Blog
The Markets
Stock markets celebrated the results of the presidential election. Bond markets were less enthusiastic.
Last week, United States stock markets rallied, and the U.S. dollar gained against other currencies, following the presidential election. The CBOE Volatility Index, Wall Street’s Fear gauge, also moved lower after concerns about a long wait for election results were quelled by a swift result, reported Alexandra Semenova of Bloomberg.1
“…the [stock] markets roared in approval of this Trumpvember surprise…Yes, expect tax cuts, less regulation, fewer guardrails, and a government no longer picking winners and losers (except for tariffs), all reasons why investors perceive the incipient environment to be advantageous. And yet, with all the dancing, dancing, dancing in the streets, note that this new freedom could be accompanied by greater risk in the capital markets,” reported Andy Serwer of Barron’s.2
The bond market’s response to the election was measured. The Federal Reserve (Fed) began lowering the federal funds rate in September. Typically, Fed rate cuts lead to lower borrowing costs for consumers and businesses, which supports economic growth. However, the yield on the 10-year U.S. Treasury, which is a benchmark for mortgage rates, corporate bonds, and other loan rates,has trended higher since September as strong economic data caused the market to rethink its expectations for future rate cuts.3,4,5,6
Now, the bond market is evaluating future rate cuts in the context of the new administration’s policies. “…the outlook for further rate cuts has been clouded by expectations that key elements of Trump’s economic platform such as tax cuts and tariffs will lead to faster growth and higher consumer prices. That could make the Fed wary of risking an inflationary rebound by cutting rates too deeply next year,” reported Davide Barbuscia and Lewis Krauskopf of Reuters.7
Markets are likely to remain volatile over the coming weeks as investors speculate about the impact of new policies on financial markets. Last week, major U.S. stock indices surged higher.8 Yields on U.S. Treasuries were mixed with yields moving lower on the shortest and longest maturities and rising for other maturities.6
Data as of 11/8/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 4.7% | 25.7% | 36.8% | 8.4% | 14.2% | 11.4% |
| Dow Jones Global ex-U.S. Index | 0.7 | 7.1 | 17.6 | -1.5 | 3.2 | 2.6 |
| 10-year Treasury Note (yield only) | 4.3 | N/A | 4.5 | 1.5 | 1.9 | 2.4 |
| Gold (per ounce) | -1.9 | 29.5 | 37.4 | 13.9 | 13.0 | 8.8 |
| Bloomberg Commodity Index | 0.1 | -0.5 | -4.1 | -1.5 | 4.2 | -1.7 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
IT’S A DIRTY JOB…If you’re a fan of baseball, you probably know that major league baseball teams don’t use balls that are fresh out of the box. In fact, the Official Baseball Rules for 2024 explains umpires’ pregame duties which include:
“Receive from the home Club a supply of regulation baseballs, the number and make to be certified to the home Club by the Office of the Commissioner. The umpire shall inspect the baseballs and ensure they are regulation baseballs and that they are properly rubbed so that the gloss is removed. The umpire shall be the sole judge of the fitness of the balls to be used in the game.”9
Usually, the gloss is removed by rubbing Lena Blackburne Baseball Rubbing Mud into the unused baseballs.10 “Originally marketed as ‘magic,’ it’s just a little thicker than chocolate pudding—a tiny dab is enough to remove the factory gloss from a new ball without mucking up the seams or getting the cover too filthy. Equipment managers rub it on before every game, allowing pitchers to get a dependable grip,” reported Emma Baccellieri of Sports Illustrated.11
The mud is sourced from a secret location, somewhere along a tributary of the Delaware River, has been passed from generation to generation of this family business since the 1930s. The mud is unique because it has “a high clay content in the soil, an oddity for the area, plus brackish water from the tributary mixing with ‘cedar water’ dropping from nearby trees. Perfect conditions exist for only about a mile.” Jim Bintliff told Baccellieri.11
Recently, researchers at the University of Pennsylvania School of Engineering and Applied Science and School of Arts & Sciences studied the mud and then published their findings in Proceedings of the National Academy of Sciences.11 According to ScienceDaily, the paper’s lead author devised three experiments to determine whether mudding baseballs is a superstition, like rally caps and playoff beards, or a value-adding process. The experiments measured the mud’s spread-ability and stickiness, as well as any change in “friction against the fingertips.”12
The experiments confirmed baseball players’ long-held belief that magic mud really does improve the performance of baseballs. The substance “spreads like a skin cream and grips like sandpaper,” according to the research.12
Weekly Focus – Think About It
“Baseball is 90 percent mental. The other half is physical.”13
—Yogi Berra, baseball legend
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
[1] https://www.bloomberg.com/news/articles/2024-11-06/wall-street-reacts-it-s-full-risk-on-as-trump-scores-win?embedded-checkout=true (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/11-11-24_Bloomberg_How%20Investors%20are%20Reacting%20to%20Trumps%20Win_1.pdf)
2 https://www.barrons.com/articles/markets-trump-risk-howard-marks-fd779c8a?refsec=up-and-down-wall-street&mod=topics_up-and-down-wall-street (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/11-11-24_Barrons_Billionaire%20Investor%20on%20How%20to%20Understand%20Risks_2.pdf)
3 https://www.investopedia.com/articles/investing/100814/why-10-year-us-treasury-rates-matter.asp
4 https://www.federalreserve.gov/newsevents/pressreleases/monetary20240918a.htm
5 https://www.federalreserve.gov/newsevents/pressreleases/monetary20241107a.htm
8 https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/11-11-24_Barrons_Data_7.pdf)
9 https://mktg.mlbstatic.com/mlb/official-information/2024-official-baseball-rules.pdf
10 https://baseballrubbingmud.com
11 https://www.si.com/mlb/2019/08/07/baseball-mud-rawlings
[1]2 https://www.sciencedaily.com/releases/2024/11/241104150622.htm
[1]3 https://www.mlb.com/news/yogisms-best-yogi-berra-sayings
The Markets
Are we witnessing an historic event?
For an airplane or a spacecraft, a soft landing occurs when the vehicle “touches the ground in a controlled and gradual way that does not damage it,” according to The Britannica Dictionary.1
For the American economy, a soft landing happens when the Federal Reserve raises interest rates to cool the economy and push inflation lower—and achieves its goal without causing a recession and significantly higher unemployment. It’s not an easy task.2
“Historically, soft landings have been tough to pull off…Keeping unemployment and inflation low while at the same time having robust growth is difficult. Threading that needle has proven to be quite elusive,” reported a source cited by Aly J. Yale of The Wall Street Journal.2
Solid economic growth, low unemployment, rising wages, and falling inflation have one Federal Reserve official and several economists declaring that the American economy has achieved this rare event—a soft-landing, reported Bryan Mena of CNN.3
So, exactly how well is the U.S. doing?
“The extent to which America has outperformed other countries since the start of the COVID-19 pandemic is breathtaking. Its real GDP has expanded by more than 10 [percent], nearly three times as much as the euro area. Among the G20 group, which includes both rich countries and emerging markets, America is the only one where output is above pre-pandemic expectations, according to the International Monetary Fund,” reported Simon Rabinovitch of The Economist.4
Last week, “with an election and Federal Reserve meeting still to come, stocks faltered under the weight of the uncertainty,” reported Teresa Rivas of Barron’s.5 Major U.S. stock indices finished the week lower.6 Uncertainty about the direction of future government spending and its possible effect on Federal Reserve policy caused some turmoil in bond markets, too, reported Paul R. LaMonica of Barron’s.7 Yields on longer maturities of U.S. Treasuries moved higher over the week, while yields on shorter maturities moved lower.8
Data as of 11/1/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -1.4% | 20.1% | 35.2% | 7.5% | 13.3% | 11.0% |
| Dow Jones Global ex-U.S. Index | -0.9 | 6.4 | 20.4 | -1.5 | 3.2 | 2.6 |
| 10-year Treasury Note (yield only) | 4.4 | N/A | 4.8 | 1.6 | 1.7 | 2.4 |
| Gold (per ounce) | 0.5 | 32.0 | 38.2 | 15.2 | 12.7 | 8.9 |
| Bloomberg Commodity Index | -2.2 | -0.6 | -5.9 | -1.8 | 4.1 | -1.8 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
PERCEPTION VS. REALITY. The human brain is complex and powerful. It runs on about 20 watts of power and brains need to be recharged, just like your cell phone does, according to Northwestern Medicine.9
It’s interesting to note that brains are not objective. They catalogue our experiences, beliefs, and emotions and then interpret what’s happening around us. As a result, our reality on any given day is affected by “our personal physical abilities, energy levels, feelings, social identities, and more,” reported Jill Suttie in Greater Good Magazine.10
For example, studies have found that hills look steeper when people are:11
- Tired.
- Wearing backpacks.
- Thinking of people they dislike.
In contrast, hills look less steep when people feel energetic or think of a supportive friend.11
An August survey from the National Federation of Independent Business, a small-business advocacy group, reinforced the idea that there is a gap between economic perception and economic reality. The survey found that small business owners were quite optimistic about the financial state of their businesses, reasonably optimistic about the state of their local economies, and pessimistic about the state of the U.S. economy.12
| Excellent/ Good | Okay | Poor | |
| The current financial state of my business is: | 70 percent | 25 percent | 5 percent |
| The current state of my local economy is: | 36 percent | 44 percent | 20 percent |
| The current state of the U.S. economy is: | 10 percent | 32 percent | 58 percent |
When survey participants were asked when the United States might experience another recession, 52 percent said the U.S. economy was in a recession right now. A recession is a downturn in economic activity that lasts for a significant period. Economic data show the U.S. economy, as measured by gross domestic product (the value of all goods and services produced in the U.S.), has been growing since late 2020.12,13
The answers were interesting because most businesses—small and large—experience declines in sales and profitability when the national economy is doing poorly or in a recession.14 The gap in perception and reality may reflect the fact that“people are upbeat about what they see directly but pessimistic about what they glean indirectly through media (and social media),” opined Rabinovitch of The Economist.4
Weekly Focus – Think About It
“A politician needs the ability to foretell what is going to happen tomorrow, next week, next month, and next year. And to have the ability afterwards to explain why it didn’t happen.”15
—Winston Churchill, former British Prime Minister
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
[1] https://www.britannica.com/dictionary/soft-landing
2 https://www.wsj.com/buyside/personal-finance/banking/what-is-a-soft-landing (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/11-04-24_Buy%20Side%20from%20WSJ_2.pdf)
3 https://www.cnn.com/2024/10/30/economy/us-economy-gdp-q3/index.html
4https://view.e.economist.com/?qs=8c4d858fa9139d530b00b25ec40bdf65fe117f88d5729ea94d87cbf85c43f09e3c17bbd199ce5c4ec8cb2d3777e0fe59cddd9c37a482b43ccf58aee1f87c8be0cf0f07b2684ca669d23da9b81cfb7a85 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/11-04-24_The%20Economist_Money%20Talks_4.pdf)
5 https://www.barrons.com/articles/market-tricked-investors-election-day-bounce-7ea56c39?refsec=the-trader&mod=topics_the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/11-04-24_Barrons_The%20Market%20Tricked%20Investors_5.pdf)
6 https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/11-04-24_Barrons%20Data_6.pdf)
7 https://www.barrons.com/articles/bond-yields-jobs-report-treasury-6f6e602e?mod=md_bond_news (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/11-04-24_Barrons_Bond%20Yields%20Fell%20After%20Jobs%20Report_7.pdf)
9 https://www.nm.org/healthbeat/healthy-tips/11-fun-facts-about-your-brain
10 https://greatergood.berkeley.edu/article/item/eight_reasons_to_distrust_your_own_perceptions
11 https://www.sciencedirect.com/science/article/abs/pii/S002210310800070X#:~
12 https://strgnfibcom.blob.core.windows.net/nfibcom/Banking-Survey-2023-Part-II.pdf [Questions 20-23]
[1]3 https://fred.stlouisfed.org/series/GDP#0 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/11-04-24_FRED%20Data_13.pdf)
[1]4 https://www.investopedia.com/articles/economics/08/recession-affecting-business.asp#:
The Markets
Financial markets appear to have pre-election jitters.
The United States election is less than two weeks away. The candidates are neck and neck. The outcome remains uncertain. And expectations for volatility have been rising, with the CBOE Volatility Index (VIX) finishing last week at 20.33.1
“When the VIX goes north of 20, Wall Street pays attention because that level signals heightened volatility,” reported Connor Smith of Barron’s.2
So far, third-quarter earnings reports have been strong.3 Regardless,stock market investors became significantly less bullish last week, according to the AAII Investor Sentiment Survey. The survey asked investors whether they think the stock market will move higher (bullish) or lower (bearish) over the next six months.4
- Bullish sentiment declined from 45.5 percent the week of October 16 to 37.7 percent last week. (The historic average for bullishness is 37.5 percent.)4
- Bearish sentiment increased from 25.4 percent to 29.9 percent. (The historic average for bearishness is 31 percent).4
- Neutral sentiment also increased from 29.2 percent to 32.4 percent. (The historic average is 31.5 percent.)4
Bond investors also have been adjusting their expectations. Since mid-October, the yield on the benchmark 10-year U.S. Treasury note has trended higher. At the start of the month, the 10-year note yielded 3.74 percent. Last week, its yield rose from 4.07 percent to 4.23 percent.5
“The rise is likely a reflection of the fact the Federal Reserve will cut interest rates fewer times than investors had thought after September’s Federal Open Market Committee meeting, a result of inflation being above its target and a job market that has grown faster than expected. Also, Donald Trump’s chances of winning the presidential election have risen in the past few months, according to RealClearPolitics. His policies include fiscal spending and tariffs, both of which create inflation and throw cold water on the idea that the Fed will cut rates many times. While the economy could continue to grow, tariffs, for their part, not only lift prices, they destroy demand,” reported Jacob Sonenshine of Barron’s.6
Ben Levisohn of Barron’s offered some advice to anyone getting swept up in pre-election jitters. “The truth of the matter is that reading the financial market tea leaves is far from straightforward…In fact, investing with your politics is one of the worst ways to lose money—or miss out on gains.”7 If you have concerns about market volatility or the possible effect of the election on your portfolio, get in touch. We’re happy to talk with you about your concerns and your portfolio.
Last week, the S&P 500 Index and Dow Jones Industrial Average moved lower, while the Nasdaq notched a seventh week of gains.8 Yields on longer maturities of U.S. Treasuries moved higher over the week.9
Data as of 10/25/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -1.0% | 21.8% | 38.7% | 8.4% | 14.0% | 11.5% |
| Dow Jones Global ex-U.S. Index | -2.0 | 7.4 | 21.7 | -1.2 | 3.7 | 2.8 |
| 10-year Treasury Note (yield only) | 4.2 | N/A | 5.0 | 1.6 | 1.8 | 2.3 |
| Gold (per ounce) | 0.7 | 31.4 | 37.7 | 14.8 | 12.5 | 8.3 |
| Bloomberg Commodity Index | 2.0 | 1.6 | -4.6 | -1.8 | 4.8 | -1.5 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
DO YOU TALK ABOUT MONEY? A lot of important events and holidays are coming up in November. There’s Election Day, National Calzone Day, No-Shave November, the International Day for Tolerance and Talk Money Day.10,11
That’s right! On November 8, everyone is encouraged to put their fears aside and begin talking with other people—spouses, partners, roommates, friends, adult children, and younger children—about money. It’s not going to be easy—money talk is tough for many people. Sixty-two percent of Americans who participated in a 2023 survey said they did not talk about money. Those who did have financial conversations generally conversed with a spouse or partner, reported Kamaron McNair of CNBC.12
There are many reasons people avoid financial conversations. They may:
- Believe it is impolite to talk about money.
- Worry that discussions will be awkward.
- Fear being judged for their choices.
- Think their money is no one else’s business.
The issue is less prevalent among younger people than it is among older people, according to CNBC. “…56 [percent] of millennials and 49 [percent] of Gen Zers say they’re having financial conversations on the regular, compared with just 38 [percent] of Gen Xers and 22 [percent] of baby boomers…Talking about money can help young people increase their financial literacy as they learn from and teach their friends. But it’s equally important for younger people to bring up financial topics with their elders—or at least their more experienced peers—especially when it comes to making big decisions,” reported McNair.12
While breaking down the money-talk barrier may be challenging, the rewards can be significant. Financial discussions can improve decision-making, strengthen relationships, and help children develop sound money habits. Our goal is to help the people we serve make financial decisions that help them live the lives they want to lead. If talking about money is a difficult hurdle, get in touch. We can help facilitate these important discussions.
