July 29th Market Commentary

July 29, 2019

The Markets

It has been said there are two sides to every story. Just look at world financial markets. Stock markets and bond markets are telling very different stories.

In the United States, stock markets were blue ribbon winners last week.

The Standard & Poor’s 500 Index rebounded to a record high. The Nasdaq Composite also set a new record. Barron’s reported U.S. stock markets were supported by abundant optimism inspired by expectations for solid earnings growth and a Federal Reserve rate cut in July.

Optimism pushed stocks higher in Europe last week, too. CNBC reported investors were receptive to news suggesting the European Central Bank would ease monetary policy to support the European economy. A significant number of national stock indices in Europe, the Middle East, and Asia finished last week higher, according to Barron’s.

Bond markets have been telling a less optimistic story.

In many regions of the world, bond yields have sunk below zero, and bond buyers have been locking in losses by investing in bonds with negative yields.

In the United States, the 10-year Treasury yield remains positive, but it has dropped from 3.2 percent in November 2018 to 2.1 percent at the end of last week.

So, what are bond markets saying? Barron’s suggested some possibilities:

“…bond buyers locking in subzero yields aren’t doing it, of course, for love of losses. They might think that the certainty of small losses will prove a better deal in the years ahead than whatever stocks provide…There’s something else that negative yields could be telling us. Investors need bonds for things like diversification and setting aside money at known rates to offset known liabilities. For an investor who must buy bonds, a purchase here with negative yields isn’t necessarily a bet against stocks. It could just be a wager that bond yields won’t get much better – that slow growth and meager inflation will loom for many years.”

Time will tell.

MUSIC, EARWORMS, AND DATA STORAGE. Anyone who has ever suffered an earworm (known in scientific circles as Involuntary Musical Imagery) understands the power of music. Some tunes that repeatedly pop into people’s heads may include:

• It’s a Small World (Disney)
• Don’t Stop Believing (Journey)
• Who Let the Dogs Out? (Baha Men)
• Silver Bells (Bing Crosby)
• We are the Champions (Queen)

Let’s face it. Music can be potent. In The Power of Music, Elena Mannes writes, “…science today is showing that music is in fact encoded in our bodies and brains.” She discusses research suggesting music may be able to help people heal, change behavior, and treat neurological disorders.

It may be used in other ways, too. Soon, you may experience a new music phenomenon called Imperceptible Audio Communication. That’s when data is secretly coded into music. You won’t be able to hear it, but your smartphone and other devices will.

At the 44th IEEE (Institute of Electrical and Electronics Engineers) International Conference on Acoustics, Speech and Signal Processing, a pair of doctoral students shared their work, which focuses on storing data in music.

Imagine, someday you may be:

• Walking through an airport, not really listening to the piped-in sounds, when your phone picks up a data feed from the music and lets you know your flight is delayed.
• Pushing your cart down a grocery aisle and Muzak® advises your smartphone cauliflower is on sale.
• Checking into a hotel and having the lobby music send the Wi-Fi password and other check-in data directly to your smartphone.
• Dancing in a club and having your smartphone flash a drink special.

The times – they are changing.

Weekly Focus – Think About It

“Any sufficiently advanced technology is indistinguishable from magic.”
--Arthur C. Clarke, British writer and inventor

* These views are those of Carson Coaching, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named broker/dealer.
* 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.
* All indexes referenced are unmanaged. 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 Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* 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.
* Stock investing involves risk including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.

Sources:
https://www.barrons.com/articles/why-some-investors-are-buying-bonds-that-lose-money-51564179385?mod=hp_DAY_2 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/07-29-19_Barrons-Why_Some_Investors_are_Buying_Bonds_that_Lose_Money-Footnote_1.pdf)
https://www.barrons.com/articles/the-s-p-500-hit-a-new-high-because-the-market-still-expects-the-federal-reserve-to-cut-interest-rates-51564195482?mod=hp_DAY_3 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/07-29-19_Barrons_The_S_and_P_Hit_a_New_High_Because_the_Market_Still_Expects_the_Federal_Reserve_to_Cut_Interest_Rates-Footnote_2.pdf)
https://www.cnbc.com/2019/07/26/europe-stock-markets-ecb-holds-interest-rates-and-earnings-in-focus.html
https://www.barrons.com/market-data/stocks/emea?mod=md_usstk_view_emea (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/07-29-19_Barrons-UK_FTSE_100_Stock_Index-Footnote_4.pdf)
https://www.barrons.com/market-data/stocks/asia?mod=md_emeastk_view_asia (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/07-29-19_Barrons-Hong_Kong_Hang_Seng_Stock_Index-Footnote_5.pdf)
https://finance.yahoo.com/quote/%5ETNX/history?p=%5ETNX
https://www.amazon.com/Poamazon%20Power%20of%20Musicwer-Music-Pioneering-Discoveries-Science/dp/0802719961/ref=sr_1_1?keywords=Elena+Mannes+POwer+of&qid=1564244240&s=dmusic&sr=8-1 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/07-29-19_Book_Excerpt-The_Power_of_Music-Footnote_7.pdf)
https://www.sciencedaily.com/releases/2019/07/190709122014.htm
https://www.goodreads.com/quotes/tag/technology

July 22nd Market Commentary

July 22, 2019

The Markets

Did last week mark the start of a new policy for the Federal Reserve?

