POCKETBOOK Week Ending Nov. 3, 2018

Source: Cresset Wealth

Source: Cresset Wealth

 

• Our Economy

I know more than one investor who doesn’t believe the figures emphasizing how great our economy is, that the unemployment rate is as low as is  publicized and that all on Wall Street is hunky dory.

So in search of some easy to understand market commentary, I’ve turned to Cresset Wealth Advisors November 2018 Market Review.

Here is what Cresset’s CFA, Jack Ablin, wrote in it re the economy: “The US economy has been growing at a rate that is above potential. Its 2.5% potential GDP growth rate is derived from 0.7% labor force growth plus a 1.8% (generous) productivity rate. Current 3.5% annualized growth has been fueled by consumer demand. Government spending added 0.6% to growth, fixed investments flat-line.”

Re tariffs: “Tariff talk has had a deleterious impact on exports. This sector, which on average has added 0.5% to economic activity, dragged growth down 0.5% in Q2.”

The entire Cresset November Market Review is worth a read and available at cressetwealth.com. Check it out.

• Market Quick Glance

It was a week that brought some year-to-date returns up from underwater for the DJIA, S&P 500 and the Russell 2000. Yahoo, for that. Whether that trend will continue, however, is still anybody’s guess.

But to cover our bases, lest we think the bull is back, here’s another look  at the following historic equity performance data from CNBC.com:

– Since World War II, the average correction for the S&P500 lasts 4 months and sees equities slide 13% before bottoming.

-Bear markets average a loss of 30.4% and last 13 months and takes stocks nearly 22 months, on average, to recover.

Below are the weekly and 1-year index performance results for the four major indices—DJIA, S&P 500, NASDAQ and the Russell 2000— including the dates each reached new highs. Data is according to CNBC.com and based on prices at the close of business on Friday, Nov. 2, 2018.

 

–DJIA 2.23% YTD up from the previous week’s return of -0.13%.

• 1 yr Rtn 7.46% up from the previous week 5.50 %

Most recent DJIA a new ALL-TIME CLOSING HIGH was reached on Oct.3, 2018 of 26,951.81. The previous high was reached on Sept. 21, 2018 of 26,796.16.

 

-S&P 500 1.85% YTD up from last week’s -0.56%

• 1 yr. Rtn 5.55% up from last week’s 3.84%

The S&P 500 reached a BRAND NEW CLOSING ALL-TIME HIGH on Sept. 21, 2018 of 2,940.91. The previous closing high was reached on August 29, 2018 of 2,916.50.

 

-NASDAQ 6.57% YTD up a lot from last week’s 3.82%

• 1yr Rtn 9.56% up a bit from last week’s 9.31%

Nasdaq reached a BRAND NEW 52-week CLOSING HIGH on August 30, 2018 of 8,1333.30. The previous high was reached on August 24, 2018 of 7,949.71.

 

-Russell 2000 0.81% YTD up a lot from last week’s -3.37%

• 1yr Rtn 3.44% also up a lot from last week’s -0.91%

The Russell 2000 reached a BRAND NEW 52-week ALL-TIME HIGH on August 31, 2018 of 1,742.09. The previous high was reached on August 24, 2018 of 1,726.97.

 

-Mutual funds

Equity funds have lost about half of their average year-to-date returns since October 18. And, at the close of business on Thursday, Nov. 1, 2018, the average total return for funds that fall under the U.S. Diversified Equity Funds heading was 1.37%, according to Lipper. That’s down from 2.36% reported on 10/18/18.

Where you want to have been invested most recently is in that large broad category of funds and not in funds that fall under the Sector Equity Funds heading— they are down at  -2.90% on average. Or in World Equity Funds, these babies are on average down at -9.46%.

World Income Funds have fared better, – 4.80% and Mixed Asset Funds -2.14% on average.

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.

 

• Got money? Maybe
  

The end of the third quarter—that would be the end of September 30— Fidelity delivered some sweet news for its investors. For instance:

• The average 401(k) balance hit a new high of $106,500, up 2.4% from Q2.
• The average individual retirement account averaged $111,000, up 3.8% from Q2.
• The number of 401(k) millionaires was up 41 percent from last year at the same time.
• And, the number of IRA millionaires was up 25 percent from last year.

