical COVID-19-related volatility may be exacerbated by the twists and turns of America's presidential election.
 
"That said, much of the tech recovery from the lows in March was rooted in fundamental shifts, like policy interventions, or pandemic-prompted changes to consumer behavior, such as online shopping, that have helped firms...Even if the giddy obsession with tech firms exhibited during the summer fades, there may be little reason for investors to throw in the beach towel yet."
 
This is a good time to take a gut check and make sure your asset allocation aligns with your financial goals and your response to market volatility.
 

Data as of 9/11/20
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) -2.6% 3.4% 11.3% 10.3% 11.2% 11.5%
Dow Jones Global ex-U.S. 0.2 -5.0 2.7 -0.5 3.7 2.2
10-year Treasury Note (Yield Only) 0.7 NA 1.7 2.1 2.2 2.7
Gold (per ounce) 1.1 27.9 30.6 13.4 11.7 4.6
Bloomberg Commodity Index -1.2 -11.5 -8.5 -5.5 -4.3 -6.3
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; 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.
 
GO FLY A KITEWind is one of the fastest growing energy sources in the United States. In 2019, wind generated 7.2 percent of the nation's electricity, powering 27.5 million homes, reported the American Wind Energy Association. Wind power has become a major provider of electricity in:
 
  • Iowa generating 41.9 percent of electricity
  • Kansas generating 41.4 percent of electricity
  • Oklahoma generating 34.5 percent of electricity
  • North Dakota generating 26.8 percent of electricity
  • South Dakota generating 23.9 percent of electricity
  • Maine generating 23.6 percent of electricity
 
As with many things, wind farms have pros and cons. On the plus side, wind energy is a renewable energy source that generates income and tax revenue in rural areas. In the negative column, construction can damage drainage systems and hurt crop production. In addition, towering turbines can catch fire, throw ice, cause headaches (literally), and create other issues, reported Slate.
 
A new wind energy option may do away with some of those negatives in some locations. Wind kites deliver power and have a far smaller profile than many turbines. Fast Company explained:
 
"As the kite flies autonomously, driven by the wind, eight small onboard rotors turn and generate energy that is sent down a thin tether back to the ground...it does the same work as the tips of the blades on large wind turbines, which convert the most energy in the system because they move the greatest distance as they're pushed by the wind. But the new technology, which came out of research at the Technical University of Munich, does that work without the same need for massive infrastructure."
 
Wind kites may be well-suited to islands and other areas where importing turbines is not feasible. They may also be a sound option in hurricane-prone regions since kites can be lowered to the ground. Best of all, kites use 10 times less material, so costs are significantly reduced.
 
Weekly Focus - Think About It
 
"We are moving so fast that when plans are being made to perform some great feat, these plans are broken into by a youth who enters and says, "I have done it." This is exactly what Cook did for Arctic exploration." (April 1914)
                                                                                                                                                --Elbert Hubbard, Writer and publisher
 
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 (September 11, 2020)

The Markets
 
Stock markets in the United States retreated a bit last week.
 
U.S. stocks have been trending higher for months. Last week, they gave back some gains. The Nasdaq Composite dropped 3.3 percent, while the S&P 500 Index fell 2.3 percent, and the Dow lost 1.8 percent, reported Ben Levisohn of Barron's.
 
It was difficult to pinpoint a specific reason for the market's retreat. Levisohn offered a litany of possibilities that included:
 
  • The Labor Day holiday
  • Corporate earnings guidance suggesting companies are pulling back on tech spending
  • Dr. Anthony Fauci tempering expectations a vaccine will be available by November 1
  • Fears a disputed election could disrupt stock markets
  • Congress's lack of progress on a new stimulus bill 
The downturn could also have something to do with the Congressional Budget Office report on U.S. debt levels. Next year, our country is expected to owe more (government debt) than it produces (gross domestic product or GDP). By 2023, the U.S. debt-to-GDP ratio is estimated to be 107 percent, which would be the highest in our nation's history.
 
A high debt-to-GDP level, typically, is bad news for economic growth. The World Bank has found countries with debt-to-GDP ratios that exceed 77 percent for extended periods of time, see significant slowdowns in economic growth, reported Will Kenton and Julius Mansa in Investopedia. U.S. debt-to-GDP has been above 77 percent since 2009, according to data from the St. Louis Federal Reserve.
 
Michael Mackenzie of Financial Times cautioned ultra-loose central bank monetary policy and enormous government spending can have unwelcome side effects. He cited an emerging markets strategist who argued, "...excessive stimulus and easy money policies led either to asset bubbles or a burst of inflation. Both outcomes 'bode ill for share prices in the long run.'"
 
On the other hand, Mackenzie says, "Given the current U.S. policy mix that penalizes investors sitting on the sidelines and holding cash - given they are earning next to nothing in interest - any cooling of a red-hot market is easily framed as an opportunity. For many, it is another chance to 'buy the dip.'"
 
We'll see what happens next week.
 

