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Weekly Market Commentary (November 7, 2019)

Blog
The Markets
 
They did it.
 
The Federal Reserve lowered interest rates last week, as expected. There were no enthusiastic fans singing the Baby Shark song, but the Federal Open Market Committee's decision was well received.
 
Reuters reported, "Gaps between market expectations and the Fed's own outlook have been wide at times this year, a source of concern for policymakers who don't want to kowtow to markets, but also don't want to surprise or disrupt them. But, the two are now roughly in line with the idea that the Fed is on hold and the economy continuing to chug along.
 
Last week's unemployment report was full of good news. It reported job gains and moderate pay increases, according to Barron's, but there was a counterintuitive twist. The unemployment rate increased even though the economy added new jobs.
 
The only bad news was found in manufacturing. The October ISM manufacturing index ticked higher, but remains in contraction territory. CNBC reported, "Manufacturing has been at the heart of the economy's sluggishness, with a drop in business investment a big reason for the third quarter's sluggish 1.9 percent [economic] growth pace."
 
Barron's attributed softness in manufacturing to the ongoing U.S.-China trade war.
 
 
Data as of 11/1/19
1-Week
Y-T-D
1-Year
3-Year
5-Year
10-Year
Standard & Poor's 500 (Domestic Stocks)
1.5%
22.3%
11.9%
13.3%
8.7%
11.4%
Dow Jones Global ex-U.S.
1.2
13.4
8.1
5.6
1.9
2.8
10-year Treasury Note (Yield Only)
1.7
NA
3.2
1.8
2.4
3.4
Gold (per ounce)
-0.3
17.7
22.3
5.4
5.3
3.6
Bloomberg Commodity Index
1.0
4.6
-4.0
-1.7
-7.4
-4.9
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.
 
WHAT WILL WE DO WITH PARKING GARAGES? As the popularity of ride-sharing services and personal transportation options (like scooters and bicycles) grows, the need for cars in urban areas may diminish.
 
The arrival of autonomous vehicles could reduce demand even further.
 
Pew Research explained, "By 2030, 15 percent of new cars sold will be totally autonomous, according to one estimate. One in 10 will be shared. And, as it becomes easier for people to summon shared or autonomous cars when they need them, fewer people will want to own their own vehicle, meaning fewer cars overall."
 
So, what's going to happen to all of the parking garages?
 
There are a lot of interesting ideas about how parking garages might be repurposed. Some companies plan to reserve the spaces for autonomous vehicles. Others are remodeling garages to accommodate businesses and services.
 
For example, one company is buying properties with the intention of turning them into "commercial kitchens for delivery-only restaurants and other consumer services." Other possibilities include:
 
  • Recreational areas
  • Gyms
  • Movie theaters
  • E-commerce distribution centers
  • Flood protection areas
  • Urban farms
  • Apartment buildings
 
The co-CEO of an architecture and design firm told Axios News, "An obvious and functional challenge we face is that these structures were not originally designed for human habitation. These spaces often require us to raise the floor height, level the floors between ramps and incorporate design techniques that bring natural light into the space."
 
Redeveloping parking garages may be challenging and costly, but it could create opportunities for investors.
 
Weekly Focus - Think About It
 
"Before you become too entranced with gorgeous gadgets and mesmerizing video displays, let me remind you that information is not knowledge, knowledge is not wisdom, and wisdom is not foresight. Each grows out of the other, and we need them all."
--Arthur C. Clarke, Science fiction writer and futurist
 
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 (October 30, 2019)

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Weekly Market Commentary (October 30, 2019)
 
The Markets
 
More money managers are feeling less bullish, but you sure couldn't tell by the performance of U.S. stock markets last week.
 
Through the end of last week, the Standard & Poor's 500 Index had gained more than 20 percent year-to-date, the Dow Jones Industrial Index was up more than 15 percent, and the Nasdaq Composite had risen more than 24 percent.
 
All three indices finished last week in positive territory. Lawrence Strauss of Barron's reported signs that global markets are stabilizing supported investors' optimism. In addition, yields on 10-year U.S. Treasury notes increased, which suggested "investors are more optimistic about growth and overall economic prospects."
 
Despite strength in U.S. markets year-to-date, Barron's most recent Big Money Poll found fewer money managers are bullish than just one year ago when 56 percent anticipated gains in the months ahead. When 134 money managers across the United States were asked about their outlook for the next 12 months:
 
  • 27 percent were bullish
  • 42 percent were neutral
  • 31 percent were bearish
 
That's the lowest level of bullishness in 20 years and the highest level of bearishness since the mid-1990s. Nobel Laureate in Economics, Dr. Robert Shiller explains it is due to the "bubbles everywhere" including the US stock market, bond market and real estate markets. The Yale University professor sees a severe decline coming followed by ten years of recovery with stocks yielding half of what they produced in the last ten years. He believes one of the few bright spots in the stock markets will be established foreign markets. However, he also points out that our markets remain very fluid and subject to many pressures so exact time lines are impossible to predict.
 
