The wicked stepmother in the world of money is inflation. Like that hateful woman, should you know one, does all of her nasty business right in front of your very eyes without you noticing. Until it’s spending time and you find out the money you thought you had doesn’t nearly buy the same amount of goods and services it once did.
Like I said, it happens right in front of your very eyes.
Jack A. Ablin, BMOs chief investment officer, wrote about inflation in his most recent Current Market Update. Here’s history about inflation taken from that Update: “In an economic expansion spanning nearly 10 years, one missing ingredient has been inflation. Year over year inflation has remained stubbornly below three percent consistently for more than six years. Lackluster pricing power has vexed business leaders and the Federal Reserve who both would like to see incremental price growth. Headline inflation has fallen short of the Fed’s two-percent target in 66 of the last 100 months. Moreover, 2011 was the last calendar year when inflation hit three percent. The trend has picked up marginally between 2014 and 2016, but last year’s inflation rate was a tepid 2.1 percent. ….”
If you’re wondering when inflation’s bite will get stronger, Ablin wasn’t specific. But he points out that if inflation flares up when there is no economic growth happening, that would represent a “bull markets financial threat.”
We shall see…
Market Quick Glance
Nothing spooky about Friday the 13th for three of the four indices followed below. All, with the exception of the Russell 2000, reached brand new highs.
All of this new high stuff is getting a little boring, if you ask me. And hard to figure if you’re looking for why’s from the talking heads. One of whom said that this market is going to continue upward as long as there are bundles of cash sitting on the sidelines.
Which– those in the know– say there is.
Below are the weekly and 1-year index performance results for four major indices— including the dates each reached new highs—according to CNBC.com based on prices at the close of business on Friday, October 13, 2017.
-DJIA +15.73% YTD up a tad from last week’s 15.24%.
- 1 yr Rtn +26.37% up from last week’s 24.66%
And another new all-time high for the DJIA. This one of 22,905.33 was reached on October 13, 2017.
Its previous high was reached October 5, 2017 at 22,777.04.
On March 1, the Dow stood at 21,169.11.
-S&P 500 +14.04% YTD up from last week’s 13.87%.
- 1yr Rtn +19.72% up from last week’s +17.98%
The S&P 500 reached a new high of 2,556,65 on October 13, 2017.
The previous high of 2,552.51 was reached on October 5, 2017.
On March 1, 2017, that index stood at 2,400.98.
-NASDAQ +22.71% YTD up a tiny bit from last week’s +22.42%.
- 1yr Rtn +26.71% up from last week’s 24.18%
The Nasdaq reached a new all-time high of 6,,616.58 was reached on October 13, 2017.
Its previous high of 6,590.18 was reached on October 5, 2017.
On April 5, 2017 the index closed at 5,936.39.
-Russell 2000 +10.72% YTD down from last week’s +11.28%.
- 1yr Rtn +23.60% up considerably from last week’s +21.18%
The Russell 2000 reached a new all-time high of 1,514.94 on October 5, 2017.
Its previous high of 1493.56 was reached on September 29, 2017.
On March 1, 2017 this index stood at 1,414,82.
Even with a week resulting in new highs for many indices, the year-to-date average cumulative total reinvested return for equity funds falling under the broad U.S. Diversified Equity Funds didn’t move much. It closed with a 13.54% average return on Thursday, October 12, 2017, according to Lipper. That’s down a tiny bit from the previous week’s figure of 13.65.
The average Sector Fund had a year-to-date total return of 9.83% with two fund types under that heading up over 30%: Global Science & Technology funds up on average 39.38% and your basic Science & Technology funds, +32.01.
World Equity Funds were up on average 24.54%. Four of them have year-to-date average returns up over 30%: China Region Funds, +39.04; Pacific Ex-Japan Funds, +33.61%; India Region Funds, +32.05; and Latin American Funds, +30.94.
Visit www.allaboutfunds.com for more information about how various equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.
•Best and worst ETFs
There’s no overlooking the popularity of Exchange Traded Funds, ETFs. Their popularity and investment choice numbers have grown faster than, I’m gonna guess here, even Wall Street wizards could have ever imagined.
Knowing that, below are the three best and three worst ETF performers year-to-date through October 10, 2017 from ETFTrends.com:
- Best: Ark Inovation (ARKK) up 74.3%; WisdomTree China Ex State Owned Enterprises Fund (CXSE) up 70.8%; and Kraneshares CSI China Internet ETF, (KWEB) up 68.2%.
- Worst: United States Natural Gas Fund (UNG) down33.9%; PowerShares S&P Smallcap Eneegy Portfolio (PSCE), down 31.4%; and SPDR S&P Oil& Gas Equipment & Services Etf (XES), down 26.6%.