Weekly Focus – Think About It
“The single biggest problem in communication is the illusion that it has taken place.”13
—George Bernard Shaw, Nobel Prize-winning playwright
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
1 https://www.cboe.com/tradable_products/vix/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-28-24_Cboe_VIX%20Index%20Charts_1.pdf)
2 https://www.barrons.com/livecoverage/stock-market-today-102324/card/the-dow-keeps-falling-the-market-s-fear-gauge-is-near-a-key-level–349PmzqKaFkDhC1aYtSc?siteid=yhoof2 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-28-24_Barrons_The%20Dow%20Keeps%20Falling_2.pdf)
4 https://www.aaii.com/sentimentsurvey (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-28-24_Historical%20Sentiment%20Data_5.pdf)
5 https://finance.yahoo.com/quote/%5ETNX/history/
6 https://www.barrons.com/articles/stock-market-danger-zone-tariffs-b2bb22e6?refsec=the-trader&mod=topics_the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-28-24_Barrons_Stock%20Market%20Enters%20Danger%20Zone_7.pdf)
7 https://www.barrons.com/articles/stock-market-trump-harris-election-61b41129?refsec=up-and-down-wall-street&mod=topics_up-and-down-wall-street (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-28-24_Barrons_Market%20is%20Afraid%20of%20Election%20Day_8.pdf)
8 https://www.barrons.com/market-data (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-28-24_Barrons_Data_9.pdf)
10 https://www.calendarr.com/united-states/calendar-november-2024/
11 https://nationaltoday.com/talk-money-day/
12 https://www.cnbc.com/2023/05/10/americans-arent-talking-about-money-it-could-hold-you-back.html
[1]3 https://www.brainyquote.com/quotes/george_bernard_shaw_385438
The Markets
Happy birthday!
The bull market in stocks charged past its two-year birthday on October 12. “This unique bull market is still young relative to history and, for now, supported by relatively healthy breadth and broadening participation,” wrote Liz Ann Sonders and Kevin Gordon of Schwab.1
One factor in the U.S. stock market’s rise has been the American economy’s surprising strength as it recovers from a surge in inflation. Our economy is “the envy of the world” and “has left other rich countries in the dust,” reported Simon Rabinovitch and Henry Curr of The Economist. “Expect that to continue,” they wrote.2
The strength of the U.S. economy was reflected in the release of robust economic data and solid company earnings reports last week. Here’s what happened:
- U.S. retail sales grew faster-than-expected in September.3,4 Retail sales data show how much Americans spent at food and retail stores. The information is considered to be a leading economic indicator, which means that it provides some insight into what may be ahead for the stock market. Will Kenton of Investopedia explained:
“Retail sales is an important indicator that signals either the contraction or expansion of an economy. An increase in retail sales signals a healthy economy that is expanding while a decrease in retail sales signals the opposite. An increase in retail sales usually moves stocks upward and is good for shareholders.”5
- Third quarter earnings season was off to a good start. At the end of each quarter, publicly traded companies report on sales and profits for the previous quarter. Earnings season has a direct effect on share prices and stock market performance. “…if most companies, particularly the established market leaders, report increasing sales and earnings, traders tend to feel more confident about the market’s prospects. When earnings are trending below expectations, it can be a warning sign of potential trouble ahead,” explained Schwab.6
At the end of last week, 14 percent of the companies in the Standard & Poor’s 500 Index had reported third-quarter performance. Seventy-nine percent had beaten analysts’ earnings (profit) expectations, and 64 percent had beaten revenue (income) expectations, according to John Butters of FactSet.7
Major U.S. stock indexes moved higher for the sixth consecutive week,8, 9 and U.S. Treasury yields finished last week in roughly the same place they ended the week before.10
Data as of 10/18/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 0.9% | 23.0% | 35.9% | 9.3% | 14.5% | 11.9% |
| Dow Jones Global ex-U.S. Index | -0.3 | 9.5 | 21.4 | -0.3 | 4.3 | 3.1 |
| 10-year Treasury Note (yield only) | 4.1 | N/A | 4.9 | 1.6 | 1.8 | 2.2 |
| Gold (per ounce) | 2.4 | 30.5 | 38.7 | 15.3 | 12.7 | 8.1 |
| Bloomberg Commodity Index | -2.6 | -0.4 | -7.2 | -1.8 | 4.5 | -1.7 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
AN OFTEN-OVERLOOKED RETIREMENT RISK. When planning for retirement, there is a risk that is sometimes overlooked—the possibility of cognitive decline. It’s not fun to think about, but a significant number of older Americans experience difficulty with memory, problem-solving, concentration and other important mental tasks. Fortunately, there are some strategies that can help protect you and your loved ones.
As people age, they may not be as sharp as they once were. After 65, learning new information can take longer. Retirees, occasionally, struggle to find the right word or misplace their glasses and keys. This is normal aging that “doesn’t affect recognition, intelligence or long-term memory,” according to the Cleveland Clinic.11
In some cases, though, a person experiences a more significant decline in brain function. It may be caused by a health issue, such as a stroke, or a disorder, like Alzheimer’s. About 55 million Americans live with Alzheimer’s disease or another type of dementia.12
The National Institute on Aging suggests that getting enough sleep, eating healthy meals, being physically active, managing any health conditions, connecting with family and friends, and keeping your brain engaged by learning new things can help keep your brain healthy.13
No matter how conscientious you are, it’s also important to organize your finances so they are easy to manage. This often means:
- Building a network of family members and professionals who understand your goals and needs.
- Streamlining your finances so managing money is easier as you age. Automating bill payment, keeping track of accounts through a centralized system, and other actions can help simplify your financial life.
- Putting appropriate planning documents in place, such as a will, a revocable living trust, a power of attorney, and/or a living will that spells out your preferences for medical care.
“Cognitive decline can have devastating consequences for personal finances and sound financial decision-making. The ability to manage finances is one of the first cognitive skills to deteriorate, leaving many people vulnerable to suboptimal financial decision-making and an ever-growing array of pernicious financial scams,” reported Chris Heye in Kiplinger Personal Finance.14
If you would like to learn more, please get in touch.
Weekly Focus – Think About It
“Time and memory are true artists; they remould reality nearer to the heart’s desire.”15
—John Dewey, philosopher
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
[1] https://www.schwab.com/learn/story/is-two-year-old-bull-market-2-legit-2-quit
2 https://www.economist.com/special-report/2024-10-19
3 https://www.census.gov/retail/sales.html
4 https://www.reuters.com/markets/us/us-retail-sales-increase-solidly-september-2024-10-17/
5 https://www.investopedia.com/terms/r/retail-sales.asp
6 https://www.schwab.com/learn/story/earnings-season-what-to-look#
7https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_101824.pdf (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-21-24_Factset_Earnings%20Insight_7.pdf)
9 https://www.barrons.com/market-data
[1]1 https://my.clevelandclinic.org/health/diseases/17990-mild-cognitive-impairment
[1]2 https://www.alz.org/alzheimer_s_dementia
13 https://www.nia.nih.gov/health/brain-health/cognitive-health-and-older-adults
[1]4 https://www.kiplinger.com/retirement/cognitive-decline-how-to-guard-your-finances
[1]5 https://www.brainyquote.com/quotes/john_dewey_163896?src=t_memory
The Markets
There was a lot to celebrate last week!
The Standard & Poor’s 500 Index closed above 5,800 for the first time—and that’s not all.1
The Dow Jones Industrial Average also notched a record high last week—and all three major U.S. stock indices ended the first full week of October with gains of more than one percent.1
There was good economic news, too.
- Inflation continued to slow in September. The Consumer Price Index showed headline inflation was 2.4 percent annualized—the smallest annual increase since February 2021.2
- Consumers are feeling better than they did a year ago. “[Consumer sentiment] is currently 8 [percent] stronger than a year ago and almost 40 [percent] above the trough reached in June 2022,” reported University of Michigan Surveys of Consumers Director Joanne Hsu.3
- The economy continues to grow. After inflation, the U.S. economy grew by 3 percent in the second quarter of 2024.4 Forecasts project that economic growth in the third quarter will be 3.2 percent.5
- Wages have grown faster than inflation. In September 2024, average hourly earnings were up 4 percent. After inflation, they were up 1.5 percent.6 Of course, that’s a broad reading for the entire country and may not reflect individual experience.
“By just about every measure, the U.S. economy is in good shape. Growth is strong. Unemployment is low. Inflation is back down. More important, many Americans are getting sizable pay raises, and middle-class wealth has surged to record levels. We are living through one of the best economic years of many people’s lifetimes…The United States has nearly 7 million more jobs than it did before the pandemic, and the largest share of 25- to 54-year-olds working since 2001,” reported Heather Long of The Washington Post.7
It’s remarkable that many Americans still don’t recognize the strength of the economy. Last week, a Harvard Caps/Harris Poll found that, “63 [percent] of voters believe the U.S. economy is on the wrong track and 62 [percent] characterize it as weak, consistent with perceptions over the past year.”8
Last week, major U.S. stock indexes finished higher.1 U.S. bonds appeared to be headed for a fourth-straight week of declines with the yield on a 10-year note above 4 percent again.9,10
Data as of 10/11/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 1.1% | 21.9% | 32.9% | 10.1% | 14.4% | 12.0% |
| Dow Jones Global ex-U.S. Index | -0.4 | 9.9 | 19.5 | 0.5 | 4.6 | 3.1 |
| 10-year Treasury Note (yield only) | 4.1 | N/A | 4.6 | 1.6 | 1.8 | 2.3 |
| Gold (per ounce) | -0.1 | 27.4 | 41.6 | 14.7 | 12.4 | 8.0 |
| Bloomberg Commodity Index | -1.2 | 2.2 | -2.2 | -0.6 | 5.0 | -1.7 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
IT’S POLICY THAT AFFECTS STOCK MARKETS, NOT POLITICS. Although presidential elections can affect financial markets over the short term, it is the policies a new President introduces that influence economic growth and the stock market. Sometimes, policies lift the economy. Other times, they don’t. For example:
President Thomas Jefferson embargoed all trade with England and France, preventing U.S. ships from doing business with other countries. While he had sound reasons for pursuing the policy, “It decimated the economy…As many as half of the working men in the New England coastal communities were unemployed. Poor houses were overflowed, banks failed,” reported WBUR.11
The embargo was not popular. Eventually, American merchants found loopholes that allowed them to trade with Canada and Spanish Florida. Smuggling also increased.12
President Abraham Lincoln had a profound impact on the United States economy. He led the country through the Civil War, and signed the Emancipation Proclamation, which led to the end of slavery and necessitated the adoption of new economic models.13
Research from the University of Chicago suggests that “emancipation generated aggregate economic gains for the U.S. economy that were worth between 4 and 35 percent of U.S. GDP, making it, even at the low end of their estimation, one of the most important economic events in U.S. history—bigger than the introduction of railroads, by some estimates, and worth 7 to 60 years of technological innovation in the latter half of the 19th century.”13
President Jimmy Carter faced an embargo—the Arab oil embargo of 1973. Demand for gasoline far outstripped supply in the United States, and Americans waited in long lines to fill their cars’ gas tanks.14 In response, the President developed energy conservation strategies.
“President Carter signed energy legislation that created the U.S. Department of Energy, provided incentives for renewables and coal, deregulated oil and natural gas prices, and banned new power plants from using gas or oil. Some of these policies have had a lasting effect. Others drew criticism and were ultimately repealed,” stated historian Jay Hakes on a Center for Global Energy Policy podcast at Columbia University.15
While there are usually differences of opinion when new policies are implemented, the economic outcome is sometimes difficult to predict.
Weekly Focus—Think About It
“History is a jangle of accidents, blunders, surprises and absurdities, and so is our knowledge of it, but if we are to report it at all we must impose some order upon it.16
—Henry Steele Commager, historian
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
1 https://www.barrons.com/market-data (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-14-24_Barrons_Data_1.pdf)
2 https://www.bls.gov/news.release/cpi.nr0.htm
3 http://www.sca.isr.umich.edu
4 https://www.bea.gov/sites/default/files/2024-09/gdp2q24-3rd.pdf
5 https://www.atlantafed.org/cqer/research/gdpnow
6 https://www.bls.gov/news.release/realer.t01.htm (Table 1a)
7 https://www.washingtonpost.com/opinions/2024/10/10/economy-great-year-election/
8 https://harvardharrispoll.com/press-release-sep-2024/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-14-24_Bloomberg_Bond%20Traders%20Big%20Week%20Ends%20With%20Fed%20Rate%20Cuts%20Even%20Less%20Certain_8.pdf)
11 https://www.wbur.org/radioboston/2012/06/15/new-england-succession
[1]2 https://mises.org/mises-daily/jeffersons-disastrous-embargo
15 https://www.energypolicy.columbia.edu/jimmy-carters-energy-policy-legacy/
The Markets
Living the realities of risk and reward.
Asset allocation is important because it helps investors manage the risk and rewards of investing. In general, investments have different levels of risk and the potential return (or reward) for taking that level of risk is a higher return. For example, investing in stocks typically has greater risk than investing in quality bonds or cash. In return for taking a higher level of risk (i.e., tolerating the ups and downs of the stock market) investors have the potential to earn higher returns. Quality bonds have less risk that stocks and offer lower return potential, and cash/cash equivalents has the least risk and the lowest return potential.1
During the third quarter of 2024—July through September—the stock market offered a lively ride that demonstrated the concept of risk and reward. Major U.S. stock indices bobbed up and down throughout July before dropping sharply in the first week of August when the July unemployment report lagged expectations. The news caused investors to wonder whether the Fed had waited too long to lower rates, the economy was slowing too quickly, and a recession might be ahead, reported Will Daniel of Fortune via Yahoo!Finance.2,3
The stock market rebounded over the remainder of the month as inflation continued to trend lower and economic data remained robust. Then, during the first week of September, the number of new jobs created in August was lower than predicted and investor confidence stumbled again.4 Uncertainty led to a sharp—and short-lived—decline in stock prices.5 From that week on, U.S. stock prices trended higher.
Over the quarter, the dips and dives of the stock market made many investors’ stomachs drop, but by the end of the quarter, stock prices overall had moved significantly higher. Josh Schafer and Karen Friar of Yahoo!Finance reported:
“Wall Street indexes recorded monthly wins to close out the last trading day of September. Notably, the S&P 500 notched its best year-to-date performance at September’s end since 1997…Over the last three months, the Dow led the major indexes’ gains, up 8.2 [percent]. The S&P gained 5.4 [percent], and the Nasdaq added nearly 3 [percent].”6
Investors appear to have set aside worries about the U.S. economy and rightfully so, according to Mark Zandi, the chief economist at Moody’s Analytics. At the end of September, he wrote:
“I’ve hesitated to say this at the risk of sounding hyperbolic, but with last week’s big GDP revisions, there is no denying it: This is among the best performing economies in my 35+ years as an economist. Economic growth is rip-roaring, with real GDP up 3 [percent] over the past year. Unemployment is low at near 4 [percent], consistent with full employment. Inflation is fast closing in on Fed’s 2 [percent] target—grocery prices, rents and gas prices are flat to down over the past more than a year. Households’ financial obligations are light, and set to get lighter with the Fed cutting rates. House prices have never been higher, and most homeowners have more equity in their homes than ever. Corporate profits are robust, and the stock market is hitting a record high on a seemingly daily basis. Of course there are blemishes, as lower-income households are struggling financially, there is a severe shortage of affordable homes, and the government is running large budget deficits. And things could change quickly. There are plenty of threats. But in my time as an economist, the economy has rarely looked better.”7
Last week, the S&P 500 Index and Dow Jones Industrial Average closed higher after the U.S. employment report showed 254,000 jobs were created in September. That was well above expectations. The number of jobs created in July and August were revised higher, too. 8,9,10 Yields on many maturities of U.S. Treasuries moved higher last week.11
Data as of 10/4/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 0.2% | 20.5% | 34.9% | 10.2% | 14.3% | 11.3% |
| Dow Jones Global ex-U.S. Index | -2.2 | 10.3 | 24.4 | 1.0 | 5.1 | 2.9 |
| 10-year Treasury Note (yield only) | 4.0 | N/A | 4.7 | 1.5 | 1.5 | 2.4 |
| Gold (per ounce) | -0.4 | 27.5 | 45.7 | 14.7 | 12.1 | 8.3 |
| Bloomberg Commodity Index | 1.8 | 3.5 | 0.4 | 0.0 | 5.6 | -1.6 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
WHAT DO YOU KNOW ABOUT HOLIDAYS? Holidays and the economyare inextricably intertwined. Halloween, Thanksgiving, Hannukah, Christmas, Yaldā Night, Kwanzaa, Mother’s Day, Father’s Day, Lunar New Year and other celebrations give the U.S. economy a boost because people spend money to observe them. It works the other way, too. The state of the economy can affect how much consumers spend on holidays. When the economy is doing well, they typically have more to spend, and vice versa.