Hope these account balances continue to flourish for Fidelityites.

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POCKETBOOK Week Ending Oct. 20, 2018

• Caution Ahead

When it comes to taking our short term investing clues from talking heads, no matter what’s happening in the market for every one whose head nods up and down another shakes theirs side to side.

So in this world of nobody knows for sure what’s going to happen day-to-day, if you were to take a step back and look out over the past few months some basic clues do show their heads and ought not be overlooked.

For openers, don’t discount the fact that the major indices are and have been losing ground since reaching new all-time highs in August and September.  Or, that the Fed has increased interest rates three times thus far this year with one more increase expected in December. Both represent ouches of sorts for equities.

As a result, Jeremy Siegel, professor of finance at Wharton, who typically wears a bull’s cap, is now waving a yellow caution flag to investors with respect to  the markets performances through this year and in 2019.

Re a rising interest rate environment, Cresset Wealth Advisors Jack Ablin said: “ It is going to put some headwind on risk-taking which of course has enjoyed “only-child’ stature for the last 10 years.”

Through in the fact that America’s national debt has balooned,  things on Wall Street aren’t as rosey as some heads would like us to believe.

That said, with  caution in the wind, look out five or 10 years from now, and if we haven’t accidentially blown ourselves up or been invaded by aliens who don’t care about money or investing, interest rates and the major equity indices ought to be higher than they currently are. Perhaps.

 

• Market Quick Glance

Round and around and around she goes and where she stops nobody knows.

Depending upon the time of day or the day of the week you decide to check in on what’s happening in the markets, the performance results found could either be pleasing or confounding.

Below are the weekly and 1-year index performance results for the four major indices—DJIA, S&P 500, NASDAQ and the Russell 2000— including the dates each reached new highs. Data is according to CNBC.com and based on prices at the close of business on Friday, Oct. 19, 2018.

–DJIA 2.93% YTD up a tad from previous week’s return of 2.51%.

• 1 yr Rtn 9.85% down again from the previous week 10.94 %

Most recent DJIA a new ALL-TIME CLOSING HIGH was reached on Oct.3, 2018 of 26,951.81. The previous high was reached on Sept. 21, 2018 of 26,796.16.

 

-S&P 500 3.52 % YTD up a hair from last week’s 3.50%

• 1 yr. Rtn 8.03% down from last week’s 8.48%

The S&P 500 reached a BRAND NEW CLOSING ALL-TIME HIGH on Sept. 21, 2018 of 2,940.91. The previous closing high was reached on August 29, 2018 of 2,916.50.

 

-NASDAQ 7.90% YTD down from last week’s 8.60%

• 1yr Rtn 12.78% down from last week’s 13.74%

Nasdaq reached a BRAND NEW 52-week CLOSING HIGH on August 30, 2018 of 8,1333.30. The previous high was reached on August 24, 2018 of 7,949.71.

 

-Russell 2000 0.43% YTD down from last week’s 0.73% (it was over 10% two weeks ago)

• 1yr Rtn 2.65% down from last week’s 2.76%

The Russell 2000 reached a BRAND NEW 52-week ALL-TIME HIGH on August 31, 2018 of 1,742.09. The previous high was reached on August 24, 2018 of 1,726.97.

 

-Mutual funds

The market moved up a bit and that positive move was reflected within the mutual fund world.

At the close of business on Thursday, Oct. 18,2018, the average total return for funds that fall under the U.S. Diversified Equity Funds heading was 2.36%, according to Lipper. That’s higher than the 1.13% average return posted one week prior.

While the average performance of the U.S. Diversified Equity Funds was above water, that’s not been the case for the other types of equity funds that Lipper tracks.

So even though y-t-d numbers have improved slightly, the following broad categories of funds have y-t-d average performances that are still underwater.