Data as of 10/25/19
1-Week
Y-T-D
1-Year
3-Year
5-Year
10-Year
Standard & Poor's 500 (Domestic Stocks)
1.2%
20.6%
11.7%
12.1%
9.0%
11.0%
Dow Jones Global ex-U.S.
1.2
12.1
9.3
4.9
1.9
2.3
10-year Treasury Note (Yield Only)
1.8
NA
3.1
1.8
2.3
3.6
Gold (per ounce)
1.6
18.1
23.0
6.0
4.3
3.7
Bloomberg Commodity Index
1.1
3.6
-6.1
-2.6
-7.4
-5.2
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; 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.
 
HOW MUCH IS TOO MUCH? In 1986, Fortune magazine asked Warren Buffett his thoughts on inheritance. He responded children should receive, "...enough money so that they would feel they could do anything, but not so much that they could do nothing."
 
It's an important question, even though relatively few Americans may need to grapple with it. According to the Federal Reserve:
 
  • 55 percent of inheritances are less than $50,000
  • 85 percent of inheritances are less than $250,000
  • 93 percent of inheritances are less than $500,000
  • 98 percent of inheritances are less than $1 million
  • 2 percent of inheritances are more than $1 million
 
A 2015 survey conducted by Merrill Lynch's Private Banking and Investment Group found, "a majority (91 percent) of people plan to leave the lion's share of their wealth to family members, motivated by a desire to positively influence the lives of loved ones. Yet the results indicate that many see significant risk in passing on wealth without context, conversation, guidance, or accountability."
 
So, how much is too much? Is there an amount of inheritance that will sap your children's motivation and undermine their work ethic? The answer may depend on the source of the wealth, reported The Atlantic:
 
"Perspectives on what constitutes 'too much' seem to vary depending in part on whether parents inherited their wealth or earned the majority of it themselves. When significant wealth gets passed down through multiple generations, inheritors can get the sense that 'they're just the caretakers of it', which means they might be more inclined to keep up the family tradition and will it to their own children...Self-made rich people can have a different relationship to their fortune, because they have firsthand knowledge of what was required to amass it. As such, they might be more interested in bequeathing not just money to their children, but a good work ethic as well."
 
If you would like to discuss your legacy and its potential impact on your heirs, give us a call.
 
Weekly Focus - Think About It
 
"We should not forget that it will be just as important to our descendants to be prosperous in their time as it is to us to be prosperous in our time."
--Theodore Roosevelt, 26th President of the United States
 
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 (October 23, 2019)

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Weekly Market Commentary (October 23, 2019)
 
The Markets
 
Last week was like an overstuffed suitcase that busts open on the baggage carousel. A lot was unpacked in a surprising and disorderly fashion.
 
There was some positive news for investors who prioritize fundamentals. Third quarter's earnings season - the period of time when companies let investors know how they performed during the previous quarter - got off to a strong start.
 
Fifteen percent of companies in the Standard & Poor's 500 Index have reported so far and 84 percent had earnings that beat analysts' expectations. FactSet said better than expected earnings from companies in the Healthcare and Financials sectors balanced the weaker performance of companies in the Energy sector.
 
There was some negative economic news, too.
 
In the United States, retail sales declined in September. It was the first monthly decline since February, reported MarketWatch, and analysts had expected an increase.
 
In China, gross domestic product growth was 6 percent year-over-year, the slowest growth rate since the 1990s, reported Reuters.
 
On the geopolitical front, The Wall Street Journal reported U.S. and European investors were cheered by news that Britain and the European Union (EU) had reached an agreement under which Britain could amicably exit the EU. That optimism was dashed on Saturday when Parliament withheld approval of the deal until all supporting legislation has been passed, reported The Washington Post.
 
The world was also rocked by Turkey's invasion of Syria.
 
At the end of the week, the Standard & Poor's 500 Index and Nasdaq Composite had held onto gains while the Dow Jones Industrials finished lower.
 
Data as of 10/18/19
1-Week
Y-T-D
1-Year
3-Year
5-Year
10-Year
Standard & Poor's 500 (Domestic Stocks)
0.5%
19.1%
7.9%
11.8%
9.4%
10.5%
Dow Jones Global ex-U.S.
1.2
10.8
4.2
4.5
2.0
2.0
10-year Treasury Note (Yield Only)
1.8
NA
3.2
1.8
2.2
3.4
Gold (per ounce)
0.7
16.3
21.8
5.8
3.7
3.7
Bloomberg Commodity Index
-0.2
2.5
-8.3
-3.1
-7.6
-5.4
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.
 
