Enjoy the slide or correction & use it to Ur advantage CASH is KING
-----Original Message-----
From: Burgio, David R. <david.bur...@lfg.com>
Sent: Mon, Aug 24, 2015 4:56 pm
Subject: Weekly Market Commentary
Weekly Market Commentary
August 24, 2015
The Markets
Correction!
The Dow Jones Industrial Average lost about 6 percent last week. That puts the
benchmark index about 10 percent below its record high on May 19, 2015,
according to Barron’s.
A drop of that magnitude from a new high may be a correction – a brief but
jarring drop in value that often causes investors to reassess the state of the
market and the health of the companies they hold. If investors judge markets
and holdings to be sound, a correction may represent a buying opportunity. Of
course, there is a chance markets could fall further. A drop of 20 percent or
more is considered a bear market.
The Standard & Poor’s 500 Index lost about the same amount as the Dow last week
and is down almost 8 percent from its May high. Technically, it’s not yet in
correction territory. A dip greater than 5 percent and less than 10 percent is
a pullback.
Many factors contributed to U.S. stock markets’ performance last week. Concerns
about global recovery were top of mind for many investors. China’s slowdown may
significantly reduce demand for commodities, and emerging markets that are
dependent on commodity exports are struggling. CNN Money reported:
“China's economic slowdown and currency devaluation have investors worried
that things could get worse as the year goes on. Developing countries like
Brazil and Russia are struggling to revive their economies as their currencies
depreciate dramatically against the dollar. Brazil's currency value has
declined over 20 percent and Russia's over 40 percent, hurting imports and
everyday citizens. It's also a huge worry for America's biggest companies.
About 44 percent of the revenues from S&P 500 companies come from outside the
United States.”
Currency depreciation (not to be confused with devaluation, which is a
government’s deliberate downward adjustment in currency value) is market-driven
and sometimes causes investors to pull assets out of a country, which can put
more pressure on the currency.
Uncertainty about the timing of a rate hike in America didn’t help matters.
CNBC reported, after the minutes of the July Federal Open Market Committee
meeting were released last week and indicated “almost all members” had some
concerns about the strength of U.S. economic growth, the CME FedWatch barometer
put the likelihood of a September increase at 24 percent – a 45 percent drop
from the prior day.
Data as of 8/21/15
1-Week
Y-T-D
1-Year
3-Year
5-Year
10-Year
Standard & Poor's 500 (Domestic Stocks)
-5.8%
-4.3%
-1.1%
11.7%
13.1%
4.9%
Dow Jones Global ex-U.S.
-5.0
-4.9
-13.1
2.8
2.5
1.7
10-year Treasury Note (Yield Only)
2.1
NA
2.4
1.8
2.6
4.2
Gold (per ounce)
3.4
-3.6
-9.3
-11.0
-1.2
10.2
Bloomberg Commodity Index
-2.8
-15.8
-30.0
-15.6
-7.7
-6.1
DJ Equity All REIT Total Return Index
-2.4
-1.8
4.3
9.8
13.7
7.3
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.
FROM ABSTRACT TO REALITY: THE POTENTIAL EFFECTS OF RISING RATES.
When the economic data align, and the Federal Reserve pulls the trigger on
tighter monetary policy, rising interest rates may affect everything from
mortgage rates to bond yields to economic growth. Here are a few of the
possible consequences:
Higher demand for short-term bonds. When interest rates rise, bond values
fall, and vice versa. However, changes in bond values will be influenced by the
speed and magnitude of the rate change. A sharp increase over a short period
would have a greater effect than a gradual rise over a longer period. To date,
the Fed has indicated the fed funds rate will rise gradually. Experts cited by
The Wall Street Journal suggest shorter-term bonds and cash will be more
attractive than longer-term bonds for a period of time.
Less attractive loan terms and credit card incentives. By raising the fed
funds rate, the Fed will increase borrowing costs. That’s likely to affect
mortgage rates as well as automobile and other consumer loan rates. The Journal
cautioned homebuyers to be wary of adjustable-rate mortgages and indicated zero
percent introductory offers on credit cards may disappear.
Slow improvement in savings account returns. Over the longer term, rising
rates may prove to be a boon for savers, but there is likely to be little
immediate change in the yields offered on savings accounts. That’s because
banks set these rates. In general, banks raise rates to attract deposits and
few banks need to do that right now, according to an expert cited by The Wall
Street Journal.
While it seems counterintuitive, tightening monetary policy will not affect
interest rates equally across all markets.
Weekly Focus – Think About It
“The individual investor should act consistently as an investor and not as a
speculator.”
--Benjamin Graham, American economist
Best regards,
David Burgio
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David Burgio is a registered representative of Lincoln Financial Advisors Corp.
Securities offered through Lincoln Financial Advisors Corp., a broker/dealer
(Member SIPC). Investment advisory services offered through Sagemark
Consulting, a division of Lincoln Financial Advisors, a registered investment
advisor. Insurance offered through Lincoln affiliates and other fine
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* These views are those of Peak Advisor Alliance, and not the presenting
Representative or the Representative’s Broker/Dealer, and should not be
construed as investment advice.
* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance
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.
* 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.
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Sources:
http://www.barrons.com/articles/stocks-swooned-but-didnt-crash-1440224891?mod=trending_now_2
(or go to
http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/08-24-15_Barrons-Stocks_Swooned_but_Didnt_Crash-Footnote_1.pdf)
http://finance.yahoo.com/blogs/breakout/investing-101--defining-pullbacks--corrections-and-bear-markets-201410281.html
http://www.cnbc.com/2015/08/21/stock-bulls-sidelined-while-markets-shake-out.html
http://money.cnn.com/2015/08/20/investing/stocks-market-dow-200-august-20/index.html?iid=SF_LN
http://www.investopedia.com/terms/d/devaluation.asp
http://www.investopedia.com/terms/c/currency-depreciation.asp
http://www.cnbc.com/2015/08/20/the-fed-rate-hike-speculation-is-getting-crazy.html
http://time.com/money/3749580/higher-rates-winners-losers/
http://www.nuveen.com/Home/Documents/Viewer.aspx?fileId=52960
http://www.federalreserve.gov/monetarypolicy/fomcminutes20150729.htm (or go to
http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/08-24-15_FedReserveSystem-FOMC_Minutes_07-29-15-Footnote_10.pdf)
http://www.wsj.com/articles/how-your-rates-will-move-when-the-fed-does-1433732576
(or go to
http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/08-24-15_WSJ-How_Your_Rates_Will_Move_When_the_Fed_Does-Footnote_11.pdf)
http://www.investopedia.com/financial-edge/0511/the-top-17-investing-quotes-of-all-time.aspx#ixzz3jYtMLrfd
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