Below is a comparison of the 10/18 total returns from the previous week’s numbers:

-Sector Equity Funds, on 10/18 enjoyed an average return of -1.59, and improved from the previous week of -2.51%

-World Equity Funds, an average return of -9.30, a bit of an improvement from the prior week’s return of -9.73%

-Mixed Asset Funds, -1.61% is an improvement from the prior week’s return of -2.11%

-Domestic L-T Fixed Income Funds, now- 0.67% is an improvement from prior week’s average return of -0.80%

-World Income Funds, -4.41% is an improvement from the prior week’s average return of-4.86%.

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.

 

• City Opportunities

If San Francisco and New York City are your kind of cities, a report of Glassdoor shows they don’t necessarily offer the best prospects for jobs—and we all know that the cost of living in either can be astronomical.

On the other hand, Glassdoor results show that it’s the smaller cities where work can be found. Add to that the bonus of a lower cost of living it all the makes smaller cities worth looking into.

In case you’re interested, here are the top five cities in Glassdoor’s list of the 25 best cities for jobs in 2018:

1. Pittsburgh, PA
2. Louis, MO
3. Indianapolis, IN
4. Cincinnati, OH
5. Hartford, CT

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POCKETBOOK: Week ending April 14, 2018

• Golden

Good news this week for gold investors. On Wednesday, gold futures traded at an intraday high of $1,369.30 an ounce, according to Gary Wagner’s Kitco Commentary on Friday, April 13, 2018.

The June Comex contract wasn’t quite that high at the close of business on Friday ($1,348.60), but even so, for the week gold had enjoyed an $11 an ounce  gain.

That’s a big deal because this precious metal has had a hard time making any kind of sustainable gains over the past few years. And, in a jumpy market like we’ve all been a part of, one might consider that a bit of an oddity.

That said, the big takeaway here is that you’ve got to go back to August 2016 to find gold trading at that high a level. “More importantly,” writes Wagner, “ the highs achieved during that rally were the first occurrence of a higher high since the multiyear correction (that) began in the middle of 2011.”

Perhaps it’s time to reconsider the value of this precious metal for ones investment portfolio other than see its worth only in golden bangles, earrings or as a cap to top off one of your back molars.

 

• Market Quick Glance

A better performance week for stock index results than the week before with the downs not as down and the ups more up.

Look at the 1-year returns and one might even begin to wonder what all the bears on Wall Street are concerned about. Then again, the only time that 1-year returns that seem to matter to the average investor is when the end of the year 52-week results are in.

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, April 13, 2018.

 

–DJIA -1.45% YTD down but less than the previous week’s -3.18%

• 1 yr Rtn 19.10% up from the previous week’s 15.82%

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 -0.65% YTD down much less than last week’s -2.59%

• 1 yr Rtn 14.06% up from last week’s 10.48%

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 2.94% YTD way up from last week’s 0.17%

• 1yr Rtn 22.42% way up from last week’s 17.62%

Nasdaq reached a brand new all-time high on March 13, 2018 of 7,637.27. The previous high was reached on March 9, 2018 of 7,560.81.

 

-Russell 2000 0.91% YTD up from than last week’s -1.45%

• 1yr Rtn 15.18% way up from last week’s 10.91%

The Russell 2000 reached an all-time high on January 24, of 1,615.52. The previous high was reached on January 16, 2018 of 1,604.02.

 

-Mutual funds

Lipper’s weekly mutual fund performance figures not available yet. Will post them when received.

Till then, here’s a repeat look at last week’s report: At the close of business on Thursday, April 4, 2018 the average fund that falls under the broad U.S. Diversified Equity Funds heading had a year-to-date return of +0.32%. That’s up—yes up—from the previous week’s average of -0.37%.

Large-Cap and Small-Cap Growth funds were up on average well over 3% last week. Science & Technology Funds and Global Science & Technology Funds both up at 4.92 and 5.08% respectively.

Latin American Funds, too, were up–averaging almost 6% y-t-d.

The biggest loser fund type of all were Energy MLP, down on average -10.02%.

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.

 

•   Credit Risks

The ability to raise, borrow and repay money is great deal. And one individuals as well as businesses count on. But like everything else within the world of money, risks exist and timing is everything.

