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Weekly Market Commentary (October 22, 2018)

Weekly Market Commentary (October 22, 2018)
 
The Markets
 
The world remains full of opportunities and challenges.
 
Although we've seen global markets moving in tandem in recent years, Sara Potter of FactSetpointed out, "...we're starting to see the end of the synchronized global growth that has prevailed over the last two years. While the U.S. economy remains strong, growth in Europe and Japan is moderating, and emerging markets are under increasing economic and financial market pressure."
 
Strong economic growth and robust earnings helped U.S. stocks significantly outperform other regions of the world during the third quarter of 2018. In addition, the resolution of some trade tensions, namely the signing of a United States-Korea trade deal and the renegotiation of NAFTA (North American Free Trade Agreement), helped soothe investor concerns, reported Jeffrey Kleintop of Schwab.
 
The trade relationship between the United States and China, however, remains an itchy rash marring the outlook for economic growth in both countries. The Economist Intelligence Unitreported:
 
"Since the start of 2018 trade policy has become the biggest risk to The Economist Intelligence Unit's central forecast for global economic growth. We now expect this risk to materialize in the form of a bilateral trade war between the United States and China, with negative consequences for global growth...The trade war comes at a challenging time for the Chinese economy...The trade war will also affect the U.S. economy...the escalating trade dispute with China will start to weigh on growth later in 2018 and into 2019 - we now expect growth to slow in 2019 to 2.2 percent (2.5 percent previously). The U.S. manufacturing and agricultural sectors, in particular, will be hit by the trade dispute, and rising interest rates will cause private consumption to slow."
 
China's economic growth slowed during the third quarter. The nation experienced its slowest growth since 2009, reported Reuters.
 
Chinese stock markets generally lost value. However, some Chinese indices performed better than others, depending on the type of stocks included in the index. For example, the MSCI China Index, which measures large- and mid-cap stocks of various share types that trade on the mainland and in Hong Kong, was down 8.45 percent during the quarter.
 
In contrast, the MSCI Red Chip Index, which is comprised of stocks that are incorporated outside of China, trade on the Hong Kong exchange, and are usually controlled by the state or a province or municipality, was up 3.25 percent for the quarter and flat year-to-date.
 
Emerging markets were weak performers overall during the third quarter, but there were bright spots. Schroders explained, "Turkey was the weakest index market amid a sharp sell-off in the lira...By contrast, Thailand recorded a strong gain and was the best performing index, with energy stocks among the strongest names. Mexico outperformed as the market rallied following general elections and an agreement with the United States on NAFTA renegotiation. Taiwan, where semiconductor stocks supported performance, also outperformed. Despite ongoing risk of new U.S. sanctions, Russian equities also finished ahead of the benchmark, benefiting from crude oil price strength."
 
Political strife continued to hamper the European Union and the United Kingdom during the third quarter. Overall company profits weren't particularly impressive in the region and neither was economic growth, reported BlackRock.
 
As the third quarter came to a close, Barron's conducted its Fall Big Money Poll. Vito Racanelli reported almost two-thirds of professional money managers from across the country said the U.S. stock market was fairly valued - and that was before the market slid lower early in the fourth quarter. While the money managers' assessment doesn't mean all U.S. stocks are fairly valued, there may be opportunities to invest in sound companies at attractive prices.
 
Trade tensions, inflation trends, and central bank monetary policy are likely to affect the performance of markets during the remainder of 2018 and into next year.
 

Data as of 10/19/18
1-Week
Y-T-D
1-Year
3-Year
5-Year
10-Year
Standard & Poor's 500 (Domestic Stocks)
0.0%
3.5%
8.0%
10.8%
9.7%
10.9%
Dow Jones Global ex-U.S.
-0.3
-11.4
-8.7
2.8
-0.1
4.3
10-year Treasury Note (Yield Only)
3.2
NA
2.3
2.0
2.6
3.9
Gold (per ounce)
0.7
-5.3
-4.6
1.5
-1.4
4.4
Bloomberg Commodity Index
-0.3
-2.5
0.7
-1.0
-7.7
-4.7
DJ Equity All REIT Total Return Index
3.1
-0.9
0.1
5.6
8.0
11.3
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; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron's, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
 
NEW TREND: PETS AND FINANCIAL PLANNING. Animals have played important roles in human lives for centuries. They provide companionship, comic relief, work assistance, transportation, reassurance, protection, and food.
 