The U.S. Federal Reserve has a reputation for providing little transparency about the timing and direction of potential rate changes. That reputation was challenged last week.

In back-to-back speeches, two of the three most influential members of the Federal Open Market Committee (FOMC) – Federal Reserve Vice-Chairman Richard Clarida and Fed Bank of New York President John Williams – made a case for lowering the Fed funds rate to support economic growth, reported Financial Times.

When asked about Fed officials’ comments, a currency strategist cited by Financial Times said, “…the communication we received seemed in many ways to be a coordinated attempt to signal the market given its timing and context…”

The magnitude of the change remains a mystery. Barron’s reported debate remains over whether the Fed will cut rates by 0.25 or 0.50 of a percentage point. On Saturday, the CME FedWatch Tool reported a 77.5 percent probability of the former.

There was some positive economic data last week, including an uptick in U.S. consumer spending and positive manufacturing data from the Philadelphia Fed’s July survey, reported Barron’s. However, the Conference Board Leading Economic Index® declined, indicating growth may remain slow during the second half of the year. The index combines 10 individual leading indicators in an effort to reveal patterns in economic data.

The Standard & Poor’s 500 Index was down 1.2 percent last week.

 

HOW HOT WAS IT LAST WEEK? If you were in a region of the United States that didn’t experience some of the hottest and most humid weather in years over the weekend, count your lucky stars.

The Washington Post reported, “The heat wave…comes in the midst of what may turn out to be the hottest month Earth has recorded since instrument records began in the late 19th century…”

So, how hot was it?

It was so hot:

• The National Weather Service staff in Nebraska attempted to bake biscuits inside a car, reported UPI. The biscuits didn’t bake through, but the tops were crispy. The temperature in the pan reached 185 degrees Fahrenheit.

• Paved roads were melting in France and Germany. Deteriorating road conditions caused Germany to impose speed limits on the Autobahn, which usually has no limits at all, reported Bloomberg.

• Bicycles melted and police were called to restore order at public pools in Berlin, Germany, according to tweets cited by Buzzfeed.

The U.S. heat event is expected to end by Tuesday. Forecasters were warning the heat index could rise as high as 115 degrees. If you are in an area afflicted by extreme heat, the National Weather Service advises staying out of the sun, remaining in air-conditioned places, drinking plenty of water, and checking on older or disabled friends and relatives.

Weekly Focus – Think About It

“Hold yourself responsible for a higher standard than anybody else expects of you. Never excuse yourself. Never pity yourself. Be a hard master to yourself – and be lenient to everybody else.”
--Henry Ward Beecher, American minister and speaker

* These views are those of Carson Coaching, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named broker/dealer.
* 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.
* All indexes referenced are unmanaged. 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 Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* 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.
* Stock investing involves risk including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.

Sources:
https://www.ft.com/content/15c2d8c6-aa39-11e9-b6ee-3cdf3174eb89 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/07-22-19_FinancialTimes-Fed_Comes_Under_Fire_from_Wall_Street_Over_Rate_Confusion-Footnote_1.pdf)
https://www.barrons.com/articles/stock-market-gauges-barely-budge-as-fed-decision-looms-51563592175?mod=hp_DAY_3 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/07-22-19_Barrons-Stock_Market_Gauges_Barely_Budge_as_Fed_Decision_Looms-Footnote_2.pdf)
https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/07-22-19_CMEGroup-Probabilities_of_FOMC_Rate_Moves-Footnote_3.pdf)
https://www.conference-board.org/data/bcicountry.cfm?cid=1
https://www.washingtonpost.com/weather/2019/07/19/potentially-deadly-heat-wave-grips-two-thirds-us-with-dozens-records-likely-fall/?noredirect=on&utm_term=.ffd966f965d8
https://www.upi.com/Odd_News/2019/07/19/National-Weather-Service-bakes-biscuits-in-hot-car/5931563563478/
https://www.bloomberg.com/news/articles/2019-06-26/blazing-heatwave-forces-germany-to-lower-autobahn-speed-limit
https://www.buzzfeed.com/michelleno/europe-is-so-hot-right-now-that-even-meteorologists-are
https://www.npr.org/2019/07/18/743268248/heat-wave-blankets-much-of-the-u-s-this-week
https://www.goodreads.com/quotes/tag/resilience

July 8th Market Commentary

July 8, 2019

The Markets

What will the Federal Reserve do now?

There was unexpected economic news last week. On Friday, the Bureau of Labor Statistics announced 224,000 new jobs were added in June, which was more than analysts had anticipated. The gains were offset a bit by reductions in April and May employment estimates. However, overall, the pace of jobs growth during second quarter was fairly consistent with jobs growth during the first quarter, reported Matthew Klein of Barron’s.

