Calm before the storm.....?
Submitted by Oram & Kaylor on May 15th, 2017Trying to accurately predict the movement of the financial markets is akin to predicting the weather. No one really knows, and we have to wait to see what actually happens.
Sorry this update is a little late this week. The delay was caused by my website provider migrating to new servers.
MARKET UPDATE
Market Index Returns as of 11/12/211 |
WTD |
QTD |
YTD |
1 YR |
3 YR |
5 YR |
S&P 500 |
-0.27% |
8.88% |
26.21% |
34.32% |
21.92% |
18.89% |
NASDAQ |
-0.68% |
9.84% |
23.75% |
36.36% |
31.28% |
26.03% |
Dow Jones Industrial Average |
-0.56% |
6.83% |
19.79% |
26.50% |
14.95% |
16.48% |
Russell Mid-Cap |
0.38% |
8.46% |
24.91% |
37.30% |
20.43% |
16.53% |
Russell 2000 (Small Cap) |
-1.00% |
9.52% |
23.11% |
42.58% |
18.18% |
14.95% |
MSCI EAFE (International) |
-0.34% |
3.78% |
12.45% |
20.81% |
11.91% |
10.40% |
MSCI Emerging Markets |
1.71% |
2.68% |
1.40% |
10.98% |
12.50% |
11.16% |
Bloomberg Barclays US Agg Bond |
-0.75% |
-0.14% |
-1.69% |
-0.93% |
5.59% |
3.35% |
Bloomberg Barclays High Yield Corp. |
-0.25% |
0.19% |
4.73% |
8.11% |
7.45% |
6.67% |
Bloomberg Barclays Global Agg |
-0.82% |
-0.37% |
-4.42% |
-2.03% |
4.60% |
2.82% |
OBSERVATIONS
BOND BULL RUN – Just over 40 years ago (9/30/1981), the yield on the 10-year US Treasury note closed at an all-time peak of 15.84%. The yield on the 10-year Treasury note closed on 11/12/21 at 1.583%. The all-time low closing yield on the 10-year Treasury note was 0.501% set on 3/09/20 (source: Treasury Department).
FIRST YEAR IN OFFICE - The first calendar year of the 8-years that Barack Obama was president (2009) produced a S&P 500 gain of +26.5% (total return). The first calendar year of the 4-years that Donald Trump was president (2017) produced a S&P 500 gain of +21.8% (total return). The first calendar year of the Joe Biden presidency has produced a S&P 500 gain of +26.2% YTD (total return) with 7 weeks to go in the year. The S&P 500 consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market value weighted index with each stock's weight in the index proportionate to its market value (source: BTN Research).
NOT BABIES ANYMORE - “Baby Boomers” are the 78 million Americans born between 1946-1964, i.e., the last of the “boomers” will turn 65 years old in 2029. By 2030, an estimated 9.5% of the US civilian labor force will be individuals at least age 65 years old, up from 6.6% today (source: Bureau of Labor Statistics).
Reprinted with permission from BTN. Copyright © 2021 Michael A. Higley.
Economic Definitions
The Federal Reserve System: The central bank of the United States. It performs several general functions to promote the effective operation of the U.S. economy and, more generally, the public interest.
Producer Prices - PPI (headline and core): Producer prices (output) are a measure of the change in the price of goods as they leave their place of production (i.e. prices received by domestic producers for their outputs either on the domestic or foreign market).
CPI (headline and core): Consumer prices (CPI) are a measure of prices paid by consumers for a market basket of consumer goods and services. The yearly (or monthly) growth rates represent the inflation rate.
University of Michigan Consumer Sentiment Index: Consumer confidence tracks sentiment among households or consumers. The results are based on surveys conducted among a random sample of households. Target Audience: representative sample of US households (excluding Alaska and Hawaii). Surveys of Consumers collects data on consumer attitudes and expectations summarized in the Consumer Sentiment, in order to determine the changes in consumers' willingness to buy and to predict their subsequent discretionary expenditures. This Index is comprised of measures of attitudes toward personal finances, general business conditions, and market conditions or prices. Components of the Index of Consumer Sentiment are included in the Leading Indicator Composite Index. Unit: Index (Q1 1966=100)
Retail Sales: Retail sales (also referred to as retail trade) tracks the resale of new and used goods to the general public, for personal or household consumption. This concept is based on the value of goods sold.
Building Permits: This concept tracks the number of permits that have been issued for new construction, additions to pre-existing structures or major renovations. These statistics are based on the number of construction permits approved.
Housing Starts: Housing (or building) starts track the number of new housing units (or buildings) that have been started during the reference period.