Today, emotional-support and service animals may be found in workplaces, beauty salons, cafes, theatres, airplanes, and many other places where our parents or grandparents would have been surprised to find them. Landlords charge pet rent, and some service animals qualify as a medical expense under Internal Revenue Service rules.
 
It is also becoming more and more common for pet owners to include pets in their financial planning goals. While you cannot leave your pet property, you can make arrangements to have your pet cared for after you are gone.
 
Last week, The Economist reported, "Two-thirds of all horse owners in America have made some provision in their wills for their pets, according to a survey by the American Pet Products Association. Over a third of American pet owners say they would pay for animal-related expenses by putting less into their retirement accounts. And, three-quarters of those buying a home said they would turn down an otherwise ideal property if it did not meet their animal's needs." In addition, pets can become beneficiaries of trusts.
 
Whether you think the idea of providing financial support for pets is silly or you wholeheartedly embrace it, the role of animals in the lives of many Americans is changing.
 
Weekly Focus - Think About It
 
"Animals are such agreeable friends - they ask no questions; they pass no criticisms."
--George Eliot (a.k.a. Mary Anne Evans), English Novelist
 
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 15, 2018)

Weekly Market Commentary (October 15, 2018)
 
 
The Markets
 
Like an unexpected gust of wind that blows the hat off your head or flips your umbrella inside out, last week's stock market performance startled investors.
 
Looking back, it's easy to identify some of the factors that may have contributed to investors' unease and shaken confidence in the markets. Ben Levisohn of Barron's offered a brief rundown that included:
 
  • The yield on 10-year Treasuries rising to a seven-year high. As interest rates move higher, bonds become more attractive to investors who prefer to take less risk. They move money from stocks into bonds and that can push stock prices lower.
  • Federal Reserve Chairman Jerome Powell suggesting the Fed funds target rate could move higher. Investors worry the Federal Reserve is too hawkish and will raise rates too high, too quickly, causing economic growth to stumble.
  • A speech by Vice President Mike Pence indicating tensions with China may persist.Companies that export to China or manufacture goods in China are at risk if relations between China and the United States don't improve. Poor relations could affect profits, share values, and economic growth.
  • Earnings reports showing tariffs negatively affecting some companies' profit margins. FactSet reported, "the term 'tariff' has been mentioned during the earnings calls of 12 S&P 500 companies to date, with six of these 12 companies citing a negative impact linked to tariffs."
  • The International Monetary Fund (IMF) lowering its economic growth projections.Concern about the impact of trade tensions on companies around the world led the IMF to lower some of its economic growth estimates for 2018, especially in Asia and emerging markets.
 
Some analysts believe a desire to take profits also helped fuel the downturn, according to Barron's Randall W. Forsyth.
 
Whatever combination of events was responsible, the result was markets losing value on Wednesday and Thursday of last week before regaining some lost ground on Friday. Forsyth wrote, "What turned the U.S. markets around Friday - when the Dow and the S&P 500 managed to pop more than 1 percent and the NASDAQ Composite bounced over 2 percent - wasn't much clearer than what set off the slide. Market Semiotics' Woody Dorsey says that his proprietary sentiment polling found a bullish reading of absolute zero on Thursday, a contrarian indication that "panic" would be short-lived."
 
While sharp drops in share values are never comfortable, it's important to consider the bigger picture. A contributor to Bloomberg Opinion wrote, "This decline follows a market that has tripled since 2009, had zero volatility in 2017...This was the 20th time since the bear market ended in 2009 that the Standard & Poor's 500 Index had a one-day loss of 3 percent. The NASDAQ-100 Index had its eighth 4 percent down day (although it was the biggest one-day fall since August 2011)."
 