Strong employment numbers invigorated some investors. As a result, the Standard & Poor’s 500 Index, Dow Jones Industrial Average, and Nasdaq Composite finished the week near record highs.

Not everyone was jumping for joy, however.

The performance of the bond market continued to indicate some investors are worried about the possibility of recession. The yield curve remained inverted last week with the 10-year Treasury note trading at lower yields than 3-month Treasury bills. Yield curve inversions have been harbingers of recession in the past, reported Ben Levisohn of Barron’s.

Time may provide greater clarity about the strength of the American economy. April Joyner of Reuters reported,

“It will likely take several months of economic data - along with results from the corporate earnings season later this month - to clarify the picture, investors say. In contrast to Friday’s upbeat employment report, data earlier this week showed U.S. manufacturing and service activity in June declined to multi-year lows… Future data…may end up either confirming recession fears or altogether dashing the hopes for interest-rate cuts that have buoyed stocks.”

In its July meeting, the Federal Reserve will examine economic data and decide whether to lower rates. Investors have been anticipating a rate cut, reported Greg Robb of MarketWatch. If it doesn’t happen, stock markets could be a bit volatile.

 

SUCCUMBING TO THE POWER OF DIGITAL PERSUASION OR NOT. A lot has been written about Americans and smartphones – the crowd favorite among mobile devices. Eighty-five percent of U.S. participants in the 2018 Deloitte Global Mobile Survey owned smartphones and checked their phones about 14 billion times a day.

Which amounts to approximately 52 times each. If you figure Americans are awake about 960 minutes each day, they check their phones every 18 minutes.

Almost three-in-ten Americans say that what they see on social media influences their decisions to buy or not buy. The percent rises to five-in-ten for millennials, according to the UPS Pulse of the Online Shopper Survey™.

It is little wonder social media influencers have become a staple of digital marketing.

What are influencers? The Influencer Marketing Hub describes an influencer like this:

“An influencer is an individual who has the power to affect purchase decisions of others because of his/her authority, knowledge, position or relationship with his/her audience.”

Influencing has become a bona fide career path, a job with has its own set of Federal Trade Commission guidelines. For example, truth in advertising requires influencers to indicate when they’ve being paid to promote a product and also when they’ve received the product for free. Consumers should see the letters #ad before a comment or tweet when the influencer is promoting a brand or product.

Not everyone is impressed with the influence of influencers. CBC reported the owner of a Los Angeles ice cream truck got fed up with requests for free ice cream in exchange for online exposure. His solution was to start charging influencers twice the going rate.

The lesson may be that influence should be used judiciously.

Weekly Focus – Think About It

“One thing I've learned through all the ups and downs is that if you're doing things right, then you have a core group of people. Not just a core group like your homies or your buddies, but a group of people that has a good influence on you, who you respect and admire, and you know that if they're on your side, you're doing something right.”
--Hope Solo, former United States national soccer team goalkeeper

* These views are those of Carson Coaching, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the United States 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.
* All indexes referenced are unmanaged. 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 Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* 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.
* Stock investing involves risk including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.

Sources:
https://www.barrons.com/articles/what-the-june-jobs-report-really-says-about-the-u-s-economy-51562334857?mod=hp_DAY_2 (or go to https://peakcontent.s3-us-west-.amazonaws.com/+Peak+Commentary/07-08-19_What_the_Jobs_Report_Really_Says_About_The+Economy.pdf)
https://www.bls.gov/news.release/empsit.nr0.htm
https://www.barrons.com/articles/s-p-500-rallies-as-trade-truce-conquers-all-51562375561?mod=hp_LATEST (or go to s3://peakcontent/ Peak Commentary/07-08-19_The+S&P_500_Soared_Last_Weel_Because_A_Trade_Truce_Conguers_All.pdf)
https://www.reuters.com/article/us-usa-stocks-weekahead/buoyant-u-s-stocks-at-odds-with-downbeat-market-signals-idUSKCN1U01Q6
https://www.marketwatch.com/story/its-hallucinatory-to-expect-a-half-point-fed-rate-cut-now-but-economists-still-expect-a-quarter-point-reduction-2019-07-05
https://www2.deloitte.com/us/en/pages/technology-media-and-telecommunications/articles/global-mobile-consumer-survey-us-edition.html [Click on download executive summary] (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/07-08-19_2018_Global_Mobile_Consumer_Survey_US_Edition.pdf)
https://solutions.ups.com/rs/935-KKE-240/images/UPS-Pulse-of-the-Online-Shopper-2017-Volume-3_Channel_Dynamics.pdf [Page 21]
https://influencermarketinghub.com/what-is-an-influencer/
https:/www.ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking
https://www.cbc.ca/radio/asithappens/as-it-happens-wednesday-edition-1.5198437/this-ice-cream-truck-owner-is-so-fed-up-with-influencers-he-s-charging-them-double-1.5198500
https://www.brainyquote.com/quotes/hope_solo_567369?src=t_influence