Index Definitions
S&P 500: The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities and serves as the foundation for a wide range of investment products. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.
NASDAQ: The NASDAQ Composite Index is a broad-based capitalization-weighted index of stocks in all three NASDAQ tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of February 5, 1971.
Dow Jones Industrial Average: The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928.
Russell Mid-Cap: Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 25% of the total market capitalization of the Russell 1000 Index.
Russell 2000: The Russell 2000 Index is comprised of the smallest 2000 companies in the Russell 3000 Index, representing approximately 8% of the Russell 3000 total market capitalization. The real-time value is calculated with a base value of 135.00 as
of December 31, 1986. The end-of-day value is calculated with a base value of 100.00 as of December 29, 1978.
MSCI EAFE: The MSCI EAFE Index is a free-float weighted equity index. The index was developed with a base value of 100 as of December 31, 1969. The MSCI EAFE region covers DM countries in Europe, Australasia, Israel, and the Far East.
MSCI EM: The MSCI EM (Emerging Markets) Index is a free-float weighted equity index that captures large and mid-cap representation across Emerging Markets (EM) countries. The index covers approximately 85% of the free float-adjusted market capitalization in each country.
Bloomberg Barclays US Agg Bond: The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate pass-throughs), ABS and CMBS (agency and non-agency).
Bloomberg Barclays High Yield Corp: The Bloomberg Barclays US Corporate High Yield Bond Index measures the USD-denominated, high yield, fixed-rate corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch and S&P is Ba1/BB+/BB+ or below. Bonds from issuers with an emerging markets country of risk, based on Barclays EM country definition,
are excluded.
Bloomberg Barclays Global Agg: The Bloomberg Barclays Global Aggregate Index is a flagship measure of global investment grade debt from twenty-four local currency markets. This multi-currency benchmark includes treasury, government-related, corporate and securitized fixed-rate bonds from both developed and emerging markets issuers.
Disclosures
Index performance does not reflect the deduction of any fees and expenses, and if deducted, performance would be reduced. Indexes are unmanaged and investors are not able to invest directly into any index. Past performance cannot guarantee future results.
Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect again loss. In general, the bond market is volatile; bond prices rise when interest rates fall and vice versa. This effect is usually pronounced for longer-term securities. Any fixed-income security sold or redeemed prior to maturity may be subject to a substantial gain or loss. Vehicles that invest in lower-rated debt securities (commonly referred to as junk bonds or high-yield bonds) involve additional risks because of the lower credit quality of the securities in the portfolio. International investing involves special risks do not present with U.S. investments due to factors such as increased volatility, currency fluctuation, and differences in auditing and other financial standards. These risks can be accentuated in emerging markets.
The statements provided herein are based solely on the opinions of the Advisor Group Research Team and are being provided for general information purposes only. Neither the information nor any opinion expressed constitutes an offer or a solicitation to buy or sell any securities or other financial instruments. Any opinions provided herein should not be relied upon for investment decisions and may differ from those of other departments or divisions of Advisor Group or its affiliates.
Certain information may be based on information received from sources the Advisor Group Research Team considers reliable; however, the accuracy and completeness of such information cannot be guaranteed. Certain statements contained herein may constitute “projections,” “forecasts” and other “forward-looking statements” which do not reflect actual results and are based primarily upon applying retroactively a hypothetical set of assumptions to certain historical financial information. Any opinions, projections, forecasts and forward-looking statements presented herein reflect the judgment of the Advisor Group Research Team only as of the date of this document and are subject to change without notice. Advisor Group has no obligation to provide updates or changes to these opinions, projections, forecasts and forward-looking statements. Advisor Group is not soliciting or recommending any action based on any information in this document.
Securities and investment advisory services are offered through the firms: FSC Securities Corporation, Royal Alliance Associates, Inc., SagePoint Financial, Inc., Triad Advisors, LLC, and Woodbury Financial Services, Inc., broker-dealers, registered investment advisers, and members of FINRA and SIPC. Securities are offered through Securities America, Inc., a broker-dealer and member of FINRA and SIPC. Advisory services are offered through Arbor Point Advisors, LLC, Ladenburg Thalmann Asset Management, Inc., Securities America Advisors, Inc., and Triad Hybrid Solutions, LLC, registered investment advisers. Advisory programs offered by FSC Securities Corporation, Royal Alliance Associates, Inc., SagePoint Financial, Inc., and Woodbury Financial Services, Inc., are sponsored by VISION2020 Wealth Management Corp., an affiliated registered investment adviser. Advisor Group, Inc. is an affiliate of these firms. [3915553]
[1] Data obtained from Bloomberg as of 11/12/2021