Data as of 9/4/20
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) -2.2% 6.2% 16.8% 11.8% 12.3% 12.1%
Dow Jones Global ex-U.S. -1.6 -5.2 4.7 0.0 4.0 2.4
10-year Treasury Note (Yield Only) 0.6 NA 1.5 2.1 2.2 2.6
Gold (per ounce) -1.6 26.5 24.6 13.1 11.5 4.4
Bloomberg Commodity Index -1.0 -10.5 -7.7 -5.4 -4.1 -6.0
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; 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.
 
WHAT WILL A 'NEW' NORMAL LOOK LIKE ? COVID-19 has reshaped our world. Some of the ways we have adapted will be temporary, others may become permanent. Here are just a few ways our lives and the world around us have changed:
 
  • Remote work. Just 12 percent of people participating in a recent survey want to return to work in an office full time. The majority (72 percent) would prefer a combination of office and remote work. The attractions of the hybrid model include reducing commute time, saving money, and improving work-life balance.
  • Air quality. The 2020 slowdown delivered a temporary respite from air pollution in some parts of the world. The Economist reported, "...as [economic productivity] has fallen so has air pollution. This spring marked the first time in decades that residents of Jalandhar in northern India were able to see the snow-capped Himalayan mountains, 160km (100 miles) away." The World Health Organization estimates that more than four million people died prematurely from diseases related to air pollution in 2016.
  • Movie watching. Social distancing has kept indoor movie theaters closed. So, instead of people streaming into theaters to watch summer blockbusters, new movie releases have begun streaming into people's homes, reported Jeffrey Brown and Courtney Norris of PBS. 
  • Grocery shopping. Many people don't shop the way they used to shop. They've been taking advantage of innovations, such as touchless checkout, contactless shopping, online ordering, curbside pick-up, and home delivery.
  • Water quality. Water quality has improved along with air quality. However, higher concentrations of microplastics and other substances are increasing in some waterways because we're using more disposable products. "It would be nice to keep this quality of air and water when the pandemic is over. It is possible, but we will have to work hard for it," reported Marco Tedesco in State of the Planet, which is published by Columbia University's Earth Institute.
 
Weekly Focus - Think About It
 
"The world as we have created it is a process of our thinking. It cannot be changed without changing our thinking."
                                                                                        --Albert Einstein, Physicist
 
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 (September 1, 2020 )

Weekly Market Commentary (September 1, 2020 )
 
The Markets
 
The stock market rallies like it's 1986.
 
August has been a good month for stock investors. At the end of last week, the S&P 500 Index was up 6.8 percent for the month. The Index is poised to deliver its best returns for the month since 1986, when it gained 7.1 percent, reported Financial Times.
 
The performance of U.S. stock markets is remarkable, in part, because, so far, company earnings - the profit that publicly-traded companies earn and report each quarter - haven't been great in 2020. Earnings were down 31.9 percent during the second quarter of the year, reported FactSet. The decline in earnings reflected the impact of coronavirus closures.
 
FactSet reported other factors have been cited to explain the upward trajectory of stock markets, as well. These include:
 
  • Improved earnings sentiment
  • Expectations for additional fiscal stimulus
  • Optimism about coronavirus treatments and vaccines
  • Fear-of-missing-out (FOMO) as the market moves higher
 
The list should also include the Federal Reserve's strategy for inflation and employment, which was announced last week. Randall Forsyth of Barron's reported:
 
"In practical terms, the central bank's current policy of near-zero interest rates and heavy purchases of Treasury and agency mortgage-backed securities will continue as long as unemployment remains elevated. The chasm between a Wall Street at record levels and a Main Street in a near-depression will persist as a result."
 
Last week, the Standard & Poor's 500 and Nasdaq Composite Indices chalked up a fifth consecutive week of gains, while the Dow Jones Industrial Index moved into positive territory for 2020.
 

Data as of 8/28/20
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) 3.3% 8.6% 21.5% 12.8% 12.0% 12.8%
Dow Jones Global ex-U.S. 2.0 -3.7 8.5 0.6 3.5 3.0
10-year Treasury Note (Yield Only) 0.7 NA 1.5 2.2 2.2 2.6
Gold (per ounce) 1.7 28.5 27.3 14.1 11.5 4.6
Bloomberg Commodity Index 2.4 -9.6 --5.2 -4.3 -3.9 -5.7
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; 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.
 
Could you pass the american citizenship test? It's not easy to become an American citizen. In fact, newly-minted citizens may know more about the history of the United States than many of us who were born here. In 2018, a national survey reported just one-in-three Americans scored 60 percent or better on a multiple-choice test that included questions from the U.S. Citizenship Test.
 
See what you know about the United States by taking this brief quiz:
 
  1. What does the Constitution do?
    1. Defines the government
    2. Sets up the government
    3. Protects basic rights of Americans
    4. All of the above
     2. Name one of the two longest rivers in the United States.
    1. Mississippi River
    2. Colorado River
    3. Ohio River
    4. Rio Grande River
 

      3. What did Susan B. Anthony do?

    1. Founded the Red Cross
    2. Made the first flag of the United States
    3. Fought for women's rights
    4. Was the first woman elected to the House of Representatives
      4.Which statement correctly describes the "rule of law?"
    1. The law is what the president says it is
    2. The people who enforce the laws do not have to follow them
    3. Judges can rewrite laws they disagree with
    4. No one is above the law
      5. When was the Constitution written?
    1. 1492
    2. 1776
    3. 1787
    4. 1865
      6. Name your U.S. Representative.
 
