Deal or no deal?
Last week opened with heightened trade tensions between the United States and its allies. It closed with the United States imposing new tariffs on $50 billion of Chinese goods. The Chinese declared it was the start of a trade war, reported Financial Times.
U.S. markets largely ignored the potential impact of trade wars on multiple fronts. Barron’s reported the Dow Jones Industrial Average, which includes companies that are vulnerable to tariffs, moved slightly lower. However, the Standard & Poor’s 500 Index shrugged off the possibility of trade wars, and the NASDAQ Composite gained more than 1 percent.
While Barron’s has written the largest risk to the U.S. stock market is the possibility of global trade wars, it appears many investors believe tariffs are a negotiating tactic. Barron’s reported:
“The market’s apparent indifference suggests it doesn’t see these tariffs as the reincarnation of Smoot-Hawley, but just the latest in President Trump’s negotiating tactics. Moving away from his denunciation of Kim Jong-un as “Little Rocket Man” inviting “fire and fury” by missile launches, Trump last week declared the threat from North Korea neutralized. Similarly, many professional investors view the bluster on tariffs as part of Trump’s negotiating tactics, rather than the start of an actual trade war.”
News that monetary policy is becoming less accommodating in certain regions of the world didn’t have much impact on markets either. Reuters reported the Federal Reserve raised its benchmark rate 0.25 percent last week. The European Central Bank is ending its bond-buying program and gave notice it expects to begin raising rates next summer. The Bank of Japan is still easing.
There was a lot of red ink in Asian emerging markets. China’s Shanghai Composite finished the week lower, as well. However, stock markets in Canada and Mexico finished the week higher.
|Data as of 6/15/18||1-Week||Y-T-D||1-Year||3-Year||5-Year||10-Year|
|Standard & Poor’s 500 (Domestic Stocks)||0.0%||4.0%||14.3%||10.1%||11.1%||7.4%|
|Dow Jones Global ex-U.S.||-1.0||-2.6||8.3||3.4||3.8||0.4|
|10-year Treasury Note (Yield Only)||2.9||NA||2.2||2.4||2.2||4.2|
|Gold (per ounce)||-1.0||-0.9||2.5||2.9||-1.5||3.8|
|Bloomberg Commodity Index||-2.5||-0.5||8.4||-4.4||-7.7||-9.1|
|DJ Equity All REIT Total Return Index||-0.7||-2.0||0.3||7.5||7.9||6.9|
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; 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.
sorry America, you’re not in the tournament. If you’ve been watching the World Cup – the global soccer championship – you’ve probably seen the commercials entreating Americans to root for another country since we don’t have a team playing. The ads offer encouragements like, “Iceland could really use your support. We don’t have enough people to do the wave,” and “Cheer for Germany. We gave you the frankfurter!”
If you haven’t already chosen a favorite team, you may want to consider (or not) the insight of economists before making your choice. Since the demise of Paul, the octopus that successfully predicted winners during the 2010 final, various firms’ economists have offered opinions about this year’s possible winner. Financial Times reported:
- Multinational analysts at a Japanese bank concluded “…using portfolio theory and the efficient-markets hypothesis as well as data on the value, form, and historical performance of players, that France will beat Spain in the final, with Brazil in third place.”
- A German bank predicted Germany will win, and so did a Swiss bank that relied on unspecified econometric tools to determine that Germans have a 24 percent chance of victory.
- A Dutch bank concluded Spain will be the big winner.
Perhaps the most interesting analysis was done by the Toulouse School of Economics, which employed automated face-reading software on World Cup sticker albums from the 1970s through the present. They found teams that did better in the group stage had players who looked happier or angrier on the stickers. Happiness showed confidence and anger led to fewer goals allowed.
Weekly Focus – Think About It
“Winning is great, sure, but if you are really going to do something in life, the secret is learning how to lose. Nobody goes undefeated all the time. If you can pick up after a crushing defeat, and go on to win again, you are going to be a champion someday.”