In other words, selloffs are normal and we have experienced them before.
 
So, what should you take away from last week?
 
  1. First, it was a reminder that stocks are volatile investments. They have the potential to deliver higher returns than other asset classes because they require investors to take higher levels of risk.
 
  1. Second, stock market volatility is one reason we allocate assets and build well-diversified portfolios. Holding different asset classes and diverse investments within a portfolio can help reduce the sting of unwelcome surprises like a sharp drop in the value of stocks.
 
  1. Worries about what the future may hold are likely to ruffle investors and we may see additional bouts of market volatility. The current bull market has been running for a long time. Some analysts anticipate recession and a bear market are ahead. As Barron'sreported, neither appears to be here yet:
 
"Other leading indicators, including jobless claims and credit spreads, also held up. 'I don't see this all leading to recession,' says Ed Yardeni, president of Yardeni Research. 'And, without a recession, I don't think we get a bear market.'"
 
No matter how intellectually rational these points seem, downturns tend to leave everyone feeling jittery and uncertain. So, take a moment. Think about your portfolio and how it was built to help you achieve your financial goals. Now, ask yourself:
 
  • Have my goals changed?
 
  • Has my risk tolerance changed?
 
If the answer to either of these questions is, 'Yes,' call us. We'll sit down, review your goals and risk tolerance, and make sure your portfolio is structured appropriately.
 
We're hoping for calmer markets ahead, but we may be in for a bumpy ride.
 

Data as of 10/12/18
1-Week
Y-T-D
1-Year
3-Year
5-Year
10-Year
Standard & Poor's 500 (Domestic Stocks)
-4.1%
3.5%
8.5%
11.1%
10.1%
10.7%
Dow Jones Global ex-U.S.
-3.6
-11.1
-8.3
3.0
0.5
4.3
10-year Treasury Note (Yield Only)
3.1
NA
2.3
2.1
2.7
3.9
Gold (per ounce)
1.3
-5.9
-5.5
1.6
-1.0
3.9
Bloomberg Commodity Index
-0.8
-2.2
1.3
-1.4
-7.6
-5.1
DJ Equity All REIT Total Return Index
-3.0
-3.8
-3.4
5.2
7.8
9.2
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron's, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
 
ON A LIGHTER NOTE...It's important to recognize when daily challenges affect our ability to cope and take steps to lower stress when they do. The Mayo Clinic recommends laughter, "Whether you're guffawing at a sitcom on TV or quietly giggling at a newspaper cartoon, laughing does you good. Laughter is a great form of stress relief, and that's no joke."
 
In the hope of offsetting some of last week's stress, here is humor from F In Exams: The Very Best Totally Wrong Test Answers by Richard Benson:
 
Question: What is a vibration?
Answer: There are good vibrations and bad vibrations. Good vibrations were discovered in the 1960s.
 
Question: What happens when your body starts to age?
Answer: When you get old your organs work less effectively and you can become intercontinental.
 
Question: What is a fibula?
Answer: A little lie.
 
Question: Give three ways to reduce heat loss in your home.
Answer: 1) Thermal underwear; 2) Move to Hawaii; 3) Close the door.
 
Question: You are at a friend's party. Six cupcakes are distributed among nine plates, and there is no more than one cake per plate. What is the probability of receiving a plate with a cake on it?
Answer: None, if my sister is invited too.
 
Question: Explain the dispersal of various farming types in the Midwest.
Answer: The cows and pigs are distributed in different fields so they don't eat each other.
 
Question: Name six animals that live specifically in the Arctic.
Answer: Two polar bears Three Four seals
 
Sometimes, laughter is truly the best medicine.
 
Weekly Focus - Think About It
 
"In the business world, the rearview mirror is always clearer than the windshield."
--Warren Buffett, American businessman, speaker, and philanthropist
 
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 1, 2018)

Weekly Market Commentary (October 1, 2018)
 
 The Markets
 
It wasn't headline news...
 