See what you know about holidays by taking this brief quiz.
- Which of the following events did Americans spend the most on in 2024?
- Fourth of July
- The Super Bowl
- St. Patrick’s Day
- Father’s Day
- Americans are expected to spend about $104 per person on Halloween in 2024.12 Some of that money will be spent on costumes. According to a National Retail Federation survey, which costume ranks in the top five for both children and pets?
- Pumpkin
- Ghost
- Hot dog
- Superhero
- In 2024, back-to-school shoppers (K-12) expected to spend the highest percentage of their budgets on which of the following categories?
- Shoes
- Electronics
- Classroom supplies
- Clothing
- A recent survey found that Gen Xers like Thanksgiving and Memorial Day holidays the best, while Baby Boomers prefer Memorial Day and Veteran’s Day. Which holidays are at the top of the list for Millennials?
- Thanksgiving Day and Mother’s Day
- Memorial Day and Veteran’s Day
- Christmas and Martin Luther King Day
- Halloween and New Year’s Eve
Weekly Focus – Think About It
“We have seasons when we flourish and seasons when the leaves fall from us, revealing our bare bones. Given time, they grow again.”13
—Katherine May, author
Answers: 1) d14; 2) b15; 3) b16; 4) a17
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
1 https://www.investopedia.com/terms/a/assetallocation.asp
2 https://finance.yahoo.com/quote/%5EGSPC/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-07-24_Yahoo%20Finance_Data_2.pdf)
3 https://finance.yahoo.com/news/august-stock-market-fiasco-stark-130900158.html
4 https://www.washingtonpost.com/business/2024/09/06/august-jobs-unemployment-labor-market/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-07-24_Washington%20Post_August%20Jobs%20Unemployment%20Labor%20Market_4.pdf)
5 https://www.reuters.com/markets/us/futures-drop-investors-brace-payrolls-data-2024-09-06/
7 https://x.com/Markzandi/status/1840488882405614037#
8 https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-07-24_Barrons_Data_8.pdf)
9 https://www.bls.gov/news.release/empsit.nr0.htm
[1]2 https://nrf.com/research-insights/holiday-data-and-trends/halloween
[1]4 https://nrf.com/research-insights/holiday-data-and-trends/fathers-day; https://nrf.com/research-insights/holiday-data-and-trends/super-bowl; https://nrf.com/research-insights/holiday-data-and-trends/st-patricks-day; https://nrf.com/research-insights/holiday-data-and-trends/independence-day/independence-day-data-center (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-07-24_NRF_Spending_14.pdf)
[1]7 https://today.yougov.com/ratings/entertainment/popularity/national-religious-events/millennials
The Markets
The Standard & Poor’s (S&P) 500 Index hit a new all-time high last week.1
The S&P 500 has had quite a year. Despite a sharp downturn in August when investor confidence was ruffled by concerns about economic growth, the Index was up about 20 percent, year-to-date, at the end of last week. The gains were widespread with all sectors of the Index participating, according to data from Fidelity.2
Last week, investor enthusiasm was bubbling up. There were a lot of reasons for their optimism. First, investors were encouraged by the Federal Reserve’s rate reduction earlier this month and expectations that the Fed will continue to reduce the federal funds rate further to support economic growth.3 Jacob Sonenshine of Barron’s explained the advantages conferred by the Fed’s actions:
“Lower rates would only boost consumer spending on housing and other goods and services—a demand picture that will spur investment from companies, helping the industrial economy specifically. This all means companies’ profit growth could easily extend from next year into 2026. Analysts expect S&P 500 companies, in aggregate, to generate annual sales growth just above 5 [percent] over the coming two years, according to FactSet.”4
Second, a round of positive economic news helped investors set aside any lingering concerns about economic growth. Brian Evans and Lisa Kailai Han of CNBC reported:
“A slate of fresh data supported a solid economy, easing fears that perhaps the Federal Reserve is cutting rates aggressively because of a potential slowdown. Weekly jobless claims fell more than expected, pointing to a steady labor market. Durable goods orders for August were unchanged versus economists’ expectations for a decline. Further, the final reading of second-quarter GDP was unrevised at a strong 3 [percent].”1
In addition, inflation continued to trend lower in August. The Fed’s favored inflation gauge, the personal consumption expenditures index, indicated prices rose 0.1 percent.5 Megan Leonhardt of Barron’s reported:
“The August pace [of inflation] was also lower than consensus calls…The latest data show that the annualized three-month core PCE is currently running below the Fed’s 2 [percent] inflation target. It should help erase any doubts that the Federal Open Market Committee made the right call when it slashed benchmark interest rates by a half percentage point earlier this month.”6
Last week, the S&P hit a new all-time high, as well as a record close.1 The Dow Jones Industrial Average and Nasdaq Composite Index also rose last week.7 After rising earlier in the week, yields on many maturities of U.S. Treasuries moved lower on Friday after inflation news shored up expectations for further Fed rate cuts.8
Data as of 9/27/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 0.6% | 20.3% | 34.2% | 8.9% | 14.1% | 11.3% |
| Dow Jones Global ex-U.S. Index | 4.1 | 12.8 | 23.7 | 0.6 | 5.2 | 2.9 |
| 10-year Treasury Note (yield only) | 3.8 | N/A | 4.6 | 1.5 | 1.7 | 2.5 |
| Gold (per ounce) | 2.2 | 28.1 | 41.0 | 14.9 | 12.3 | 8.1 |
| Bloomberg Commodity Index | 2.1 | 1.6 | -5.2 | -0.2 | 5.2 | -1.8 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
THERE’S A NEW TWIST TO HOME BUYING AND SELLING. Mortgage rates have been moving lower. Last week, the average 30-year fixed rate mortgage dropped to the lowest level in two years, reported Claire Boston of Yahoo! Finance.9 This was welcome news to anyone hoping to buy a home.
Climate conscious buyers are also likely to be enthusiastic about a new feature being rolled out by an online real estate marketplace. The digital listing service is partnering with a climate risk financial modeling group to provide additional climate risk information to buyers.10
“When viewing a for-sale property…home shoppers will see a new climate risk section. This section includes a separate module for each risk category—flood, wildfire, wind, heat and air quality—giving detailed, property-specific data…This section not only shows how these risks might affect the home now and in the future, but also provides crucial information on wind, fire and flood insurance requirements,” reported the listing service.10
About 80 percent of home buyers consider at least one climate risk when shopping for a house, according to a recent survey. Home buyers in the Western and Northeastern United States are more likely to be aware of and concerned about the impact of climate risks, while about a third of Midwestern and Southern home shoppers say climate factors are not a significant concern as they search for real estate.11
The wisdom of considering climate risks when making major financial purchases has been evident in recent weeks as Hurricane Helene left a trail of destruction across Florida and the southeastern United States,12 Hurricane Francine tore into Louisiana, and flooding and wildfires have plagued regions of the United States.13
It’s also critical to consider whether a property is insurable and how much the insurance will cost. The climate risk financial modeling group found that “about 35.6 million properties—a quarter of all U.S. real estate—are facing higher insurance costs and lower coverage because of climate risks,” reported Li Cohen, Tracy J. Wholf, and Marina Jurica of CBS News.13
Weekly Focus – Think About It
“Risk comes from not knowing what you’re doing.”14—Warren Buffett, The Oracle of Omaha
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
[1] https://www.cnbc.com/2024/09/25/stock-market-today-live-updates.html
2 https://digital.fidelity.com/prgw/digital/research/sector
3 https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20240918.pdf
4 https://www.barrons.com/articles/stock-market-melt-up-9739e83a?mod=hp_LEAD_1_B_2 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-30-24_Barrons_The%20Stock%20Market%20is%20Melting%20Up_4.pdf)
5 https://www.bea.gov/news/2024/personal-income-and-outlays-august-2024
6 https://www.barrons.com/articles/august-pce-inflation-report-release-today-f2b2b883 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-30-24_Barrons_Inflation%20Cooled%20in%20August_6.pdf)
7 https://www.barrons.com/market-data (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-30-24_Barrons_Data_7.pdf)
9 https://finance.yahoo.com/news/30-year-mortgage-rate-hits-2-year-low-161147933.html
[1]3 https://www.cbsnews.com/news/maps-home-insurance-costs-state-extreme-weather-risks/# [1]4https://www.brainyquote.com/quotes/warren_buffett_138173?src=t_not_knowing
The Markets
Rates moved lower and stocks moved higher.
In 2022, the United States Federal Reserve (Fed) began raising interest rates as it battled high rates of inflation. That year prices rose 8 percent, as measured by the Consumer Price Index. In 2023, prices increased more slowly (4.1 percent), but still advanced at a pace that was well above the Fed’s target of two percent.1 Last month, prices rose 2.5 percent annualized.2 And last week, the Fed decided it is time to change course.3
“On Wednesday, policymakers indicated their rate cut would likely be the first of several through the end of next year. The median forecast among members of the Federal Open Market Committee was that the benchmark federal-funds rate will be at 3.4 [percent] by the end of 2025, compared with the current targeted range of 4.75 [percent] to 5 [percent],” reported Elizabeth O’Brien and Shaina Mishkin of Barron’s. “This marks a significant shift. The Fed has moved from a phase when it kept rates high to combat inflation to one where it is lowering them to support the labor market and the broad economy.”4
As borrowing costs move lower, other interest rates are likely to follow. As a result, consumers, investors, and business owners may have opportunities to:
- Pay lower interest rates on auto and home loans,
- Refinance mortgages at lower rates, and
- Tap into home equity at a lower cost.
Major U.S. stock indices rose on Thursday, following the Fed’s rate cut. “The S&P 500 climbed 1.7 [percent]—notching its 39th record in 2024 and extending this year’s surge to about 20 [percent],” reported Rita Nazareth of Bloomberg. “The Fed’s bold start to cutting interest rates and its determination not to fall behind the curve re-ignited hopes the central bank will be able to avoid a recession. Data Thursday showing a slide in jobless claims to the lowest since May signaled the labor market remains healthy despite a slowdown in hiring.”5
Stocks gave back some gains on Friday but finished week higher.6 Yields on U.S. Treasuries were mixed over the week.7
Data as of 9/20/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 1.4% | 19.6% | 29.5% | 9.4% | 13.8% | 11.1% |
| Dow Jones Global ex-U.S. Index | 1.0 | 8.3 | 14.7 | -0.4 | 4.2 | 2.3 |
| 10-year Treasury Note (yield only) | 3.7 | N/A | 4.4 | 1.3 | 1.8 | 2.6 |
| Gold (per ounce) | 1.2 | 25.4 | 34.1 | 14.0 | 11.7 | 7.9 |
| Bloomberg Commodity Index | 2.1 | -0.5 | -8.5 | 0.7 | 4.4 | -1.9 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
You’re Talking My Language! They say the only constant is change, and that’s certainly the case when it comes to language. Pronunciations, meanings and syntax often change gradually. However, some changes, especially when it comes to vocabulary, occur quite quickly.8 For instance, “social media,” “content curation,” and “influencers” are recent additions to the lexicon of American English. There is one aspect of language that has been modified by every generation—slang. See what you know about generational jargon by engaging with this brief quiz.
- Which term describes a person who is pretending to be someone else while chatting online?
- Goat
- Catfish
- Chameleon
- Octopus
- In the 1950s, when something was “radioactive,” it was:
- Exhausting
- Toxic
- Popular
- Crazy
- Which of these is not a choice example of 1980s slang?
- Wannabe
- Not even
- Psych
- Bae
- When you give someone the side-eye, what are you doing?
- Looking at them with suspicion
- Checking them out without being obvious
- Flirting with them
- Admiring their clothing or accessories
- If you’re feeling resentful or bitter, someone might accuse you of being:
- Blue
- Salty
- Sus
- Delulu
Weekly Focus – Think About It
“Slang is a language that rolls up its sleeves, spits on its hands and goes to work.”9
—Carl Sandburg, poet
Answers: 1) b10 2) c11; 3) d12; 4) a13; 5) b14
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
[1] https://fred.stlouisfed.org/series/FPCPITOTLZGUSA
2 https://www.bls.gov/news.release/cpi.nr0.htm
3 https://www.federalreserve.gov/newsevents/pressreleases/monetary20240918a.htm
4 https://www.barrons.com/articles/rate-cut-savings-yields-what-to-do-c0833d40 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-23-24_Barrons_Rate%20Cut%20Brings%20a%20New%20Day_4.pdf)
5 https://www.bloomberg.com/news/articles/2024-09-18/stocks-bonds-rangebound-as-traders-digest-fed-cut-markets-wrap?srnd=undefined (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-23-24_Bloomberg_S&P%20500%20Hits%20Record%20High%20Buoyed%20by%20Economic%20Hopes_5.pdf)
6 https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-23-24_Barrons_Data_6.pdf)
8 https://www.britannica.com/topic/language/Linguistic-change
9 https://www.goodreads.com/author/quotes/16380.Carl_Sandburg?page=6
[1]0 https://www.merriam-webster.com/dictionary/catfish
[1]1 https://www.yourdictionary.com/articles/1950s-slang
[1]2 https://www.dictionary.com/browse/bae#
[1]3 https://www.merriam-webster.com/dictionary/side-eye [1]4https://www.merriam-webster.com/dictionary/salty
The Markets
There was a lot of good news last week!
Inflation continued to trend lower. The Consumer Price Index showed that inflation was 2.5 percent year over year (yoy) in August. That’s lower than economists had expected, and a significant decline from July’s 2.9 percent.1, 2
Food and energy prices have been falling faster than some other prices because the core CPI, which excludes food and energy, showed a 3.2 percent increase over the last 12 months. The biggest price increases were for shelter (+5.2 percent yoy) and automobile insurance (+16.5 percent yoy).1
Consumers are happier. The University of Michigan’s Consumer Sentiment Survey found that optimism is on the rise. “Year-ahead expectations for personal finances and the economy both improved as well, despite a modest weakening in views of labor markets. Sentiment is now about 40 [percent] above its June 2022 low, though consumers remain guarded as the looming election continues to generate substantial uncertainty,” reported Surveys of Consumers Director Joanne Hsu. “Year-ahead inflation expectations fell for the fourth straight month, coming in at 2.7 [percent].”3
Household net worth is up in the United States. Last week, the Federal Reserve reported on the financial well-being of households and nonprofit organizations at the end of June 2024.4 Over the last decade household and nonprofit net worth has risen from $85 trillion (2Q 2014) to $164 trillion (2Q 2024).5 Vince Golle of Bloomberg reported:
“U.S. household wealth reached a fresh record in the second quarter, fueled by a steady rise in the value of real estate and Americans’ stock holdings…The value of real estate held by households climbed about $1.75 trillion, the most in a year, while the value of equity holdings rose about $662 billion.”6
It’s important to note that not all Americans participate equally as wealth grows. The top 10 percent of households hold 67 percent of all household wealth, while the bottom 50 percent hold just 2.5 percent, according to the St. Louis Federal Reserve.7
Stocks and bonds had a good week. Last week, major U.S. stock indices moved higher,8 and U.S. Treasury bonds rallied as yields on all maturities of Treasuries moved lower.9
Data as of 9/13/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 4.0% | 18.0% | 25.9% | 8.0% | 13.3% | 11.0% |
| Dow Jones Global ex-U.S. Index | 1.2 | 7.3 | 14.3 | -1.7 | 3.9 | 2.1 |
| 10-year Treasury Note (yield only) | 3.65 | N/A | 4.3 | 1.3 | 1.9 | 2.6 |
| Gold (per ounce) | 2.8 | 23.9 | 34.6 | 12.8 | 11.4 | 7.6 |
| Bloomberg Commodity Index | 2.6 | -2.5 | -10.1 | -0.5 | 4.1 | -2.3 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
WHICH IS MORE POPULAR: BUTTER, ICE CREAM, YOGURT OR CHEESE? My best guess was ice cream, but that’s not the case. Ilena Peng of Bloomberg explained, “America’s per capita cheese consumption has more than doubled since the government began keeping track in 1975, to about 42 pounds a year—more than all the butter, ice cream and yogurt combined.”10
When it comes to dairy products, cheese is the big cheese. As milk consumption has declined, cheese eating has accelerated. According to the United States Department of Agriculture (USDA), rising demand for cheese has become “one of the most important forces shaping the U.S. dairy industry.”11
The popularity of cheese owes much to the pandemic, according to Bloomberg’s Peng. It may be that working from home improved proximity to refrigerators or that efforts to recreate favorite restaurant meals elevated demand for cheesy goodness.10
Either way, the global market for cheese is growing, and the cheese snack market is expected to expand “at a compound annual growth rate of 6.5 [percent] through 2034,” reported Corey Geiger, Abbi Prins and Billy Roberts for the CoBank Knowledge Exchange.12 According to one company’s survey, the most-produced, top-selling, and most widely eaten cheeses in the U.S. include:13
- Cheddar,
- Mozzarella,
- Parmesan,
- American, and
- Cream cheese.