–Wilma Rudolph, American sprinter and Olympic champion
Value vs. Growth Investing (6/15/18)
|US Large Cap||0.04||5.28||2.78||1.60||17.16||12.65||13.76|
|US Large Core||-0.27||0.58||1.48||-0.22||10.28||11.51||12.85|
|US Large Growth||1.10||15.23||5.38||4.74||29.56||16.11||17.96|
|US Large Val||-0.86||-0.85||0.88||-0.80||10.65||9.86||10.16|
|US Mid Cap||0.48||5.20||3.44||2.73||15.95||10.74||13.22|
|US Mid Core||0.06||1.63||3.02||1.22||12.04||8.97||12.58|
|US Mid Growth||1.43||12.04||5.52||4.73||24.48||11.67||14.01|
|US Mid Val||-0.17||1.89||1.61||2.12||11.19||11.42||12.97|
|US Small Cap||0.36||7.45||4.57||6.18||18.19||10.55||12.48|
|US Small Core||-0.18||5.48||3.96||5.36||14.77||9.78||12.17|
|US Small Growth||1.82||14.47||5.57||7.25||28.27||12.75||14.32|
|US Small Val||-0.67||2.58||4.12||5.87||11.79||8.94||10.83|
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This is an incredible #Fact” In 2016, roughly 12.8% of the American population was disabled. And roughly half of those people were working age. Do you have disability insurance and if you do is it enough? If not contact my office. #disabilityinsurance
Here is a story you may have seen before in this column:
“barrel of bricks”
Consider this humorous accident report from someone who should have considered disability insurance sooner.
I am writing in response to your request for additional information on my accident report. In block number three of the accident reporting form I wrote, “Trying to do the job alone,” as the cause of my accident. You said in your letter that I should explain more fully and I trust the following details will be sufficient.
I am a bricklayer by trade. On the day of the accident I was working alone on the roof of a new six-story building. When I completed my work I discovered that I had about 500 pounds of brick left over. Rather than carry the bricks down by hand, I decided to lower them in a barrel by using a pulley, which fortunately was attached to the side of the building at the sixth floor.
Securing the rope at ground level, I went up to the roof, swung the barrel out, and loaded the bricks into it. Then I went back to the ground level and untied the rope, holding tightly to it to ensure a slow decent of the 500 pounds of brick. You will note in block eleven of the accident report that I weigh 135 pounds.
Due to my surprise at being jerked off the ground so suddenly, I lost my presence of mind and forgot to let go of the rope. Needless to say, I proceeded at a rather rapid rate up the side of the building.
In the vicinity of the third floor I met the barrel coming down. This explains the fractured skull and broken collarbone.
Slowing down slightly, I continued my rapid ascent, not stopping until the fingers of my right hand were two knuckles deep into the pulley. Fortunately, by this time I had regained my presence of mind and was able to hold tightly to the rope in spite of my pain.
At approximately the same time, however, the barrel of bricks hit the ground and the bottom fell out of the barrel. Devoid of the weight of the bricks, the barrel now weighed approximately 50 pounds. I refer you again to my weight in block eleven. As you might imagine, I began a rapid decent down the side of the building. In the vicinity of the third floor I met the barrel coming up. This accounts for the two fractured ankles and the lacerations of my legs and lower body.
The encounter with the barrel slowed me enough to lessen my injuries when I fell onto a pile of bricks and, fortunately, only three vertebrae were cracked.
I am sorry to report, however, that as I lay there on the bricks in pain, unable to stand, and watching the empty barrel six stories above me I again lost my presence of mind. I let go of the rope.
Moral of this tale: #It doesn’t pay to try to do the job alone.
Give our office a call at 215-886-2122 for more information or a second opinion quote.
Michael L. Schwartz, RFC®, CWS®, CFS
P.S. Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added.
Michael L. Schwartz, RFC, CWS, CFS, a registered principal offering securities and advisory services through Independent Financial Group, LLC., a registered broker-dealer and investment advisor. Member FINRA-SIPC. Schwartz Financial and Independent Financial Group are unaffiliated entities.
This information is provided for informational purposes only and is not a solicitation or recommendation that any particular investor should purchase or sell any security. The information contained herein is obtained from sources believed to be reliable but its accuracy or completeness is not guaranteed. Any opinions expressed herein are subject to change without notice. An Index is a composite of securities that provides a performance benchmark. Returns are presented for illustrative purposes only and are not intended to project the performance of any specific investment. Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly. Past performance is not a guarantee of future results.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
* The DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.
* 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 London afternoon gold price fix as reported by the London Bullion Market Association.
* The DJ 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.
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