But, if newsprint was still popular, last week's key economic news would have appeared below the fold.
 
The Federal Reserve raised rates for the third time in 2018, as expected. In addition, the Federal Open Market Committee projects economic growth will continue for three more years, although its median numbers show growth slowing from 3.1 percent in 2018 to 1.8 percent in 2021. (Remember, forecasts, no matter how venerable the source, are best guesses and not bedrock.)
 
Investors weren't enthusiastic about the Fed's actions or its expectations, and the onset of United States-China tariffs didn't lift their spirits. Ben Levisohn of Barron's explained:
 
"The Dow Jones Industrial Average dropped 285.19 points, or 1.1 percent, to 26,458.31 on the week, while the S&P 500 fell 0.5 percent to 2913.98. Neither could be considered life threatening, and the S&P 500 still rose for a sixth consecutive month. So, while we need something to blame, we needn't get too worried. Last Monday kicked off with the implementation of tariffs by the United States and China and continued with a Federal Reserve rate hike. Neither was a surprise, though the Fed might have caught a few napping when it removed the word 'accommodative' from its statement."
 
What does it mean when the Federal Reserve removes the word 'accommodative?'
 
The Fed pursues 'accommodative' or 'easy' monetary policy when it is encouraging economic growth. Accommodative policy may include lowering interest rates or, in unusual circumstances, quantitative easing.
 
By removing the word, the Fed may be signaling that policy will be 'tightening' in an effort to prevent the economy from overheating, reported Sam Fleming of Financial Times. There is debate about whether rates are at a neutral level; one that won't cause the economy to run too hot or too cold.
 
Let's hope for a Goldilocks economy.
 

Data as of 9/28/18
1-Week
Y-T-D
1-Year
3-Year
5-Year
10-Year
Standard & Poor's 500 (Domestic Stocks)
-0.5%
9.0%
16.1%
15.7%
11.6%
10.2%
Dow Jones Global ex-U.S.
-0.9
-5.2
0.1
8.0
2.1
2.9
10-year Treasury Note (Yield Only)
3.1
NA
2.3
2.1
2.6
3.6
Gold (per ounce)
-1.0
-8.4
-7.5
1.6
-2.2
2.8
Bloomberg Commodity Index
1.0
-3.4
0.7
-0.8
-7.7
-6.5
DJ Equity All REIT Total Return Index
-1.1
2.1
4.7
9.8
9.7
8.4
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron's, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
 
WHEN DO YOU BEHAVE THE MOST LIKE YOURSELF? Don't worry. This isn't about soul-searching and trying to find answers to existential questions like, 'Who am I?' or 'What is my purpose?' or 'How should I live my life?'
 
Nope. This is about a science experiment!
 
Ian Krajbich of Ohio State University and Fadong Chen of Zhejiang University in China wanted to better understand how people made social decisions, according to a paper they published in Nature Communications. They began with the premise that "Social decisions typically involve conflicts between selfishness and pro-sociality."
 
Then, they asked 200 students in the United States and Germany to play "mini-dictator games in which subjects make binary decisions about how to allocate money between themselves and another participant."
 
Science Daily explained, "In some cases, participants had to decide within two seconds how they would share their money as opposed to other cases, when they were forced to wait at least 10 seconds before deciding. And, in additional scenarios, they were free to choose at their own pace, which was usually more than two seconds but less than 10."
 
The upshot was people who were pro-social became more pro-social, and people with more selfish instincts became more selfish, under severe time constraints. Given more time, "pro-social subjects became marginally less pro-social under time delay...while selfish subjects became less selfish under time delay...though these effects are less pronounced."
 
Maybe you behave most like you when you're pressed for time.
 
Weekly Focus - Think About It
 
"Selfishness is not living as one wishes to live, it is asking others to live as one wishes to live."
--Oscar Wilde, Irish poet and playwright
 
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 24, 2018)

Weekly Market Commentary (September 24, 2018)
 
The Markets
  
Did you hear the news?
 