Weekly Focus - Think About It
 
"When humor goes, there goes civilization."
                                                            --Erma Bombeck, Humorist, writer, columnist
 
Quiz Answers:
  1. D - All of the above (Defines the government; Sets up the government; Protects basic rights of Americans)
  2. A - Mississippi River
  3. C - Fought for women's rights
  4. D - No one is above the law
  5. C - 1787
  6. Look up your representative at https://www.house.gov/representatives/find-your-representative
 
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 (August 26, 2020)

The Markets
 
Is the shortest bear market in history over?
 
The Nasdaq Composite and Standard & Poor's 500 Indices finished at new highs last week. The stock market is considered to be a leading economic indicator, so strong stock market performance suggests economic improvement ahead.
 
There was a caveat to last week's gains, though. One large technology company was responsible for 60 percent of the S&P's weekly gains (0.7 percent), reported Ben Levisohn of Barron's. The same large company is also a component of the Dow Jones Industrials Index, which finished the week flat. Without that stock, the Dow would have finished the week lower. Levisohn wrote:
 
"The S&P 500 might have hit a record last week, but most stocks have been having bad days. On Friday, for instance, just 220 stocks in the S&P 500 closed higher for the day, and that was far from an anomaly. The S&P 500's cumulative advance/decline line - a measure of the number of stocks finishing higher versus those finishing lower that technicians use to gauge the market's underlying strength - has been falling even as the S&P 500 progressed to a record."
 
One reason for the U.S. stock market's rise to date may be dividends, reported Lawrence Strauss of Barron's. "...equities remain attractive relative to 10-year U.S. Treasuries. The yield on that bond was recently at 0.67 percent, about one percentage point below the S&P 500's yield."
 
The story told by last week's jobs data was as uncertain as the one told by the U.S. stock market. The Department of Labor reported jobless claims moved higher with 1.1 million people filing new claims for the week of August 15. During the previous week, new claims had fallen below one million. The four-week moving average for new claims continued to trend lower.
 
The unemployment rate dropped from 10.6 percent to 10.2 percent. That's an improvement over April's 14.4 percent, but the rate remains historically high. As a point for comparison, during the Great Recession, the unemployment rate peaked at 10.6 percent in January 2010, according to Rakesh Kochhar of Pew Research Center.
 
There was also a decline in the number of jobs posted. (Job postings provide insight to labor market activity in real time.) The Indeed Hiring Lab reported postings were down more than 20 percent year-over-year as of August 14, 2020. It was the first decline in the number of job listings since April 2020. Fewer jobs were available in hospitality, tourism, childcare, banking, finance, and software development.
 

Data as of 8/21/20
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) 0.7% 5.2% 16.2% 11.8% 11.5% 12.3%
Dow Jones Global ex-U.S. -0.6 -5.6 5.4 0.2 3.1 2.8
10-year Treasury Note (Yield Only) 0.6 NA 1.6 2.2 2.1 2.6
Gold (per ounce) -1.1 26.4 28.0 14.2 10.7 4.6
Bloomberg Commodity Index 0.9 -11.7 -7.0 -4.9 -4.0 -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; 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.
 
improbable research. The Annals of Improbable Research publishes "...research that makes people LAUGH, then THINK. Real research, about anything and everything, from everywhere - research that's maybe good or bad, important or trivial, valuable or worthless." In that spirit, here are a few notable scientific studies that may inspire awe and/or skepticism:
 
  • Coffee improves longevity. There has been a lot of research exploring whether coffee helps people live longer or shortens their life spans. A metastudy published in the European Journal of Epidemiology found people who drank two to four cups of coffee a day were likely to live longer than those who drank no coffee.
 
  • People don't know what they don't know - and they don't know it. The Dunning-Kruger Effect is a cognitive bias in which people wrongly overestimate their knowledge or ability in a specific area. "Not only do these people reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the metacognitive ability to realize it." Notably, when the unskilled are trained and develop skills, they recognize the limits of their abilities.
 
  • Insights about alligators on treadmills. Researchers at the University of Utah found, "...alligators, unlike lizards, are able to walk and breathe at the same time by using a rocking pubic bone - part of the pelvis - to help them inhale and exhale," reported Science Daily. A study published in the Journal of Comparative Physiology reported alligators that trained on treadmills for 15 months improved their peak oxygen rate by 27 percent.
 
  • Arachnids fly the friendly skies. Venomous pseudoscorpions, which are tiny predatory arachnids, have perfected the art of hitchhiking. They attach to flying insects, such as beetles, when they want to travel to new hunting grounds, reported National Museum Publications.
 
Weekly Focus - Think About It
 
"All sorts of things can happen when you're open to new ideas and playing around with things."
      --Stephanie Kwolek, Chemist and inventor of Kevlar
 
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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