That list did not include cottage cheese, which has been having a moment on social media. “People have taken to [a social media site] to show how cottage cheese can be used in better-for-you recipes, with creative dishes like viral cottage cheese flatbread and ice cream. At-home followers looking to recreate these recipes have helped cottage cheese boost dairy sales,” reported Gabriela Barkho of Modern Retail. “According to Circana data from May, cottage cheese sales were up 13.5 [percent] year-over-year, up to $1.33 billion.”14
What’s your favorite cheese?
Weekly Focus – Think About It
“A cheese may disappoint. It may be dull, it may be naive, it may be oversophisticated. Yet it remains cheese, milk’s leap toward immortality.”15
—Clifton Fadiman, television and radio personality
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
[1] https://www.bls.gov/news.release/cpi.nr0.htm
2 https://www.bls.gov/opub/ted/2024/the-consumer-price-index-rose-2-5-percent-over-the-past-year.htm
3 http://www.sca.isr.umich.edu
4 https://www.federalreserve.gov/releases/z1/20240912/html/recent_developments.htm
5 https://www.federalreserve.gov/releases/z1/dataviz/z1/balance_sheet/chart/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-16-24_Bloomberg_US%20Household%20Net%20Worth%20Climbs%20to%20Record%20on%20Home%20Values%20Stocks_5.pdf)
7 https://www.stlouisfed.org/institute-for-economic-equity/the-state-of-us-wealth-inequality (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-16-24_Barrons_Data_7.pdf)
8 https://www.barrons.com/market-data
9 https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202409 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-16-24_Bloomberg_The%20Average%20American%20Eats%2042%20Pounds%20of%20Chees%20a%20Year_9.pdf)
[1]1 https://www.ers.usda.gov/topics/animal-products/dairy/background/
12 https://www.cobank.com/knowledge-exchange/dairy/dairy-products-have-more-growth-potential#:~:text=Globally%2C%20the%20cheese%20snack%20market,of%20the%2015%20dairy%20categories (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-16-24_Modern%20Retail_TikTok%20Ignited%20a%20Cottage%20Cheese%20Renaissance_12.pdf)
[1]3 https://www.cellocheese.com/most-popular-cheeses/
[1]4 https://www.modernretail.co/marketing/tiktok-has-ignited-a-cottage-cheese-renaissance/#:~ [1]5https://www.goodreads.com/quotes/tag/cheese?page=5
The Markets
Investing in September can be like biting into a jelly doughnut and finding boiled cabbage—full of unwelcome surprises.
“History suggests September is the worst month of the year in terms of stock-market performance,” reported Isabel Wang of Morningstar. The Standard & Poor’s (S&P) 500 Index “has generated an average monthly decline of 1.2%…dating back to 1928, according to Dow Jones Market Data.”1
One reason for the sharp stock market decline last week appeared to be concerns that the Federal Reserve may have waited too long to lower rates. During the week, economic data continued to present a mixed picture of the U.S. economy. The employment report released on Friday showed the United States added about 142,000 jobs in August—a significant increase from July—and that average hourly earnings were up 3.8 percent year over year. In addition, the unemployment rate ticked lower to 4.2 percent.2
However, the report wasn’t quite as rosy as those numbers suggest. Fewer jobs were created than economists had predicted and “downward revisions from the two previous months suggest that the labor market is cooling faster than the initial data may indicate,” reported Lauren Kaori Gurley and Rachel Siegel of The Washington Post.3
The information has some pundits speculating that Fed officials may opt for a larger rate cut than originally anticipated at the Fed meeting in September, according to CME FedWatch.4 On Friday, Federal Reserve Governor Christopher Waller said he support a September rate cut and was “open-minded about the size and pace of those reductions,” reported Ann Saphir of Reuters.5
In recent weeks, investors have been feeling quite bullish, according to the AAII Sentiment Survey. During the last two weeks of August, more than 50 percent of survey participants indicated they expected the stock market to rise over the subsequent six months. The level of optimism among survey participants came close to the survey’s all-time high (52.9 percent on December 20, 2023) and remained well above the historical average of 37.5 percent.6
Last week, investor sentiment shifted. Fewer participants were bullish – and fewer participants were bearish.6 The number of respondents who were neutral increased, which means they think stock prices will remain relatively unchanged over the next six months.7
By the end of last week, major U.S. stock indices had moved lower, while bond markets rallied.8 U.S. Treasury yields fell across the yield curve9 and finished the week with the yield on the benchmark 10-year U.S. Treasury above the yield on the 2-year U.S. Treasury for the first time since July 2022, reported Connor Smith of Barron’s.10
When markets are volatile, as they were last week, it’s normal for investors to worry. Before making any changes in response to short-term market fluctuations, remember that historical performance supports the idea that staying invested is a sound way to pursue long-term financial goals. If you have any questions about recent market volatility or your investments, please get in touch.
Data as of 9/6/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -4.3% | 13.4% | 21.1% | 6.2% | 12.7% | 10.5% |
| Dow Jones Global ex-U.S. Index | -2.5 | 6.1 | 12.8 | -2.4 | 3.9 | 1.8 |
| 10-year Treasury Note (yield only) | 3.7 | N/A | 4.3 | 1.4 | 1.6 | 2.5 |
| Gold (per ounce) | -0.3 | 20.6 | 30.4 | 11.2 | 10.5 | 7.1 |
| Bloomberg Commodity Index | -2.5 | -5.0 | -11.9 | -0.7 | 3.8 | -2.8 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
THE STRANGE STORY OF TRANSPARENT MICE. A big challenge for medical and biological researchers is an inability to see inside living creatures. Sophisticated imaging techniques are helpful, but they don’t always provide a clear picture. That may be about to change. Researchers at Stanford University:
“…found that a yellow food dye called tartrazine, used to color everything from M&Ms to Gatorade, can, if applied to the skin of a live mouse, make the tissue transparent. The effect was pronounced enough for researchers to see blood vessels beneath the animal’s scalp, some of its abdominal organs and a number of the more delicate muscles in its legs—sights hitherto only directly visible through dissection. When the dye was washed off, the skin’s natural opacity returned,” reported The Economist.11
Why does yellow food dye make it possible to see through mouse skin? In general, skin is opaque because fats, protein, and water scatter light and prevent it from passing through the skin. Food dyes are great light absorbers. As a result, a combination of tartrazine and water applied to mouse skin helps light travel more directly through the skin, making it transparent.11
The discovery may have a wide variety of applications, according to a source cited by Carolyn Y. Johnson of The Washington Post. The technique could someday help researchers:12
- Observe brain activity;
- Diagnose deep tumors without surgery;
- Locate veins more easily for IVs and blood draws; and
- Make cosmetic procedures (like tattoo removal) more precise.
The lead researcher on the study, which was published in the print issue of the journal Science on September 6, Dr. Zihao Ou told The Economist, “It will take more work before humans are added. As human skin is ten times thicker than that of mice, replicating the tetrazine experiment would require far longer application periods…It is also unclear just how reversible such a process would be.”11
Clearly, there is more work to be done!
Weekly Focus – Think About It
“The real voyage of discovery consists not in seeking new landscapes, but in having new eyes.”13
—Marcel Proust, novelist
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
2 https://www.bls.gov/news.release/pdf/empsit.pdf
3 https://www.washingtonpost.com/business/2024/09/06/august-jobs-unemployment-labor-market/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-09-24_The%20Washington%20Post_3.pdf)
4 https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
6 https://www.aaii.com/sentimentsurvey (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-09-24_AAII%20Investor%20Sentiment%20Survey_6.pdf)
7 https://www.aaii.com/latest/article/234628-aaii-sentiment-survey-neutral-sentiment-rises
8 https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-09-24_Barrons_Data_8.pdf)
10 https://www.barrons.com/livecoverage/stock-market-today-090624?mod=article_inline (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-09-24_Barrons_The%20Yield%20Curve%20Finally%20Closed%20Normal_10.pdf)
11 https://www.economist.com/science-and-technology/2024/09/05/a-common-food-dye-can-make-skin-transparent (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-09-24_The%20Economist_A%20Common%20Food%20Dye%20Can%20Make%20Skin%20Transparent_11.pdf)
12 https://www.washingtonpost.com/science/2024/09/05/see-through-transparent-mice-food-dye/?_pml=1 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-09-24_The%20Washington%20Post_Scientists%20Use%20Food%20Dye%20in%20Doritos%20to%20Make%20See-Through%20Mice_12.pdf)
[1]3 https://www.brainyquote.com/quotes/marcel_proust_107111?src=t_discovery
The Markets
After gyrating wildly throughout the month, major U.S. stock indexes finished August higher.
Despite a lot of uncertainty and some dramatic ups and downs, the Standard & Poor’s (S&P) 500 Index rose 2.3 percent in August, while the Dow Jones Industrial Average gained 1.8 percent to close at a record high. It was the fourth consecutive month of gains for both indexes, reported Connor Smith of Barron’s.1
The month’s most remarkable comeback belonged to the Nasdaq Composite Index which eked out a 0.6 percent gain for the month. “That’s a shocking turnaround, given the Nasdaq entered correction territory early in the month…,” reported Smith.1 (A correction is a decline of at least 10 percent.2)
As sentiment calmed, the CBOE Volatility Index (VIX), which gauges how volatile investors expect the market to be over the next 30 days, moved lower. “Wall Street’s ‘fear gauge’—the VIX—dropped to 15. That’s after an unprecedented spike that took the index above 65 during the Aug. 5 market selloff,” reported Rita Nazareth of Bloomberg.3
Why did investors regain their confidence?
There was some good economic news last week that proved to be just what markets were hoping to see. The data were strong enough to allay fears the economy might weaken too fast, but not so strong they might cause the U.S. Federal Reserve (Fed) to change its mind about lowering the federal funds rate in September. Here’s what happened:
- The economy remains steady. Investors have been worried U.S. economic growth might be slowing more quickly than previously thought. Those concerns were soothed when the Bureau of Economic Analysis revised its estimate for gross domestic product (GDP)—which is the value of all goods and services produced in the U.S. —from April through June.4 “The U.S. economy grew faster than initially thought in the second quarter amid strong consumer spending, while corporate profits rebounded, which should help to sustain the expansion,” reported Lucia Mutikani of Reuters.5
- Inflation continues to soften. On Friday, one of the Fed’s favored inflation gauges—the personal consumption expenditures (PCE) price index—showed headline inflation was 2.5 percent year over year. Core inflation, which excludes volatile food and energy prices, was up 2.6 percent year over year.6 “The soft price growth continues a recent stretch of cooler inflation readings and falls in line with what Fed officials were hoping to see before easing their restrictive monetary-policy stance,” reported Megan Leonhardt of Barron’s.7
Last week, major U.S. stock indices moved higher.1 Yields for U.S Treasuries with shorter maturities moved lower over the week, while yields for longer maturities moved higher.8
Data as of 8/30/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 0.2% | 18.4% | 25.1% | 7.6% | 14.1% | 10.9% |
| Dow Jones Global ex-U.S. Index | 0.4 | 8.8 | 14.3 | -0.8 | 5.0 | 2.1 |
| 10-year Treasury Note (yield only) | 3.9 | N/A | 4.1 | 1.3 | 1.5 | 2.4 |
| Gold (per ounce) | 0.1 | 20.9 | 29.4 | 11.5 | 10.5 | 6.9 |
| Bloomberg Commodity Index | -0.4 | -2.6 | -9.5 | 0.0 | 4.5 | -2.6 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
WE JUST WANT TO HAVE FUN! When you live a busy and sometimes stressful life, play can be important for your health. Adam Piore of Newsweek reported, “A weighty and growing body of evidence—spanning evolutionary biology, neuroscience and developmental psychology—has in recent years confirmed the centrality of play to human life. Not only is it a crucial part of childhood development and learning but it is also a means for young and old alike to connect with others and a potent way of supercharging creativity and engagement.”9
The idea dovetails with a cultural trend known as “kidulting.” The Economist reported on the rise of kidulting, “…where adults engage in lighthearted activities traditionally designed for children…a giant ball pit for adults in three British cities, welcomes 25,000 visitors each month. Even museums and immersive exhibitions typically aimed at actual children now host adult-only evenings…Enthusiasts say that such spaces heighten creativity, human connection and joy, triggering the pleasure-seeking chemical [dopamine].”10
New museums have popped up to help adults unleash their inner child. For example, the Museum of Ice Cream offers a fun-dae out for adults (children are welcome, too). They can frolic in pools of artificial ice cream sprinkles, engage with themed playscapes, and eat ice cream.11
The WNDR Museum offers a completely different kind of fun. It engages visitors through interactive experiences with installations like The Wisdom Project that asks visitors to answer the question, “What do you know for sure?” and requests that they consider what information is important enough to put out into the world.12 Museum visitors also can use imagination to create AI-generated artwork13 or visit the Quantum Mirror, “an infinity room with over 150 mirrors that touches on our interaction with technology. Our obsession with screens, the way that our self-perception has changed as social media has become more popular in our society.”14
The National Institute for Play cautions that, while play is important for adults, what one person embraces as play may be an annoyance to another.15 Instead of interactive museums, your jam may be a fantasy football league, a book club or a hike in the woods. What do you do just for the fun of it?
Weekly Focus – Think About It
“It’s very important that we re-learn the art of resting and relaxing. Not only does it help prevent the onset of many illnesses that develop through chronic tension and worrying; it allows us to clear our minds, focus, and find creative solutions to problems.”16
–Thich Nhat Hanh, Buddhist monk and author
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
[1] https://www.barrons.com/livecoverage/stock-market-today-083024?mod=article_inline (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-03-24_Barrons_Dow%20Snags%20Record%20Close%20as%20Index%20Marks%20Fourth%20Monthly%20Gain_1.pdf)
2 https://www.investopedia.com/terms/c/correction.asp
3 https://www.bloomberg.com/news/articles/2024-08-29/stock-market-today-dow-s-p-live-updates (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-03-24_Bloomberg_S&P%20500%20Spikes%20in%20Last%2010%20Minutes%20of%20US%20Trading_3.pdf)
4 https://www.bea.gov/sites/default/files/2024-08/gdp2q24-2nd.pdf
6 https://www.bea.gov/news/2024/personal-income-and-outlays-july-2024
7 https://www.barrons.com/livecoverage/july-pce-inflation-report-release-today (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-03-24_Barrons_Dow%20Snags%20Record%20Close%20as%20Index%20Marks%20Fourth%20Monthly%20Gain_1.pdf)
[1]0 https://www.economist.com/culture/2023/08/15/the-rise-of-kidulting (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-03-24_Economist_Rise%20of%20Kidulting_10.pdf)
[1]1 https://www.museumoficecream.com
[1]2 https://wndrmuseum.com/installation/the-wisdom-project-boston/
[1]3 https://wndrmuseum.com/installation/untitled-by-you-boston/
[1]4 https://wndrmuseum.com/installation/quantum-mirror/
[1]5 https://nifplay.org/play-for-you/make-play-part-of-an-adult-life/ [1]6https://www.brainyquote.com/quotes/thich_nhat_hanh_531578
The Markets
The near future is more predictable than the distant future.