IT'S THAT TIME AGAIN. During the past few weeks, Nobel Prize winners have been announced as well as Ig Nobel Prize winners. The Igs are awarded for improbable research that makes people laugh and then think. A lucky few have won both Ig Nobel and Nobel prizes.
 
The honorees at the Ig Nobel ceremony received their awards from "a group of genuine, genuinely bemused Nobel Laureates, in Harvard's historic and largest theater." This year's winners included:
 
  • Medicine: Cancer researcher Silvano Gallus and associates researched and wrote the paper, Does Pizza Protect Against Cancer? They received the Ig Nobel for "collecting evidence that pizza might protect against illness and death, if the pizza is made and eaten in Italy."
 
  • Biology: A group of researchers from the School of Physical and Mathematical Sciences at Nanyang Technological University in Singapore were recognized for "discovering that dead magnetized cockroaches behave differently than living magnetized cockroaches."
 
  • Engineering: Iman Farahbakhsh of Iran was recognized for patenting an infant diaper changer and washer. The patent explained, "...once the infant is placed inside the apparatus, various steps may in some cases be carried out automatically without needing the operator to touch the infant or interact manually with the diaper or infant during the changing process..."
 
  • Economics: Father and son, Timothy and Andreas Voss, and their associates received an Ig Nobel for "testing which country's paper money is best at transmitting dangerous bacteria."
 
Other winners explored the pleasure of scratching an itch (Peace Prize), the volume of saliva produced daily by a five-year-old child (Chemistry Prize), and whether holding a pen in your mouth increases happiness (Psychology Prize).
 
Weekly Focus - Think About It
 
"There is nothing in the world so irresistibly contagious as laughter and good humor."
--Charles Dickens, English 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 (October 16, 2019)

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Weekly Market Commentary (October 16, 2019)
 
The Markets
The world breathed a sigh of relief last week when the United States and China took a step toward a trade-war truce.
 
Financial Times reported the United States agreed to not increase tariffs from 25 percent to 30 percent on $250 billion of Chinese imports next week. (Current tariffs remain in place, and it is possible new tariffs will be imposed on additional Chinese goods - electronics, apparel, and other consumer items - in mid-December.)
 
In return, China agreed to purchase $40 to $50 billion of agricultural goods, including soybeans and pork, although no time frame was established for the purchases. It remained unclear what progress was made on intellectual-property protection and rules to prevent currency manipulation, reported The Wall Street Journal (WSJ).
 
U.S. stock markets responded enthusiastically to news about one of the great uncertainties hanging over economic growth, namely the trade war between the United States and China, might be resolved. However, after the details of the deal were announced, markets gave back some gains.
 
"The tentative truce underwhelmed some international businesses that had been hoping the United States and China would finish up a deal that cemented more sweeping structural changes in China's economy, eliminated additional tariffs scheduled to go into place in December, and even rolled back existing tariffs both sides have added to imports from each country," reported WSJ.
 
Derek Scissors, an American Enterprise Institute trade expert and White House advisor told WSJ, "If this turns out to be all there is, we could have achieved these results a year ago or more."
 
Yields on U.S. Treasury bonds moved higher during the week, and the yield curve righted itself, reported MarketWatch. The change reflected optimism about trade negotiations. Bond markets also embraced a Federal Reserve announcement it will resume buying Treasuries each month to ensure the banking system has sufficient reserves.
 
The United States and China hope to have a written draft of the phase-one agreement finalized during the next few weeks.
 
Data as of 10/11/19
1-Week
Y-T-D
1-Year
3-Year
5-Year
10-Year
Standard & Poor's 500 (Domestic Stocks)
0.6%
18.5%
8.9%
11.6%
9.6%
10.7%
Dow Jones Global ex-U.S.
1.9
9.5
3.5
4.2
1.7
2.1
10-year Treasury Note (Yield Only)
1.8
NA
3.1
1.8
2.3
3.4
Gold (per ounce)
-1.3
15.4
22.7
5.8
3.8
3.4
Bloomberg Commodity Index
1.2
2.8
-8.3
-2.9
-7.9
-5.0
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.
 
THE NICEST PLACE IN AMERICA. There are some people who scorn being nice (a.k.a. amiable, agreeable, pleasant). They equate it with being uninteresting or boring. What they fail to understand is being nice is often more challenging than the alternative.
 
Years ago, Marilyn Zeilinski penned a Chicago Tribune article entitled, "Being Nice Is Hugely Underrated." In it, she explained:
 
"Eventually I discovered that being nice is hard work. It is strong enough to shovel the elderly neighbor's driveway and as brave as a child inviting, 'Come play with me!' to another child exiled by unpopularity...Niceness is not weakness, as I once thought. Niceness stands up for itself, though politely, if someone cuts in line. Most of all, niceness is not safe. Safety is keeping your head down, minding your own business. Niceness reaches out, and that is riskier than a cocoon of self-interest. But it is worth it."
 