A tech company introduced a microwave you can turn on using Wi-Fi - as long as you have one of the company's voice assistants at home, reported Kaitlyn Tiffany of Vox. Soon, the voice assistants will be built with neural networks that will formulate hunches about whether their owners might like to be reminded to lock the door or turn off a device.
 
Some people love the idea. Others don't.
 
Internet-enabled appliances weren't the only show in town last week. The strong performance of the U.S. economy earned a standing ovation from investors who pushed the Dow Jones Industrial Index and the Standard & Poor's 500 Index to new highs. Many global stock markets moved higher, too. Ben Levisohn of Barron's reported:
 
"One need only look overseas for a sign that investors are feeling better about the state of the world - or at least better enough to do some bargain-hunting. China's Shanghai Composite rose 4.3 percent this past week, though it is still down 21 percent from its January high..."
 
The news in a FactSet Insight written by John Butters may dampen some investors' enthusiasm.
 
With the third quarter earnings season ahead, Butters reported 98 of the companies in the Standard & Poor's 500 Index have issued guidance. The majority (76 percent) issued negative guidance, meaning they anticipate earnings will be lower than analysts' mean earnings per share estimates.
 
It's important to remember that, historically, the U.S. economy has moved in cycles. We may be in the latter stages of this expansion. The next stage is contraction and no one can predict exactly when it may occur.
 

Data as of 9/21/18
1-Week
Y-T-D
1-Year
3-Year
5-Year
10-Year
Standard & Poor's 500 (Domestic Stocks)
0.9%
9.6%
17.2%
14.2%
11.5%
9.3%
Dow Jones Global ex-U.S.
2.7
-4.3
0.0
6.8
2.1
2.0
10-year Treasury Note (Yield Only)
3.1
NA
2.3
2.2
2.7
3.8
Gold (per ounce)
-0.3
-7.5
-7.2
1.9
-2.0
3.0
Bloomberg Commodity Index
2.4
-4.3
-0.5
-1.6
-7.9
-7.4
DJ Equity All REIT Total Return Index
-0.4
3.2
5.8
9.2
9.7
8.2
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron's, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
 
MILLENNIALS DON'T EXIST! Gen Xers and the Silent Generation get a lot less press than Millennials, but all three generations have one thing in common. According to comedian Adam Conover, "Generations in general don't exist. They're not real things that exist in nature. We made them up...Here's what really exists: People who are alive at the same time."
 
He may have a point.
 
The only generation that has been recognized officially by the U.S. government is the Baby Boom generation. At least, that's what a U.S. Census Bureau spokesperson told Philip Bump of The Atlantic. The Baby Boom generation was recognized because its members were part of a demographic event. Encyclopedia Britannica explainedthe baby boom as:
 
"...the U.S. increase in the birth rate between 1946 and 1964; also, the generation born in the U.S. during that period. The hardships and uncertainties of the Great Depression and World War II led many unmarried couples to delay marriage and many married couples to delay having children. The war's end, followed by a sustained period of economic prosperity (the 1950s and early 1960s), was accompanied by a surge in population. The sheer size of the baby-boom generation (some 75 million) magnified its impact on society..."
 
So, where did other generations originate?
 
Sarah Laskow of The Atlantic reported, until the 19th century, generations were thought of as biological relationships within families. For example, grandparents would be one generation, their children the next, and their grandchildren the next, and so on.
 
The idea of societal generations - people who live at the same time and experience the same things - came from European intellectuals in the 1800s and early 1900s who advised, "people do not react to their particular historical conundrums as a monolithic group."
 
Every person is unique and individual.
 
Weekly Focus - Think About It
 
"The power of youth is the common wealth for the entire world. The faces of young people are the faces of our past, our present, and our future. No segment in the society can match with the power, idealism, enthusiasm, and courage of the young people."
--Kailash Satyarthi, Nobel Prize winner and activist
 
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 17, 2018)

Weekly Market Commentary (September 17, 2018)
 
The Markets
 
All investors are consumers, but not all consumers are investors.
 