Last week, Jack Ablin,CFA and Chief Financial Officer at Cresset Wealth Advisors published a piece titled “Credit Conditions and Risk Taking”.

From the piece: “The easiest way to gauge real time credit conditions is by observing the yield differential between 10-year, BBB bonds and 10-year Treasury notes. Since the bond market is roughly seven times the size of the stock market, the yield premium lenders require to extend credit to lower-quality borrowers is a useful barometer.”

While currently credit conditions are “favorable”, Ablin thinks that rising credit spreads can be an early warning sign of troubles ahead.

The chart below  provides additional insight on the subject.

 

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POCKETBOOK: Week ending Oct. 13, 2017

• Inflation

 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 13^th 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.

 

-Mutual funds

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%.

 

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POCKETBOOK: Week ending June 4, 2016

• 
  

• Welcome to June

I’m guessing investors can expect the same from the equity markets this summer as they can from their summer travel experiences: No relief from worries about the direction of the stock markets or from the weather and the storms typically accompanying them.

Then again, worrying about things to come has never paid much of a dividend. Enjoying the moment, however, certainly has.

• Market Quick Glance

-Indices:

Below are the year-to-date performance figures for the major indices through June 3, 2016, according to Bloomberg. To provide a longer performance perspective, 1-year returns have been added.

The Russell 2000 was the only index of the four below that enjoyed any noteworthy upward change—its y-t-d return gained about 1.5%.

-Dow Jones +3.49% YTD

1yr Rtn +2.44%

-S&P 500 +3.71%YTD

1yr Rtn +2.51%

–NASDAQ -0.66% YTD

1yr Rtn -1.17%

–Russell 2000 +3.12 YTD

1yr Rtn -6.31%

-Mutual funds

Through Thursday, June 2, 2016 the average U.S.Diversified Equity Fund jumped into positive territory ending the week up 2.65 percent, according to Lipper. Last week, if you remember, the average year-to-date returns of this group of 815 funds was down 1.29 percent.

It was Equity Leverage Funds that ruled the performance roost as the y-t-d performance of the 200 funds in that category had an average return of 7.40 percent. Behind it  Mid-Cap Value Funds with their average return of 6.45 percent followed by Small-Cap Value Funds at 6.45 percent.

Precious Metals Equity Funds are still rewarding their shareholders as the average return of this group was up 63.83 percent. Those rewards, however, just aren’t as much as they had been. Three weeks ago, (May 19), the average return of funds in this group was 75.64 percent. Now the return is 11.8 percent lower that the one reported on May 19.

One more thing: That 3-year average return of U.S.Diversifed Equity funds pointed out  in last week’s POCKETBOOK  of over 9 percent has shriveled  22 basis points to 8.80 percent.

I mention that only because investors need to look beyond current returns and back a few years to get a real sense of what’s happening in the market regarding the direction of equities.

It’s still an iffy market with recession worries that aren’t going away.

Visit www.allaboutfunds.com for weekly updates to see how 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.

Lipper’s weekly performance figures for stock and fixed-income funds are at www.allaboutfunds.com in the left column on the home page.

• BMOs July outlook

I know, it’s still June but BMO likes to keep on top of things. And, in the BMO Wealth Management  June 2 report titled “July 2016 Outlook for Financial Markets” , its Summary by Jack A. Ablin,  BMOs Chief Investment Officer, is worth sharing.

Here’s the Summary:

“•Temp jobs are the first to go in a downturn. The sector has shed 27,400 jobs since December, reversing a five-year trend that saw it grow five times faster than overall employment.

“•Businesses are awash in more than $1.8 trillion of cash –and the 25 largest companies control more than half of the hoard. While this corporate “one percent” is up to its armpits in cash, the bottom 99 percent is swimming in debt.

“•What’s bothering the corner office? Consumers are confident, spending is strong and interest rates are low, yet companies aren’t spending.

“•Despite becoming an increasingly distant memory with every passing year, the housing bust and financial crisis inflicted lasting scars on American households.

“•Conviction and complacency are running hot, setting investors up for a surprise. “