Last year, the St. Louis Federal Reserve explored the accuracy of recession forecasts. They found that short-term predictions about whether there would be a recession in the subsequent quarter were fairly accurate. However, projections for economic growth a year ahead were far less accurate. The researchers concluded, “Even though forecasts can help, we must live with significant uncertainty about future economic conditions.”1
Investors experienced some of that uncertainty last week as economic data created confusion about the state of the economy. The Department of Labor released its preliminary revision of the employment report, which showed the number of jobs created from March 2023 to March 2024 was significantly lower than previously thought.2
“The new estimates suggest monthly job growth of about 174,000, instead of the roughly 240,000 previously understood…At the end of the day, the revisions imply that the total number of jobs in the U.S. is just 0.5 [percent] smaller than previously thought,” reported Natalie Sherman of BBC News. She cautioned that the preliminary revision will be adjusted again and that, “Over the last four years, the final estimates of job growth have ended up higher than indicated in August.”3
Other figures released last week weren’t particularly helpful. In August, manufacturing data was softer than expected. However, sales of existing homes rose in July as supply increased and interest rates fell, reported Seana Smith and Madison Mills of Yahoo! Finance.4
The Economist also weighed in on the state of the U.S. economy last week. It asked whether America was already in a recession as some rules of thumb have suggested. It concluded:
“Recession rules are based on the premise that once news gets bad enough, it will worsen further. Historically, that has been a decent bet: unemployment shoots up quickly and then falls slowly; central banks tend to raise interest rates until something breaks. Yet today the Federal Reserve has room to ease and, given the unusual labor-market recovery, some bumpiness does not spell disaster. Although America’s gangbusters expansion is calming, a gradual slowdown is not a crash—no matter what the rules say.”5
On Friday, investors were reassured by Federal Reserve Chair Jerome Powell who indicated he is confident “inflation is on a sustainable path back to 2 percent,” and “the time has come for policy to adjust.” Many market watchers interpreted that to mean a rate cut is ahead in September. Major U.S. stock indices finished the week higher, and yields on most maturities of U.S. Treasuries moved lower. 6,7,8
Data as of 8/23/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 1.5% | 18.1% | 27.0% | 8.0% | 14.6% | 10.9% |
| Dow Jones Global ex-U.S. Index | 2.1 | 8.4 | 16.0 | -0.9 | 5.2 | 2.0 |
| 10-year Treasury Note (yield only) | 3.8 | N/A | 4.2 | 1.3 | 1.5 | 2.4 |
| Gold (per ounce) | 1.0 | 20.8 | 31.0 | 11.7 | 10.8 | 6.9 |
| Bloomberg Commodity Index | 1.0 | -2.2 | -8.6 | 1.2 | 4.9 | -2.6 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
THE SKINNY ON SOCIAL SECURITY. Social Security was a source of income during retirement for 91 percent of current retirees who participated in the Employee Benefit Research Institute (EBRI)’s 2024 Retirement Confidence Survey. Sixty-two percent of participants reported that Social Security was a major source of income. However, both retired and working participants were concerned that significant changes may be ahead.9
They’re not wrong to be concerned. According to the most recent Trustees report, the trust fund that supports Social Security and Medicare will pay 100 percent of scheduled benefits until 2033. After that, benefits are expected to drop by about 21 percent.10
So far, Congress has not been enthusiastic about addressing the issue because many of the solutions being considered are unpalatable to one group of voters or another. Various solutions are being considered, including:
- Raising the official retirement age. Currently, the full retirement age is 67 for anyone born after 1960. Since people are living longer and working longer, one idea under consideration is that full retirement age be pushed back to age 70 for Americans born after 1977, reported Mike Townsend of Schwab.11
- Changing the payroll tax that funds Social Security and Medicare. Under the current system, payroll taxes of 12.4 percent fund retiree benefits. The tax is split between employers and employees. Working people pay 6.2 percent on earnings up to $168,600, and earnings above $168,600 are exempt. One proposal suggests that payroll tax also be assessed on earnings above $400,000, reported Peter Grieve of Money.12
- Investing the trust fund differently. An alternative approach that is being considered is diversifying the Social Security trust fund. “Social Security funds are now 100 percent invested in U.S. Treasury bonds, which are very safe but offer a relatively low rate of return. One idea is to put some portion of Social Security taxes into a newly created sovereign wealth fund that would invest in stocks and have the potential to earn a higher rate of return,” reported Townsend.11
If you have concerns about the future of Social Security and would like to explore other sources of guaranteed retirement income, please get in touch.
Weekly Focus – Think About It
A Time to Talk
by Robert Frost
When a friend calls to me from the road
And slows his horse to a meaning walk,
I don’t stand still and look around
On all the hills I haven’t hoed,
And shout from where I am, What is it?
No, not as there is a time to talk.
I thrust my hoe in the mellow ground,
Blade-end up and five feet tall,
And plod: I go up to the stone wall
For a friendly visit.13
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
[1] https://www.stlouisfed.org/on-the-economy/2023/sep/can-economists-predict-recessions
2 https://www.bls.gov/ces/notices/2024/2024-preliminary-benchmark-revision.htm
3 https://www.bbc.com/news/articles/cy4ydqv8721o
4 https://finance.yahoo.com/video/manufacturing-pmi-falls-existing-home-142453232.html
5 https://www.economist.com/finance-and-economics/2024/08/22/is-america-already-in-recession (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/08-26-24_Economist_Is%20America%20Already%20in%20a%20Recession_5.pdf)
6 https://www.barrons.com/market-data (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/08-26-24_Barrons_Data_6.pdf)
7 https://www.federalreserve.gov/newsevents/speech/powell20240823a.htm
10 https://www.ssa.gov/oact/trsum/
11 https://www.schwab.com/learn/story/future-social-security-and-medicare?cmp=em-XCU
[1]2 https://money.com/proposals-fix-social-security-affect-benefits/ [1]3https://discoverpoetry.com/poems/poems-about-community/
The Markets
The best week of the year?
After two weeks of slow and jolting market performance, a bounty of positive news calmed investors and lifted stock markets higher last week.
“Investors seem to have come to the realization that while the economy may be in fact slowing, the Federal Reserve is going to take action to address that by cutting interest rates on Sept. 18…with a September rate cut a near certainty, the mood in the market has turned on a dime,” reported Paul R. La Monica of Barron’s.1
Here’s what happened:
Inflation continued to move lower. In July, prices rose 2.9 percent year to year, according to the latest Consumer Price Index report. That was an improvement on June’s 3.0 percent increase. The price of gasoline, new and used vehicles, and medical care moved lower, while the cost of shelter, motor vehicle insurance and recreation moved higher.2,3
“It was the first time that the annual pace of inflation was below 3 [percent] since spring of 2021. Even though June’s inflation reading was slightly better, the pricing data from last month will likely help convince Fed officials to cut interest rates by at least a quarter of a percentage point at their next policy meeting in September,” reported Megan Leonhardt of Barron’s.4
Consumer spending remained strong. Consumer spending is the engine that drives the American economy. After slowing (down 0.2 percent) in June, retail sales accelerated (up 1.0 percent) in July, according to the U.S. Commerce Department’s Advance Monthly Sales for Retail and Food Services.5
“The retail sales numbers were a blowout versus consensus [expectations], but more importantly it should lay to rest (at least for the moment) all of the ‘doom and gloom’ that was expressed at the beginning of this month,” said a source cited by Rita Nazareth of Bloomberg.6
Consumer sentiment brightened. In August, for the first time in five months, consumer sentiment improved, according to the University of Michigan’s Consumer Sentiment Survey.7 Joanne Hsu, the Survey of Consumers Director, wrote:
“Overall, expectations strengthened for both personal finances and the five-year economic outlook, which reached its highest reading in four months, consistent with the fact that election developments can influence future expectations but are unlikely to alter current assessments. Survey responses generally incorporate who, at the moment, consumers expect the next president will be. Some consumers note that if their election expectations do not come to pass, their expected trajectory of the economy would be entirely different. Hence, consumer expectations are subject to change as the presidential campaign comes into greater focus, even as consumers expect that inflation—still their top concern—will continue stabilizing.”7
Major U.S. stock indices finished the week higher.8The yield on longer-maturities of U.S. Treasuries moved higher over the week.9
Data as of 8/16/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 3.9% | 16.5% | 26.1% | 7.4% | 14.0% | 10.9% |
| Dow Jones Global ex-U.S. Index | 3.6 | 6.2 | 13.2 | -1.5 | 4.9 | 1.9 |
| 10-year Treasury Note (yield only) | 3.9 | N/A | 4.3 | 1.3 | 1.5 | 2.4 |
| Gold (per ounce) | 3.1 | 19.6 | 30.5 | 11.6 | 10.4 | 6.7 |
| Bloomberg Commodity Index | 0.2 | -3.0 | -7.5 | 0.2 | 4.5 | -2.6 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
SUMMER CAMP IS A GROWING INDUSTRY. Many people have fond memories of sleep-away summer camps that feature hiking, canoeing, swimming and campfire songs. Others remember camp as a place where they learned about music, theater, dance, horseback riding, creative writing, environmental education or other activities.
After stalling during the pandemic, camp is once again a growing industry. A 2023 study conducted by the University of Michigan Economic Growth Institute and the American Camp Association (ACA) found, “camp contributes $70 billion to the national economy directly and through ripple effects, including via business-to-business purchases and labor income.”10
About 26 million kids—more than 30 percent of school-age children in the United States—go to summer camp. As a result, day camps and overnight camps have become an important aspect of children’s education and growth reported Kira Garcia of Bloomberg.11
“Today’s entrepreneurial camp directors are thinking beyond canoes and lakeside cabins,” wrote Garcia. “Want your kid to work on DJ skills, robotics or scuba diving? There’s a camp for that! Specialty programs were the industry’s fastest-growing segment prior to the COVID-19 pandemic and are predicted to be in increasingly high demand from 2023 to 2028.”11
Camp is also important for parents. When the school year ends, working parents are left without structured supervision for school-age children. The struggle to juggle work, home and parenting responsibilities can be intense. Camp offers a way for children to refuel and reset, while participating in stimulating activities, reported Alex Frost in Success.12
One issue for many families is cost. While the average cost of camp varies widely, the average cost is $87 per day, reported Nancy Chen of CBS News.13 The ACA reports there are ways to reduce or manage the cost of camp, including:14
- Applying for a camp scholarship,
- Taking advantage of early registration discounts,
- Choosing a structured payment plan,
- Spending funds in a Dependent Care Flexible Spending Account, and
- Receiving the Child and Dependent Care Tax Credit.
If you’re looking for a present for a younger person, gifting a summer camp experience may be a good choice.
Weekly Focus – Think About It
“To this day, I fondly recall the challenges of building a fire, pitching a tent, climbing a New England mountain, canoeing on a lake. Camp songs still resonate inside me. Nobody fails summer camp, a nice respite from winters of fortune and misfortune at school.”15―Michael Eisner, Disney CEO
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
[1] https://www.barrons.com/articles/stock-market-complacency-violent-volatility-12691013?mod=hp_LEAD_1_B_2 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/08-19-2024_Barrons_How%20the%20Stock%20Market%20Went%20from%20Complacency%20to%20Volatility%20and%20Back_1.pdf)
2 https://www.bls.gov/news.release/cpi.nr0.htm
4 https://www.barrons.com/livecoverage/cpi-inflation-july-report-data-today (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/08-19-2024_Barrons_Inflation%20Falls%20Below%203%25%20for%20First%20Time%20Since%202021_4.pdf)
5 https://www.census.gov/retail/marts/www/marts_current.pdf
6 https://www.bloomberg.com/news/articles/2024-08-14/asian-stocks-to-open-weaker-cpi-calms-wall-street-markets-wrap (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/08-19-2024_Bloomberg_Stocks%20Rally%20as%20Data%20Show%20US%20Economy%20is%20Holding%20Up_6.pdf)
7 http://www.sca.isr.umich.edu
8 https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/08-19-2024_Barrons_Data_8.pdf)
11 https://www.success.com/working-parents-summer-break/
12 https://www.cbsnews.com/news/summer-camp-soaring-heres-some-tips-for-parents-on-how-to-save-money/
[1]3 https://www.bloomberg.com/news/features/2023-06-01/niches-such-as-soccer-and-arts-make-summer-camp-a-3-5-billion-business (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/08-19-2024_Bloomberg_How%20Summer%20Camp%20Became%20a%20$3.5%20Billion%20Industry_13.pdf)
[1]4 https://www.acacamps.org/parents-families/planning-camp/preparing-camp/how-afford-camp [1]5https://www.summercamps.com/summer-camp-quotes/
The Markets
Stock markets swelled and dropped like waves at the Olympic surfing competition in Tahiti.
It is often said that markets hate uncertainty. There was a lot of uncertainty last week, and it showed. “The technology-heavy Nasdaq 100 Index soared 3 [percent] on Wednesday and then retreated almost that much on Thursday, before paring the decline at the close, for its biggest up-to-down rotation since May 2022. The S&P 500 Index sank 1.4 [percent], just one day after rallying 1.6 [percent],” reported Alexandra Semenova, Esha Dey, Carmen Reinicke, and Natalia Kniazhevich of Bloomberg.1
High levels of market volatility reflect high levels of uncertainty. Here are three issues that have been top-of-mind for investors:
- Will the United States experience a soft landing or dip into a recession?
Last week, investors became concerned that the U.S. economy may be slowing faster than anticipated.2 First, a key gauge showed that U.S. manufacturing activity slowed in July, reported Lucia Mutikani of Reuters.3 Then, on Friday, the U.S. unemployment rate rose to 4.3 percent as employers added fewer new jobs than economists had anticipated.4,5
Investors were in a tizzy after seeing weaker-than-expected data. Expectations about the magnitude of a possible Federal Reserve rate cut in September changed—and then changed again. On Friday, the CME FedWatch Tool registered a 74 percent probability of a half-percentage-point rate cut at the Fed’s September meeting, suggesting that the market thought the Fed was likely to begin easing rates too late and would have to lower aggressively. Markets took some calming breaths and, on Saturday, expectations had reversed. There was a 22 percent probability of a half-point cut in September and a 78 percent chance of a quarter-point drop.5
- Will geopolitical issues escalate?
There is a lot happening around the world that could affect financial markets. One concern is ongoing tensions in relations between the United States and China. In addition to tariffs and trade issues, there are allegations that China is providing support for Russian war efforts in Ukraine, and concerns about a possible conflict over Taiwan.6 Energy security also is a risk as wars in Ukraine and the Middle East have disrupted energy supplies in some regions of the world, according to to S&P Global and David McHugh and Matthew Daly of AP News.7,8
- Who will win the United States election?