The September installment of University of Michigan's Consumer Sentiment Survey reported Americans are feeling pretty optimistic. Consumer sentiment rose to the second highest level since 2004, and consumer expectations reached the highest level since 2004. Surveys of Consumers chief economist, Richard Curtin, wrote:
 
"Consumers anticipated continued growth in the economy that would produce more jobs and an even lower unemployment rate during the year ahead...The largest problem cited on the economic horizon involved the anticipated negative impact from tariffs. Concerns about the negative impact of tariffs on the domestic economy were spontaneously mentioned by nearly one-third of all consumers in the past three months, up from one-in-five in the prior four months."
 
Investors weren't as optimistic, according to the American Association of Individual Investors(AAII). Last week, the AAII Investor Sentiment Survey reported bullish sentiment dropped more than 10 percentage points. The results were:
 
  • Bullish            32.1 percent of respondents (historic average: 38.5 percent)
  • Neutral                        35.1 percent of respondents (historic average: 31.0 percent)
  • Bearish            32.8 percent of respondents (historic average: 30.5 percent)
 
Despite the apparent shift in investor attitudes, stock markets moved higher last week. Vito J. Racanelli of Barron's wrote:
 
"The stock market radiated confidence this past week, finishing about 1 percent higher despite choppy action. There was a plethora of good economic news - from lower-than-expected inflation to sky-high business and consumer confidence numbers - that drove shares up. Not even a ratcheting up of tough tariff talk Friday on the part of the U.S. could dampen investor enthusiasm for long."
 
Some believe the AAII Sentiment Survey is a contrarian indicator. Last week, that may have been the case.
 

Data as of 9/14/18
1-Week
Y-T-D
1-Year
3-Year
5-Year
10-Year
Standard & Poor's 500 (Domestic Stocks)
1.2%
8.7%
16.4%
14.2%
11.3%
9.3%
Dow Jones Global ex-U.S.
1.4
-6.8
-2.3
5.9
1.8
2.1
10-year Treasury Note (Yield Only)
3.0
NA
2.2
2.2
2.9
3.5
Gold (per ounce)
0.3
-7.3
-9.3
2.9
-1.9
4.5
Bloomberg Commodity Index
-3.3
-6.5
-3.1
-2.4
-8.6
-7.1
DJ Equity All REIT Total Return Index
0.2
3.6
4.5
10.7
9.9
8.6
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron's, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
 
WORDIES UNITE! The Merriam Webster Dictionary added some new words during 2018. A favorite among fans of dictionaries is 'wordie,' which means 'word lover' and should not be confused with 'wordy,' which describes something with too many words. Dictionary newcomer 'TL;DR' (the new word that means 'too long; didn't read') could be used to describe a reader's response to something that's wordy.
 
A few of the new additions are descriptions of dog breeds, including:
 
  • Chiweenie: a cross between a Chihuahua and a dachshund
  • Schnoodle: a cross between a schnauzer and a poodle
  • Yorkie-poo: a cross between a Yorkshire terrier and a poodle
 
A number of 'wanderworts' - words that have wandered from one language into another - also made the list. These include:
 
  • Harissa: spicy North African chili paste
  • Kabocha: a type of Japanese pumpkin
  • Kombucha: a fermented, bubbly tea drink
 
Many of the new entries are abbreviated versions of longer words that have been part of our vocabulary for a long time. This may be the inevitable outcome in a society that adapts to the communication shorthand demanded by text, photo, and social media apps. See if you can guess the longer version of these new words:
 
  • Adorbs
  • Avo
  • Bougie
  • Fave
  • Guac
  • Marg
  • Ribbie
  • Zuke
 
If you get stumped, give us a call.
 
Weekly Focus - Think About It
 
"Language is the road map of a culture. It tells you where its people come from and where they are going."
--Rita Mae Brown, 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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