Not so subtle signs
The great divide between our two America’s — one in which the wealthy enjoy the fruits of their fortunes and the much larger group that finds making it harder and more challenging than ever—is not-so subtly showing signs of widening.
On the one hand, the Fed says the economy is roaring along just fine even guestimating GDP growth could hit something like 4% this year. On the other, the second rise in key short-term rates this year from 1.75 to 2% may add pennies to one’s saving accounts and money market fund accounts. But, it is also making a bigger dent for those who will see increases on the interest rates charged by credit card accounts, rates on mortgages, variable line-of-credit accounts, car loans. etc.
And everybody is noticing. Two examples: CNBC reported that half of Americans aren’t taking summer vacations this year and real estate developers are offering super deals for new home buyers.
In my local paper on Friday (6/15/18), I saw new home developers offering mighty attractive discounts to entice new home buyers to buy.
At On Top of the World, a 55+ community in Ocala, Florida where new homes are priced from the $160s to over $400s, ran a full-page read, “GET MORE FOR LESS” offering a 25% on all options.
Divosta, a developer with a huge and long-standing presence in Palm Beach County, was —get this— giving a free pool with screen enclosure—to new home buyers at their Sonoma Isles development in Jupiter through June 18th.
That said, my adult life’s experience in South Florida has shown me that whenever real estate developers start discounting their prices and/or offering what’s typically costly upgrades, it’s been a sign that they’re concerned about sales.
The good news here is anybody who can qualify and afford a new home at either of these developments has got to love getting any kind of discount or a new pool.
The bad news is not everyone can either qualify for or afford to buy a new home these days. And even small interest rate hikes upward only exasperate that problem.
Now imagine what a number of interest rate hikes upward will do.
LISTEN UP!!!! Two, yes, not one but two of the indices followed here scored big last week: Both the NASDAQ and the Russell 2000 hit new all-time record numbers last week. Yahoo for them.
That’s something to crow about particularly since the rest of the investing arena is in a little bit of quandary with interest rates on the rise. As we all know, any move in any direction of interest impacts all sorts of things including equities.
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, June 15, 2018.
–DJIA 1.50% YTD ouch as that index is down again from the previous week’s return of 2.42%
- 1 yr Rtn 14.27% big downward move from the previous week’s 19.52%
Most recent DJIA all-time high was reached on January 26, 2018 of 26,616.71. The previous high was reached January 18, 2018 was 26,153.42.
-S&P 500 3.97% YTD up a hair from last week’s 3.94%.
•1 yr Rtn 14.27% up a bit from last week’s 14.19%
The S&P 500 reached its most recent all-time high on January 26, 2018 of 2,872.87. The previous high was reached on January 19, 2018 of 2810.33.
-NASDAQ 12.21% YTD a whopping big move up from last week’s 10.75%
- 1yr Rtn 25.64% also a big up from last week’s 20.94%
Nasdaq reached a BRAND NEW ALL-TIME HIGH on June 14,2018 of 7,768.6. The previous highs was reached on March 13, 2018 of 7,637.27
-Russell 2000 9.66% YTD up from last week’s 8.92%
- 1yr Rtn 19.42% up from last week’s 18.15%
The Russell 2000 reached a BRAND NEW ALL-TIME HIGH on June 12, 2018 of 1,686.37. The previous high was reached on January 24, of 1,615.52.
Last week’s data not available yet. Data below is from previous week:
The total return performance of the funds under the U.S. Diversified Equity Funds heading enjoyed an average return of 5.11% at the close of business on Thursday, June 7, 2018, according to Lipper. That’s up a lot from the previous week’s average total return of 2.84%.
In the big time skids this year are Latin American Funds. Of the 33 that Lipper tracks, the y-t-d average total return was underwater at -12.00%.
Other World Equity Funds that haven’t fared well so far this year was India Funds, -7.50%. And in third underwater place Emerging Markets Funds, -1.38%.
Overall, World Equity Funds are up 0.90%.
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.
If you’re a believer in Morningstar data and research, the pros over at that Chicago-based firm aren’t expecting much in returns from that precious metal we call gold.
In a recent column by Kristoffer Inton, “Gold Steady in Face of Rate Hikes”, had this to write about the recent the impact of interest rates on gold: “This rate doesn’t change our view…. We continue to expect the gold price to fall to $1,225 per ounce by then end of 2018…. “
He continued: “Additionally, although the recent rise in inflation bodes well for gold, we think that higher inflation will only spur a more rapid pace of rate hikes.”
And then there is this from a recent ETFTrends.com story: “China is the world’s largest consumer of many commodities, including precious metals.
“Tariffs on China could be a game changer for metals markets, ” George Gero, managing director at RBC Capital Markets, told the WSJ.”
The ETFTrends.com story points out that one area precious metals are making positive strides is in inverse or bearish ETFs.
If you’re a fan of gold, that’s an area worth investigating.
Sometimes down pays up.