There has been—and will continue to be—a lot of speculation about the outcome of the U.S. election and its potential effect on the economy and markets. The emotion that accompanies elections can make it difficult to remember that financial markets are generally efficient and adjust to changing risks. While election sentiment may sway stock markets over the shorter term, other factors—valuations, earnings, and the business cycle—also are important,” reported Karishma Vanjani of Barron’s.9
Last week, major U.S. stock indices moved lower with the Nasdaq Composite Index dropping into correction territory as it fell by about 10 percent.The U.S. Treasury market rallied as the yield on the benchmark 10-year Treasury fell to its lowest level since last December, reported Pia Singh and Hakyung Kim of CNBC. 10,11
Data as of 8/2/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -2.1% | 12.1% | 18.5% | 6.8% | 12.8% | 10.7% |
| Dow Jones Global ex-U.S. Index | -1.7 | 2.7 | 6.4 | -2.6 | 3.6 | 1.6 |
| 10-year Treasury Note (yield only) | 3.8 | N/A | 4.1 | 1.2 | 1.9 | 2.5 |
| Gold (per ounce) | 3.5 | 18.8 | 27.0 | 10.9 | 11.4 | 6.7 |
| Bloomberg Commodity Index | -1.3 | -4.0 | -9.8 | -0.4 | 4.3 | -3.0 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
THE OLYMPIC BONUS. Before 1972, only amateur athletes could compete in the Olympics.For example, in 1913, Jim Thorpe’s Olympic titles were stripped from him because Thorpe had been paid to play semi-pro baseball for two seasons. (Eventually, his gold medals were reinstated.) 12
Olympic amateurism rules became less stringent during the latter decades of the 20th century and, by the 1990s, the rules were mostly eliminated. Today, athletes from many countries receive a bonus if they earn a spot on the Olympic podium. For example, the United States awards bonuses of $38,000 for a gold medal, $23,000 for silver, and $15,000 for bronze. Many countries offer far larger bonuses, reported Lee Ying Shan of CNBC.13 Here are a few:
- Hong Kong, which has won 13 Olympic medals in total (when this was written), pays a bonus of 6 million Hong Kong dollars (~US $768,000) for a gold medal, HK$3 million for silver (~US $384,000), and HK$1.5 million for bronze (~US $192,000).13
- Singapore, which has won five Olympic medals in total (when this was written), pays a bonus of 1 million Singaporean dollars for a gold medal (~US $745,000), SG$500,000 for silver (~US $373,000), and SG $250,000 for bronze (~US $186,000).13
- Indonesia, which has won 37 Olympic medals in total (when this was written), pays a bonus of 5 billion Indonesian rupiah for a gold medal (~US $300,000), Rp2.5 billion for silver (~US $150,000), and Rp1.2 billion for bronze (~US $75,000).13,14
Other countries that offer a triple-digit U.S. dollar bonus for gold include Israel, Kazakhstan, Malaysia, and Spain.13
You may not be an Olympian, but you can reward yourself for your hard work by saving and investing for the future. If you would like to learn more, get in touch.
Weekly Focus – Think About It
“Friendships born on the field of athletic strife are the real gold of competition. Awards become corroded; friends gather no dust.”15
―Jesse Owens, Olympic gold medalist
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
[1] https://www.bloomberg.com/news/articles/2024-08-01/stocks-sell-off-a-day-after-furious-rally-as-volatility-returns?embedded-checkout=true (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/08-05-24_Bloomberg_Stocks%20Sell%20Off%20a%20Day%20After%20Furious%20Rally%20as%20Volatility%20Returns_1.pdf)
2 https://www.barrons.com/livecoverage/stock-market-today-080224?mod=hpsubnav (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/08-05-24_Barrons_Nasdaq%20on%20Track%20to%20Enter%20Correction%20Territory_2.pdf)
3 https://www.reuters.com/markets/us/us-manufacturing-gauge-drops-eight-month-low-2024-08-01/
4 https://www.bls.gov/news.release/empsit.nr0.htm
5 https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/08-05-24_CME%20Group_FedWatch_5.pdf)
6 https://www.bbc.com/news/articles/cqvvxzv24pqo
7 https://www.spglobal.com/en/research-insights/market-insights/geopolitical-risk#energy-security
8 https://apnews.com/article/houthi-ship-attacks-red-sea-lng-europe-50661b8d42065f7fd7cab6556574e4b6
9 https://www.barrons.com/articles/investing-election-risk-0b6bab54?mod=Searchresults (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/08-05-24_Barrons_Why%20Investing%20for%20the%20Election%20Might%20Be%20a%20Mistake_9.pdf)
10 https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/08-05-24_Barrons_Data_10.pdf)
[1]1 https://www.cnbc.com/2024/08/01/stock-market-today-live-updates.html
12 https://usopm.org/jim-thorpe/
[1]4 https://wise.com/gb/currency-converter/usd-to-idr-rate?amount=300000 [1]5https://www.brainyquote.com/quotes/jesse_owens_140490?src=t_competition
The Markets
Americans may be witnessing something remarkable.
Earlier this year, we had the relatively rare opportunity to view a total solar eclipse – when the moon passes between the sun and the Earth, blocking the sun completely – as it crossed numerous states.1 Now, we may see the United States’ economy experience a soft landing – when the Federal Reserve raises rates to fight inflation and does not cause a recession.
“According to the conventional wisdom, the Federal Reserve has managed to achieve only one soft landing in the past 60 years—in 1994–1995,” wrote economist Alan Blinder in an abstract for the Journal of Economic Perspectives.2
Blinder’s research suggests that soft landings are more common than conventional wisdom suggests – but not easy to achieve. From 1965 to 2022, the Federal Reserve tightened monetary policy to fight inflation eleven times. In five cases, the Fed achieved a soft or softish landing.3 It appears that the Fed may be about to add another soft landing to the list.
The U.S. economy grew 2.8 percent in the second quarter of 2024 (after inflation), which is faster than economists expected. The economy grew as businesses continued to invest and consumers continued to spend on goods and services, according to figures released last week by the U.S. Department of Commerce.4
“A robust economy is a good sign for the average consumer, and because it came in tandem with positive data on prices, it is in line with the soft landing of a healthy economy and cooling inflation that Federal Reserve officials are looking to achieve. Economists consider real GDP growth rates of between 2% and 3% to be healthy in developed economies…The personal consumption expenditures price index increased 2.6% during the second quarter—the slowest pace since the first quarter of 2021. That is a marked slowdown from the 3.4% pace recorded in the first three months of the year,” reported Megan Leonhardt of Barron’s.5
Markets moved lower early in the week and then regained some lost ground after economic growth and inflation figures were released, reported Connor Smith of Barron’s.6 By the end of the week, the Dow Jones Industrial Average was up, while the Standard & Poor’s 500 Index and Nasdaq Composites indexes finished the week lower.7 Yields on most maturities of U.S. Treasuries moved lower over the week.8
Data as of 7/26/24 | 1-Week | Y-T-D | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -0.8% | 14.5% | 19.5% | 7.3% | 12.5% | 10.7% |
| Dow Jones Global ex-U.S. Index | -1.1 | 4.5 | 6.0 | -1.7 | 3.3 | 1.6 |
| 10-year Treasury Note (yield only) | 4.2 | N/A | 3.9 | 1.3 | 2.1 | 2.5 |
| Gold (per ounce) | -0.7 | 14.8 | 21.4 | 9.9 | 10.9 | 6.2 |
| Bloomberg Commodity Index | -1.6 | -2.7 | -10.8 | -0.2 | 4.0 | -2.9 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
HOW CAN INVESTORS FIGHT INFLATION? Inflation is the steady increase in prices over time. After years of relatively low inflation, the last couple of years have been an important reminder that investors need to consider inflation as they invest for the future. Even at the Fed’s target level, prices rise slightly each year. A financial plan and a well-diversified portfolio can help investors beat inflation as they save and invest. See what you know about inflation and investments by taking this brief quiz.
- Part of the Federal Reserve’s mission is keeping prices from rising or falling too fast. What do Fed officials think is the right rate for inflation?
- 0%
- 1%
- 2%
- 3%
- Inflation erodes spending power, which means that the amount of goods or services that a person on a fixed income can buy gets smaller when inflation is higher. Which of the following can help investors manage the risks associated with inflation?
- Cash under the mattress
- A diversified portfolio
- Certificates of deposit
- Fixed rate loans
- A “real” rate of return is the annual return that an investment earns minus the annual rate of inflation. If the average annual return for the Standard & Poor’s 500 Index was 10 percent over the last ten years, and inflation averaged 3 percent a year over the same period, what was the “real” average annual return over that period?
- 16 percent
- 13 percent
- 10 percent
- 7 percent
- What is the highest rate of inflation the United States has experienced since 1917 when the Consumer Price Index was introduced?
- 20.5 percent in 1917
- 9.5 percent in 1951
- 14.6 percent in 1980
- 8.9 percent in 2022
If you would like to talk about your financial goals and developing a plan to reach them, please get in touch.
Weekly Focus – Think About It
“The past is always tense, the future perfect.”9
― Zadie Smith, Novelist
Answers: 1) c10; 2) b11; 3) d; 4) a12
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
3 https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.37.1.101
4 https://www.bea.gov/sites/default/files/2024-07/gdp2q24-adv.pdf
5 https://www.barrons.com/articles/gdp-growth-data-report-today-7fbb5a1d
6 https://www.barrons.com/livecoverage/stock-market-today-072624?mod=article_inline
7 https://www.barrons.com/market-data?mod=BOL_TOPNAV
10 https://www.richmondfed.org/publications/research/econ_focus/2024/q1_q2_federal_reserve
The Markets
The rate cut stars are aligning.
For the last year, borrowing costs in the United States have remained relatively high as the U.S. Federal Reserve (Fed) waited for economic data to show that inflation was on track to reach the Fed’s two percent target. Now, we may finally be on the cusp of lower rates.
“The Fed’s preferred inflation gauge has eased to 2.6 [percent], not far off its 2 [percent] target, and the once overheated labor market has cooled to pre-pandemic levels. The rebalancing has been accompanied by moderation in consumer spending, as high prices and borrowing costs damp demand and thus price pressures,” reported Victoria Cavaliere of Bloomberg.1
Last week, Fed Chair Jerome Powell told the Economic Club of Washington D.C., “…if you wait until inflation gets all the way down to 2 [percent], you probably waited too long…Our test has been that we wanted to have greater confidence that inflation was moving sustainably down toward our 2 percent target. What increases that confidence is more good inflation data and, lately here, we have been getting some of that.”2
Few anticipate the Fed will lower the federal funds rate at its July meeting, but the outlook for September is good. The probability of a September rate cut was above 90 percent last week, according to the CME FedWatch.3
Changing rate expectations disrupted stock markets, last week. Investors moved from big technology firms into smaller companies that tend to perform better when rates are lower. Rita Nazareth of Bloomberg explained that the market experienced, “a ‘rotation’ that saw investors trimming positions on this year’s winners in favor of laggards. Underpinning that trade were bets the 2024 rally would broaden out of megacaps as the Federal Reserve cuts rates.”4
By the end of the week, the Standard & Poor’s 500 Index was down about 2.0 percent and the Nasdaq Composite had fallen about 3.7 percent. The Dow Jones Industrial Average fared better, finishing the week in positive territory, reported Alex Harring and Jesse Pound of CNBC.5 Yields on U.S. Treasuries were mixed over the week.6
Data as of 7/19/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -2.0% | 15.4% | 20.6% | 8.9% | 13.1% | 10.8% |
| Dow Jones Global ex-U.S. Index | -2.3 | 5.6 | 7.6 | -1.0 | 3.4 | 1.7 |
| 10-year Treasury Note (yield only) | 4.2 | N/A | 3.7 | 1.2 | 2.1 | 2.5 |
| Gold (per ounce) | -0.1 | 15.6 | 21.7 | 9.8 | 10.8 | 6.2 |
| Bloomberg Commodity Index | -3.2 | -1.2 | -7.6 | 1.9 | 4.2 | -2.8 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
MICROCHIP COMPANIES STUMBLED OVER GOVERNMENT POLICY. In general, one aim of governments in democratic countries is to implement policies that promote solid and sustainable economic growth.7 Sometimes, a policy change—or the possibility of one—will ripple through financial markets. Last week, we saw two examples of this as companies that have benefited from enthusiasm around artificial intelligence saw their share prices drop sharply when it appeared that U.S. government policy might change.
- Stricter limits could be imposed on some exports to China. In one case, a potential change in government policy caused the share price of a Dutch company to drop, reported Adam Clark of Barron’s. The company produces lithography machines that are necessary for semiconductor manufacturing. The company’s solid second quarter earnings report was overshadowed by news that President Biden may impose new restrictions on exports to China.8 Clark reported that the administration:
“…is considering more severe trade restrictions on exports to China if companies…continue selling chip-making machinery to the country. While the [lithography machinery] company is already restricted from selling its most advanced machines to Chinese customers, [the company] still generated 49% of its revenue from China in the second quarter, as buyers looked to stock up on older machinery.”8
- The United States’ relationship with Taiwan may change. In an interview with Bloomberg Businessweek, presidential candidate Donald Trump was asked about the United States’ relationship with Taiwan. He answered, “They did take about 100 [percent] of our chip business. I think, Taiwan should pay us for defense.”9
After the remarks became public, the share price of Taiwan’s largest company—the world’s largest maker of advanced chips—tumbled, reported George Glover of Barron’s.10 The share price fell even though the company had beaten quarterly estimates and lifted 2024 revenue projections, reported Jane Lanhee Lee of Bloomberg.11
Other chip companies’ stocks moved lower, too, on concerns that a change in U.S. policy could result in new supply chain disruptions. “China’s ruling Communist Party has vowed to ‘reunify’ with Taiwan and has refused to rule out using military force to take back control of the country,” reported Glover.10
It can be dismaying when the value of a stock or stock market index moves lower. However, falling share prices sometimes have silver linings. They sometimes create opportunities to invest in companies with solid fundamentals at attractive prices.
Weekly Focus – Think About It
“It’s not what you look at that matters, it’s what you see.”12―Henry David Thoreau, author
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
[1] https://www.cnbc.com/2024/07/15/powell-indicates-fed-wont-wait-until-inflation-is-down-to-2percent-before-cutting-rates.html (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/07-22-24_Bloomberg_Economists%20Warn%20Trump%20Policies%20Would%20Stoke%20Inflation_1.pdf)
3 https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/07-22-24_CME%20Group_FedWatch_FOMC%20Rate%20Moves_3.pdf)
4 https://www.bloomberg.com/news/articles/2024-07-18/stock-market-today-dow-s-p-live-updates?srnd=phx-markets (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/07-22-24_Bloomberg_Stocks%20Slide%20Before%20High-Stakes%20Megacap%20Earnings_4.pdf)
5 https://www.cnbc.com/2024/07/18/stock-market-today-live-updates.html
7 https://www.imf.org/en/Publications/fandd/issues/Series/Back-to-Basics/Fiscal-Policy
8 https://www.barrons.com/articles/asml-stock-drop-price-buy-sell-79d71cc3?mod=hp_LEAD_1_B_3 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/07-22-24_Barrons_ASML%20Stock%20is%20a%20Buying%20Opportunity%20After%20Tumble_8.pdf)
9 https://www.bloomberg.com/features/2024-trump-interview-transcript/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/07-22-24_Bloomberg_The%20Donald%20Trump%20Interview%20Transcript_9.pdf)
10 https://www.barrons.com/articles/tsmc-stock-price-taiwan-semi-e70d6c61?mod=article_inline (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/07-22-24_Barrons_TSMC%20Stock%20Falls_10.pdf)
[1]1 https://www.bloomberg.com/news/articles/2024-07-18/tsmc-s-profit-surpasses-estimates-after-ai-investment-surges (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/07-22-24_Bloomberg_TSMC%20Hikes%20Revenue%20Outlook%20to%20Reflect%20Heated%20AI%20Demand_11.pdf)
12 https://www.brainyquote.com/quotes/henry_david_thoreau_106041
The Markets
Will deflation continue?
In May, Pew Research asked Americans about the biggest problems facing our nation. The top three answers were:1
- Inflation;
- The ability of Democrats and Republicans to work together; and
- The affordability of health care.
Last week, there was some good news about the first issue. Inflation became deflation as the Consumer Price Index (CPI) fell in June after remaining unchanged in May. Headline inflation was ‑0.1 percent month over month.2
Megan Leonhardt of Barron’s reported on the CPI’s findings: “The details under the hood, so to speak, also largely provided good news for consumers and Fed officials. Goods deflation continued — driven by falling new and used vehicle prices—while services costs also trended down. And housing costs, a persistently stubborn sector when it comes to progress in taming inflation, increased just 0.2% on the month — a slowdown from the consistent monthly readings of 0.4%.”3
Cooling inflation may lead the Federal Reserve (Fed) to begin lowering the federal funds rate – and that would make borrowing less expensive.3 Optimism about lower rates led to a bond market rally, and a realignment in the stock market. Rita Nazareth of Bloomberg explained:
“Wall Street traders betting the Federal Reserve will be able to cut rates soon sent bond yields tumbling — while driving a big rotation out of the tech megacaps that have powered the bull market in stocks. Further signs that inflation is slowing down fueled speculation the Fed will be able to move as early as September. Optimism over lower rates sparked a shift into riskier corners of the market — as money exited the long-favored safety trade of big tech.”4
Last week, major U.S. stock market indices moved higher with the Dow Jones Industrial Average hitting its first record high for 2024, reported Jacob Sonenshine.5 The yield on the benchmark 10-year U.S. Treasury note moved lower last week.6
Over the weekend, after this commentary was written, there was an attempt to assassinate former President Donald Trump. We condemn this senseless act. We will stay alert to how this affects financial markets.