Residents of Columbiana, Ohio, have chosen to embrace 'nice.' That's why Reader's Digest (RD) recently named the town 2019 Nicest Place In America.
 
How nice is Columbiana?
 
Good News Network reported the town has, "A baker who donates freely to support causes of every kind, the real-estate developer who offers a year rent-free to promising entrepreneurs who may not have the resources to get started on their own, the local philanthropist who returned to his hometown to donate $500,000 to rebuild the town's beloved Firestone Park."
Columbiana isn't the only nice place in America. There are a lot of places where people work hard and help make each other's lives better. In 2019, RD recognized a place or town in every state.
 
Nice can be inspiring.
 
Weekly Focus - Think About It
 
"Attitude is a choice. Happiness is a choice. Optimism is a choice. Kindness is a choice. Giving is a choice. Respect is a choice. Whatever choice you make makes you. Choose wisely."
--Roy T. Bennett, 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 (September 23, 2019

Blog
 
The Markets
 
 There's a new theory in town.
 
Renowned economist Robert Shiller's new book suggests investors may be able to predict and prepare for economic events by tracking popular stories.
 
Applying the theory might have been a challenge last week. There were so many stories with potential to move markets and affect the economy it was difficult to guess which would be the most influential.
 
In the end, on-again-off-again trade negotiations provided the spark that drove markets lower. Barron's explained:
 
"The S&P 500 would have finished flat for the week - except it decided to drop 0.5 percent after reports that China had canceled a visit to Montana hit the newswires...That's not what we would have expected, given all of the week's excitement. Saudi Arabia's oil infrastructure was attacked. The Federal Reserve cut interest rates by a quarter-point. U.S. money markets went crazy and forced the Fed to intervene, setting off comparisons to the collapse of Lehman Brothers in 2008. And, yet, a Montana junket was the ultimate determinant of whether the market finished up or down."
 
On Saturday, reports from U.S. trade representatives and China's state-run news agency emphasized trade discussions were 'constructive' and 'productive' and would continue in October, reported The New York Times.
 
Last week, Federal Reserve Chair Jerome Powell mentioned trade wars 20 times in his news conference, reported The Wall Street Journal. "Other geopolitical risks figured less prominently or not at all. Mr. Powell mentioned Brexit once, and tensions in Hong Kong and Saudi Arabia didn't come up."
 
The Fed chair emphasized the Fed is using the tools at its disposal to support demand and counteract economic weakness. However, it has no way to resolve trade issues. He pointed out uncertainty about trade has reduced business investment across the United States and could hurt economic growth.
 
Until an agreement is reached, stories told about U.S.-China trade issues are likely to remain influential.
 
Data as of 9/20/19
1-Week
Y-T-D
1-Year
3-Year
5-Year
10-Year
Standard & Poor's 500 (Domestic Stocks)
-0.5%
19.4%
2.1%
11.8%
8.3%
10.9%
Dow Jones Global ex-U.S.
-0.2
10.5
-2.9
4.5
0.5
2.4
10-year Treasury Note (Yield Only)
1.8
NA
3.1
1.7
2.6
3.5
Gold (per ounce)
-0.1
17.2
24.3
4.6
4.4
4.2
Bloomberg Commodity Index
0.6
3.2
-5.6
-2.1
-7.8
-4.5
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; 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'S YOUR GIG? In a 2018 issue of theHarvard Business Review, an independent consultant compared working in the gig economy (a labor market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs) to being a trapeze artist. Independent work requires concentration and discipline. There is a stomach-dropping void between assignments and exhilaration when a new assignment is landed.
 
When you consider the risks of gig work, it's remarkable so many people work independently. About 20 to 30 percent of the working population in the United States and Western Europe are gig workers, according to the McKinsey Global Institute.
 
People work independently for a variety of reasons. Forty-four percent derive their primary income from gig work (although 14 percent of these people would prefer traditional employment). Fifty-six percent earn supplemental income from independent work (16 percent of these people are financially strapped).
 
The most popular gigs, according to appjobs, are:
 
  • Delivery work
  • Freelance work (editing, translating, photography, art, copywriting, design, and consulting)
  • Pet sitting
  • Cleaning
  • Driving
 
The most lucrative gigs include:
 
  • Massage therapy
  • Freelance work
  • Home cooking
  • Teaching
  • Delivery work
 
The gig economy is growing. However, there are issues that make it less attractive, such as lack of benefits, income insecurity, and lack of training and credentialing. These issues may create opportunities for entrepreneurs.
 
Weekly Focus - Think About It
 
"You have brains in your head. You have feet in your shoes. You can steer yourself any direction you choose. You're on your own. And you know what you know. And YOU are the one who'll decide where to go..."
--Dr. Seuss, American children's 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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Morgan Kenwood Advisors, LLC
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