Data as of 7/12/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 0.9% | 17.7% | 25.6% | 8.6% | 13.3% | 11.0% |
| Dow Jones Global ex-U.S. Index | 2.1 | 8.0 | 11.8 | -1.1 | 3.9 | 1.9 |
| 10-year Treasury Note (yield only) | 4.2 | N/A | 3.9 | 1.4 | 2.1 | 2.6 |
| Gold (per ounce) | 1.2 | 15.8 | 23.2 | 10.3 | 11.3 | 6.3 |
| Bloomberg Commodity Index | -1.7 | 2.1 | -2.6 | 2.4 | 4.5 | -2.5 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
A QUIZ FOR SOCCER FANS. Over the last couple of weeks, fans of the world’s most popular sport were riveted as the men’s championships played out in Europe and the United States. Last weekend, Spain took on England at the UEFA EURO 2024 championship in Berlin, Germany, while Argentina and Colombia duked it out for the CONMEBOL Copa AméricaTM title in Miami, Florida. Fans of the beautiful game (soccer) can test their knowledge of the tournaments by taking this brief quiz.
- In the history of European Championship matches, 30 own goals have been scored. (An own goal is when a team scores on itself.) How many own goals were tallied in the 2024 tournament prior to last weekend?
- Two
- Four
- Seven
- Ten
- Colombia beat Uruguay in the Copa América semifinal. For some of that match, Colombia had 10 players on the field after losing a player to a red card. How long did the team compete with only 10 players?
- 15 minutes
- 45 minutes
- 60 minutes
- During injury time (aka stoppage time)
- Spain’s Lamine Yamal was the youngest player to start in the Champions league and the youngest to score at the European Championship. How old was he when he scored?
- 15
- 16
- 17
- 18
- Who holds the record for the most assists – passes that lead directly to goals – in the Copa América tournament?
- Luis Suarez
- Lionel Messi
- Luis Figo
- James Rodriguez
- Bonus question: Which women’s team won the 2024 CONCACAF W Gold Cup?
- Mexico
- United States
- Canada
- Brazil
What’s your favorite bit of soccer trivia?
Weekly Focus – Think About It
“The thing about football – the important thing about football – is that it is not just about football.”7
―Terry Pratchett, author
Answers: 1) d8; 2) b9; 3) b10; 4) d11; 5) b12
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
2 https://www.bls.gov/news.release/pdf/cpi.pdf
3 https://www.barrons.com/livecoverage/cpi-inflation-june-report-data-today?mod=article_inline (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/07-15-24_Barrons_Pivotal%20Inflation%20Data%20Fuel%20Optimism%20for%20Sept%20Rate%20Cut_3.pdf)
4 https://www.bloomberg.com/news/articles/2024-07-10/stock-market-today-dow-s-p-live-updates (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/07-15-24_Bloomberg_Stock%20Rotation%20Hits%20Megacaps%20on%20Bets%20Fed%20Will%20Cut_4.pdf)
5 https://www.barrons.com/articles/tech-stocks-small-caps-1817f4f9?refsec=the-trader&mod=topics_the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/07-15-24_Barrons_Tech%20Stocks%20Have%20Fallen%20Out%20of%20Favor_5.pdf)
6 https://www.barrons.com/market-data/bonds?mod=md_subnav (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/07-15-24_Barrons_Data_6.pdf)
7 https://www.goodreads.com/quotes/tag/soccer
8 https://en.wikipedia.org/wiki/List_of_UEFA_European_Championship_own_goals
9 https://sports.yahoo.com/rash-red-card-curbs-colombias-005800066.html
[1]0 https://apnews.com/article/yamal-spain-euro-2024-youngest-scorer-5f30ffdc3dbf58087a353b6ef2584a69
[1]1 https://copaamerica.com/en/news/james-record-assists-copa-america-colombia-uruguay [1]2https://en.wikipedia.org/wiki/CONCACAF_W_Gold_Cup
Are we at an inflection point?
The transition to renewable energy has been moving forward and may be reaching an inflection point. In 2023, global renewable energy capacity increased by almost 50 percent, reported the International Energy Agency (IEA). Renewable capacity reached all-time highs in the United States, Europe and Brazil. However, the leader in new capacity is China. In 2023, the country “commissioned as much solar PV [photovoltaic] as the entire world did in 2022,” stated the IEA’s Renewables 2023 report.1
In the United States, solar power is responsible for a relatively small amount (3.9 percent in 2023) of all electricity generated; however, solar is growing faster than any other source of electricity. One reason for the growth is Big Tech companies’ commitment to clean energy. Four of the “Magnificent Seven” were responsible for “40% of the demand for large, utility-scale solar projects in the U.S. over the past five years,” reported Spencer Kimball and Gabriel Cortés of CNBC. 2
“To call solar power’s rise exponential is not hyperbole, but a statement of fact. Installed solar capacity doubles roughly every three years, and so grows ten-fold each decade. Such sustained growth is seldom seen in anything that matters. That makes it hard for people to get their heads round what is going on. When it was a tenth of its current size ten years ago, solar power was still seen as marginal even by experts who knew how fast it had grown. The next ten-fold increase will be equivalent to multiplying the world’s entire fleet of nuclear reactors by eight in less than the time it typically takes to build just a single one of them,” reported The Economist.3
The IEA forecasted that by 2028 renewable energy sources will generate more than 42 percent of the world’s electricity. Wind and solar PV energy sources are expected to deliver about 25 percent of global electricity.1
There are some obstacles to renewable energy growth, though. Current constraints include siting, permitting and grids, reported BloombergNEF.4 From 2000 to 2018, just 20 percent of U.S. renewable energy projects that sought to be connected to the power grid were actually connected.2
“Grids were not originally set up for such a fast-paced energy system; their tools and processes were developed in a slower, less volatile world…[Renewable energy source] infrastructures are already available and rapidly increasing. However, taking advantage of renewables requires a power grid that can accommodate these intermittent energy sources,” reported McKinsey & Company’s Adam Barth and colleagues.5
Last week, major stock market indices finished higher with the Standard & Poor’s 500 Index chalking up its 31st record high for 2024 during the week, reported Jacob Sonenshine of Barron’s.6 Many maturities of U.S. Treasury bonds finished this week slightly higher than they ended last week.7
Data as of 6/21/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 0.6% | 14.6% | 25.2% | 9.0% | 13.1% | 10.8% |
| Dow Jones Global ex-U.S. Index | 0.2 | 3.6 | 8.0 | -2.3 | 3.1 | 1.5 |
| 10-year Treasury Note (yield only) | 4.3 | N/A | 3.7 | 1.5 | 2.1 | 2.6 |
| Gold (per ounce) | 0.2 | 12.4 | 21.6 | 9.6 | 10.8 | 5.9 |
| Bloomberg Commodity Index | -0.7 | 3.1 | -2.9 | 3.6 | 5.2 | -2.9 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
COIN CONUNDRUM. What do you do with loose change? Many people have informal collecting stations: a money jar in the kitchen, a slide of coins on the dryer, or a jangle of change in a backpack. Oyin Adedoyin of The Wall Street Journal reported via MSN:
“Coins are as good as junk for many Americans. Buses, laundromats, toll booths, and parking meters now take credit and debit cards and mobile payments. Using any form of physical currency has become more of an annoyance, but change is often more trouble than it is worth to carry around. The U.S. quarter had roughly the buying power in 1980 that a dollar has today.” 8
Sometimes, coins are exchanged for dollars at the bank, but a lot of change ends up in the trash. A waste management company in Pennsylvania recovers $500,000 to a million dollars in coins each year as it sorts metal from other waste.8
And that’s just the face value of the coins.
U.S. coins often cost more to make than they are worth. The biennial report from the United States Mint showed that, in 2022, the United States spent:9
- 2.7 cents to make a penny,
- 10.4 cents to make a nickel,
- 5 cents to make a dime, and
- 11 cents to make a quarter.
“Currently, Congress must pass a law to either specifically make changes to statutory coin composition or provide authority for the Mint to change to an alternative metal under certain conditions,” stated the report. Depending on the solution, a change could save the government $12 to $24 million.9
The Mint recommended that Congress take steps to remedy the issue. Legislation was introduced to the 116th Congress, which governed from 2019-2021 (the Coin Metal Modification Authorization), and the 117th Congress, which governed from 2021-2023 (Cost Savings Act). So far, it has not been passed.9
Weekly Focus – Think About It
“Don’t tell me where your priorities are. Show me where you spend your money, and I’ll tell you what they are.”10 ―James W. Frick, former development officer, University of Notre Dame
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
[1] https://www.iea.org/reports/renewables-2023/executive-summary
2 https://www.economist.com/leaders/2024/06/20/the-exponential-growth-of-solar-power-will-change-the-world (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/06-24-24_Economist_The%20Exponential%20Growth%20of%20Solar%20Power%20Will%20Change%20the%20World_2.pdf)
4 https://about.bnef.com/blog/us-clean-power-at-inflection-point-bnef-summit-new-york/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/06-24-24_BloombergNEF_US%20Clean%20Power%20at%20Inflection%20Point_4.pdf)
6 https://www.barrons.com/articles/stock-market-rally-ending-5ed9e442?refsec=the-trader&mod=topics_the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/06-24-24_Barrons_Its%20Been%20a%20Good%20Bull%20Run%20for%20Stocks_6.pdf)
9 https://www.usmint.gov/wordpress/wp-content/uploads/2023/04/2022-USM-Biennial-Report_P5_FINAL.pdf [Pages 4, 6, 8-9] 10 https://www.goodreads.com/author/quotes/21470345.James_W_Frick
The Markets
Overall, May was a good month for investors.
The adage, “Sell in May and go away,” would have been poor advice last month. Major stock indices in the United States finished the month higher. Connor Smith of Barron’s reported:1
- The Nasdaq Composite was up 6.9 percent for May,
- The Standard & Poor’s 500 Index gained 4.8 percent, and
- The Dow Jones Industrial Average finished 2.3 percent higher.
Despite the positive returns, May was also a volatile month for stocks as investors worried about inflation and whether the Federal Reserve will begin to lower rates in 2024, reported Paul La Monica of Barron’s.2
For much of last week, stocks trended lower.3 The Conference Board’s Consumer Confidence Index surprised by exceeding economists’ expectations for May, but it had little effect on investors as the report wasn’t rosy.4
Confidence improved “…amid optimism about the labor market, but worries about inflation persisted and many households expected higher interest rates over the next year…The mixed survey…also showed more consumers believed that the economy could slip into recession in the next 12 months,” reported Lucia Mutikani of Reuters.5
Late in the week, markets regained lost ground after the Personal Consumption Expenditures Price Index (one of the Federal Reserve’s preferred inflation gauges) data arrived. The Index showed that core inflation, which excludes volatile food and energy prices, ticked lower from March to April. Headline inflation remained steady month to month.6
Year to year, headline inflation was 2.7 percent in April and core inflation was 2.8 percent.6
Major U.S. stock indices finished the week lower.7 The yield on the benchmark 10-year U.S. Treasury finished the week close to where it started the week.8
Data as of 5/31/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -0.5% | 10.6% | 26.3% | 7.9% | 13.9% | 10.6% |
| Dow Jones Global ex-U.S. Index | -0.8 | 4.3 | 13.9 | -2.5 | 4.3 | 1.7 |
| 10-year Treasury Note (yield only) | 4.5 | N/A | 3.6 | 1.6 | 2.1 | 2.5 |
| Gold (per ounce) | 0.2 | 13.0 | 19.5 | 7.3 | 12.6 | 6.5 |
| Bloomberg Commodity Index | -1.9 | 4.4 | 5.1 | 3.0 | 5.8 | -2.6 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
YOUNGER GENERATIONS ARE FRUSTRATED WITH BABY BOOMERS. The saving and spending habits of baby boomers, born between 1946 and 1964, have been discussed in the news and on social media lately. Much of the discussion has focused on the wealth accumulated by the world’s baby boom generation. Boomers have, broadly speaking, acquired significant wealth over their lifetimes. The Economist reported that baby boomers in the United States comprise “20% of the country’s population, own 52% of its net wealth, worth $76 [trillion].”9
Instead of congratulating a group that is likely to live longer in retirement than previous generations have, some conversations accuse boomers of hoarding wealth,9 while others suggest that policy mistakes by leaders in the cohort have held back younger generations economically.10
Whether these discussions reflect the beliefs of younger generations is unclear. Regardless, boomers have solid reasons for spending slowly. These include:
Leaving an inheritance for younger generations. “Many boomers recognize how lucky they are to have accumulated such enormous wealth. They want to pass it on to their children, many of whom are struggling to buy a house or pay school fees… The flow of bequests from the dead to the living, as a share of GDP, is rising fast across the rich world. Americans inherit about 50% more each year than they did each year in the 1980s and 1990s, for instance.”9
Living longer in retirement. Longevity risk is a significant concern for baby boomers, many of whom may spend 30 years or more in retirement. According to the Employee Benefits Research Institute’s Retirement Confidence survey, 32 percent of workers and 26 percent of retirees are not confident they will have enough money to live comfortably through retirement.11
Keeping a reserve – just in case. British research found that older people who do not believe they will need long-term care are likely to spend their savings more quickly, while those who believe there is a possibility of becoming less mobile or developing dementia are likely to spend more slowly.9
Planning for retirement is not a simple task, especially with the possibility of reduced Social Security benefits ahead.12 A new report from Goldman Sachs found that a majority of millennials and Gen Z are ahead on planning and saving for retirement, while almost half of the Gen X and baby boomer generations are behind.13
If you have any questions about retirement or estate planning, please get in touch.
Weekly Focus – Think About It
“Wealth consists not in having great possessions, but in having few wants.”14
―Epictetus, philosopher
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
[1] https://www.barrons.com/livecoverage/stock-market-today-053124/card/nasdaq-roars-in-late-trading-as-stocks-finish-strong-month-MvOOyCtoznraH3ttkx5m (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/06-03-24_Barrons_Nasdaq%20Rallies%20as%20Stocks%20Finish%20Strong%20Month_1.pdf)
2 https://www.barrons.com/articles/inflation-pce-fed-stocks-55fa0173?refsec=markets&mod=topics_markets (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/06-03-24_Barrons_Inflation%20Data%20Offer%20Good%20News%20for%20Stocks_2.pdf)
3 https://finance.yahoo.com/quote/%5EGSPC/
4 https://www.conference-board.org/topics/consumer-confidence
5 https://www.reuters.com/markets/us/us-consumer-confidence-unexpectedly-improves-may-2024-05-28/
6 https://www.bea.gov/sites/default/files/2024-05/pi0424.pdf
7 https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/06-03-24_Barrons_Data_7.pdf)
9 https://www.economist.com/finance-and-economics/2024/05/26/baby-boomers-are-loaded-why-are-they-so-stingy (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/06-03-24_The%20Economist_Baby%20Boomers%20are%20Loaded_9.pdf)
11 https://www.ebri.org/docs/default-source/rcs/2024-rcs/2024-rcs-release-report.pdf?sfvrsn=2447072f_1 [page 5]
12 https://finance.yahoo.com/news/20-cuts-social-security-may-123017196.html
The Markets
Perception versus reality.
A recent Harris poll, conducted on behalf of The Guardian newspaper, found that there is some confusion about the state of the American economy and U.S. stock market performance. A significant proportion of the Americans who participated think the economy and the stock market are in rough shape.1 Here are a few of the misperceptions uncovered by the poll:
- Misperception No. 1: The United States is in a recession, according to 56 percent of poll respondents.1
Reality: The U.S. is not in a recession. The economy has been expanding, not shrinking. Here are the statistics for recent U.S. economic growth (after adjusting for inflation):
2020: – 3.5 percent (pandemic year)2
2021: + 5.8 percent3
2022 + 1.9 percent3
2023 + 2.5 percent3
2024: + 1.6 percent (first quarter 2024) 3
- Misperception No. 2: The Standard & Poor’s (S&P) 500 Index is down for the year, according to 49 percent of poll respondents.1
Reality: The S&P 500 was up 11.2 percent, year to date, through the end of last week. In 2024, the Index has charted 24 all-time highs, reported Jan-Patrick Barnert, Alexandra Semenova, Geoffrey Morgan and Michael Msika of Bloomberg.5
- Misperception No. 3: Inflation has been rising, according to 72 percent of poll respondents.1
Reality: Inflation has been trending lower. In April, inflation was 3.4 percent over the previous 12 months. While that rate is higher than the Fed’s target rate, it is far lower than inflation in June 2022 when it peaked at 9.1 percent.5
The confusion may be related to the fact that prices remain higher than they once were. There was some positive news on that front, last week. Several major retailers announced they are lowering prices on groceries and other items, reported Jaclyn Peiser of The Washington Post.6
- Misperception No. 4: U.S. unemployment is near a 50-year high, according to 49 percent of poll respondents.1
Reality: Unemployment is near a 50-year low. The average U.S. unemployment rate from 1947 through 2023 was 5.7 percent.7 In recent years, the unemployment rate has been:
2020: 8.1 percent (Pandemic year)7
2021: 5.3 percent7
2022: 3.6 percent7
2023: 3.6 percent7
2024: 3.9 percent8 (April 2024, year over year)
Major U.S. stock indices finished the week mixed. The Nasdaq Composite Index finished the week higher, while the S&P 500 Index was flat for the week, and the Dow Jones Industrial Average lost ground.9 Yields on most maturities of U.S. Treasuries rose over the week.10
Data as of 5/24/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 0.03% | 11.2% | 29% | 8.4% | 13.2% | 10.7% |
| Dow Jones Global ex-U.S. Index | -1.1 | 5.2 | 12.8 | -1.8 | 4.3 | 1.8 |
| 10-year Treasury Note (yield only) | 4.5 | N/A | 3.7 | 1.6 | 2.3 | 2.5 |
| Gold (per ounce) | -2.5 | 12.7 | 20.3 | 7.6 | 12.8 | 6.3 |
| Bloomberg Commodity Index | -0.7 | 6.5 | 4.4 | 4.7 | 5.9 | -2.5 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
LOOKING FOR A GRADUATION GIFT? Graduation season is well underway. If you’re looking for a gift for a high school or college graduate, consider giving one or more shares of appreciated stock. This is usually done by transferring shares from your account to the recipient’s account.11
There can be significant benefits to gifting an appreciated asset, including:
- Realizing a tax advantage. When people gift shares of appreciated stock, they may realize a tax advantage. Typically, when shares that have increased in value are gifted to another person, the gift giver does not owe capital gains tax on the shares.
- Allowing the asset to grow over time. The gift recipient may owe tax when they sell the shares, depending on the sale price and the recipient’s tax bracket. If the shares remain invested, though, they have an opportunity to grow over time.
- Creating a teaching opportunity. When gifting shares, share the story of the stock with the recipient. Why did you buy it? How much has it appreciated? Do you think the recipient should keep it or sell it? Gifting shares creates an opportunity to share knowledge and increase financial literacy.
The government limits the amount of money that can be gifted to an individual without paying a gift tax. The annual gift tax exclusion is $18,000 per recipient in 2024. In general, a person can give up to $18,000 per recipient without having to pay a tax on the gift.12 Appreciated shares can also make great birthday and holiday gifts.
There can be complexities when gifting an appreciated asset. If you would like to explore the idea, give us a call.
Weekly Focus – Think About It
Instructions for living a life:
Pay attention.
Be astonished.
Tell about it.
―From Sometimes by Mary Oliver13
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
1 https://www.theguardian.com/us-news/article/2024/may/22/poll-economy-recession-biden (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-27-24_The%20Guardian_Majority%20of%20Americans%20Wrongly%20Believe%20US%20is%20In%20Recession_1.pdf)
2 https://www.bea.gov/sites/default/files/2021-01/gdp4q20_adv.pdf [Table 1] (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-27-24_BEA_Gross%20Domestic%20Product%204th%20Quarter%20and%20Year%202020_2.pdf)
3 https://www.bea.gov/sites/default/files/2024-04/gdp1q24-adv.pdf [Table 1] (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-27-24_BEA_Gross%20Domestic%20Product%201st%20Quarter%202024_3.pdf)
4 https://www.bloomberg.com/news/articles/2024-05-18/tokyo-to-new-york-stock-markets-are-on-a-record-hitting-spree-around-the-world (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-27-24_Bloomberg_From%20Tokyo%20to%20New%20York%20Stock%20Markets%20Are%20On%20a%20Spree_4.pdf)
5 https://www.bls.gov/regions/mid-atlantic/data/consumerpriceindexhistorical_us_table.htm
6 https://www.washingtonpost.com/business/2024/05/24/grocery-prices-falling/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-27-24_The%20Washington%20Post_Grocers%20Are%20Finally%20Lowering%20Prices%20as%20Consumers%20Pull%20Back_6.pdf)
7https://data.bls.gov/timeseries/LNU04000000?periods=Annual+Data&periods_option=specific_periods&years_option=all_years [Average is in pdf] (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-27-24_BLS_Labor%20Force%20Statistics%20from%20the%20Current%20Population%20Survey_7.pdf)
8 https://www.bls.gov/news.release/pdf/empsit.pdf
9 https://www.schwab.com/learn/story/stock-market-update-close
[11] https://www.investopedia.com/ask/answers/07/giftofstock.asp
[12] https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes [How many annual exclusions are available?] [13]https://readalittlepoetry.com/2014/09/10/sometimes-by-mary-oliver/
The Markets
Reading the economic tea leaves.
Tasseography practitioners read tea leaves to forecast the future.1 Some economic data serve a similar purpose. Policymakers, central bankers, economists, and investors look at leading economic indicators to forecast where the economy may be headed.2 Classic leading indicators include:
Consumer confidence. Consumer spending is the largest contributor to economic growth in the United States. When consumers feel confident about their finances, the economy may continue to grow, and vice versa.2
The slope of the yield curve. When yields for short-term U.S. Treasuries are higher than yields for long-term U.S. Treasuries, then a recession may be ahead. “Yield curve inversions have preceded each of the last eight recessions,” reported the Federal Reserve Bank of Cleveland.3
Stock market performance. Since investors make decisions based on how they believe the earnings of companies and the value of companies’ stocks will change over time, a rising or falling stock market is considered to offer insight to where the economy may be headed.4
“The leading indicators for the U.S. economy fell in April for the second month in a row…The leading index declined mainly because of weaker business orders, fewer permits to build new homes and a decline in stock prices last month. Stocks have since rebounded, however, to fresh record highs,” reported Jeffry Bartash of MarketWatch. “The economy slowed in the first quarter after heady growth in the second half of 2023. It’s unlikely to speed up much until inflation tapers off and the Federal Reserve cuts interest rates.”5
Some analysts believe rate cuts are still on the table for 2024, reported Sam Meredith of CNBC.6 Last week, theConsumer Price Index showed headline inflation (which measures price changes for a fixed basket of goods) and core inflation (which removes food and energy from the basket) both moved lower from March to April.7
Investors found a lot to like in the inflation data. U.S. stocks finished the week higher with the Dow Jones Industrial Average closing above 40,000.8 Yields on most maturities of U.S. Treasuries moved lower over the week, lifting bond prices.9
Data as of 5/17/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 1.5% | 11.2% | 27.5% | 8.4% | 13.2% | 10.9% |
| Dow Jones Global ex-U.S. Index | 1.7 | 6.3 | 12.1 | -1.0 | 4.3 | 2.0 |
| 10-year Treasury Note (yield only) | 4.4 | N/A | 3.6 | 1.6 | 2.4 | 2.5 |
| Gold (per ounce) | 1.3 | 15.6 | 21.7 | 9.0 | 13.4 | 6.3 |
| Bloomberg Commodity Index | 2.9 | 7.2 | 4.3 | 4.3 | 5.8 | -2.4 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
WHICH STATE LOOKS THE MOST LIKE THE UNITED STATES? Fifty states joined the Union from 1787 through 1959.10 Every one of them has a distinct history and culture. States’ names originated from Latin, English, Spanish, French, Polynesian, Algonquian, Siouan, Iroquoian, Uto-Aztecan, and other languages.11 In Alabama, there are deep sea fishing rodeos12 and in Arizona there are sidewalk egg-frying contests.13 In Georgia, they like salted peanuts in cola,14 and in Michigan they call soda “pop.”15 Nebraska cheers for the Cornhuskers, while Oregon flies with the Ducks.
There are a lot of differences between U.S. states, but which state is most like the United States? That’s the question Lenny Bronner and Andrew Van Dam of The Washington Post wanted to answer. Bronner crunched U.S. Census data to create indices that compare U.S. states to one another and to the nation. Some of their findings can be found in this quiz.16
- Which state most closely resembles the United States when it comes to income? (Hint: Its state flower is the violet.)
- Arizona
- Illinois
- Georgia
- Nevada
- Which state is most like the United States when it comes to residents’ educational achievement? (Hint: It has the oldest state park in the nation.)
- Rhode Island
- West Virginia
- Georgia
- Texas
- Which state most closely mirrors the country when it comes to employment? (Hint: Its known for a tasty sandwich.)
- Pennsylvania
- Utah
- Mississippi
- Ohio
- Bronner constructed a similarity index using 30 variables to predict which states are likely to vote similarly. Which states are the closest match to one another? (Hint: You may have a hard time believing it.)
- Arkansas – New Mexico
- California – Texas
- Florida – Wisconsin
- New Hampshire – Ohio
Financial plans are a lot like states. They reflect the unique characteristics and needs of individuals and families. If you have any questions about whether you are on track to achieve your financial goals, get in touch.
Answers: 1) b; 2) c; 3) a; 4) b
Weekly Focus – Think About It
“A nation’s culture resides in the hearts and in the soul of its people.”17
—Mahatma Gandhi, activist
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
1 https://en.wikipedia.org/wiki/Tasseography
2 https://www.investopedia.com/terms/l/leadingindicator.asp#citation-7
3 https://www.clevelandfed.org/indicators-and-data/yield-curve-and-predicted-gdp-growth
4 https://www.investopedia.com/terms/e/economic_indicator.asp
7 https://www.bls.gov/news.release/cpi.nr0.htm
8 https://www.barrons.com/livecoverage/stock-market-today-051724?mod=article_inline (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-20-24_Barrons_Stock%20Market%20News%20From%20May%2017%202024_8.pdf)
10 https://www.usatoday.com/story/news/2024/04/25/what-was-the-first-state/73278172007/
11 https://en.wikipedia.org/wiki/U.S._state#Name_origins
13 https://www.nbcnews.com/business/travel/arizona-town-cooks-sidewalk-egg-fry-flna6c10488679
14 https://www.southernliving.com/food/peanuts-in-coke
15 https://www.michiganpublic.org/arts-culture/2013-04-14/are-you-a-pop-or-soda-person
16 https://www.washingtonpost.com/business/2024/05/10/most-representative-most-unique-places-america/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-20-24_Washington%20Post_What%20State%20Best%20Represents%20America_16.pdf) 17https://www.azquotes.com/author/5308-Mahatma_Gandhi/tag/culture
The Markets
Higher rates are doing what they’re supposed to do.
Last week, Federal Reserve officials spoke about keeping the federal funds rate higher until it becomes clear that inflation will reach the Fed’s two percent target rate.1
While people typically don’t mind earning more interest on their saving and investment accounts, higher rates are painful for consumers. That pain is why higher rates help lower inflation. They discourage borrowing and cause people to buy fewer goods. Lower demand for goods and services should lead to lower inflation, reported Trina Paul of CNBC.2
So far, the biggest fly in the inflation-reduction ointment is housing. Diccon Hyatt of Investopedia explained:
“In the first two decades of the 21st century, the U.S. built 5.5 million fewer homes than were needed, the National Association of Realtors estimated in a 2021 report…The effects of that housing shortage are rippling through the economy, most obviously in the form of soaring home prices…official inflation rates, which are designed to measure the cost of living, are highly sensitive to any changes in housing costs. Housing costs make up 45% of the Consumer Price Index (CPI), the most widely watched measure of inflation.”3
May data show consumers are feeling discouraged.
The University of Michigan’s Index of Consumer Sentiment dropped 13 percent from April to May. “[The] decline is statistically significant and brings sentiment to its lowest reading in about six months. This month’s trend in sentiment is characterized by a broad consensus across consumers, with decreases across age, income, and education groups…They expressed worries that inflation, unemployment, and interest rates may all be moving in an unfavorable direction in the year ahead,” stated Surveys of Consumers Director Joanne Hsu.4
While consumer sentiment dragged on markets, first quarter corporate earnings reports were stronger than expected, which lifted U.S. stocks. “With well over 80% of the S&P 500 having reported results, companies are on track to have increased earnings by 7.8%, well ahead of the April expectation of 5.1% growth,” reported a source cited by Lewis Krauskopf of Reuters.5
Declining sentiment caused U.S. stocks to stumble on Friday; however, major indices finished the week higher.6 Yields on many maturities of U.S. Treasuries moved higher over the week.7
Data as of 5/10/24 | 1-Week | Y-T-D | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 1.9% | 9.5% | 26.2% | 7.6% | 12.6% | 10.7% |
| Dow Jones Global ex-U.S. Index | 1.2 | 4.5 | 9.7 | -2.2 | 3.8 | 1.9 |
| 10-year Treasury Note (yield only) | 4.5 | NA | 3.4 | 1.6 | 2.5 | 2.7 |
| Gold (per ounce) | 3.4 | 14.2 | 16.5 | 8.8 | 13.0 | 8.2 |
| Bloomberg Commodity Index | 1.4 | 4.2 | 0.1 | 3.3 | 5.5 | -2.7 |
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; 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; MarketWatch; djindexes.com; U.S. Treasury; 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.
DATA PRIVACY WILL VARY. For decades, companies have plundered the digital world for valuable treasure – information about you. When it comes to controlling how personal data are used, some people are better protected than others. It often depends on where you live.
For example, in 2016, the European Union (EU) adopted its General Data Protection Regulation (GDPR). The law is built on the idea that individuals have the right to own their personal information and decide who can use it, reported Fredric Bellamy of Reuters.8
In contrast, federal law in the U.S. allows businesses and organizations to collect personal data without the express consent of the people whose information is being collected. The government may step in to prevent or mitigate harm to the individual in certain sectors.8
In addition to choosing the type of data websites may collect, consumers can consult the free buyer’s guide created by a software firm’s foundation. The guide, called *Privacy Not Included, rates the privacy and security of connected toys, gadgets, and smart products.9 Among the many groups that have earned a warning label in the buyer’s guide are:
- Dating apps. “Most dating apps (80%) may share or sell your personal information for advertising…It’s a bit strange because…apps work on a subscription model. So with dating apps, it’s not your money or your privacy. It’s often both. We also couldn’t confirm whether half (52%) of the apps do the bare minimum to keep all your personal information safe, by meeting our Minimum Security Standards,” reported Jen Caltrider, Misha Rykov and Zoë MacDonald.10
- Automobile companies. “Car makers have been bragging about their cars being ‘computers on wheels’ for years to promote their advanced features. However, the conversation about what driving a computer means for its occupants’ privacy hasn’t really caught up…[car brands] can collect personal information from how you interact with your car, the connected services you use in your car, the car’s app (which provides a gateway to information on your phone), and can gather even more information about you from third party sources.”11 One company sold personal driving data to brokers who used the information to formulate “risk scores”. The scores were then sold to insurance companies, causing some drivers’ premiums to increase significantly.12
Some states have stepped in to provide additional protections for their residents. In March of 2024, there were “…15 states – California, Virginia, Connecticut, Colorado, Utah, Iowa, Indiana, Tennessee, Oregon, Montana, Texas, Delaware, Florida, New Jersey, and New Hampshire – that have comprehensive data privacy laws in place,” reported Bloomberg Law.13
In April, federal lawmakers proposed a law, the American Privacy Rights Act, that could give consumers control over how their information is used by companies that collect it, as well as the right to opt out of certain types of data collection, reported Cristiano Lima-Strong of The Washington Post.14
Weekly Focus – Think About It
“If you make customers unhappy in the physical world, they might each tell 6 friends. If you make customers unhappy on the Internet, they can each tell 6,000 friends.”15
-Jeff Bezos, CEO
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or 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. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
* 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:
2 https://www.cnbc.com/select/how-do-increasing-interest-rates-affect-inflation/
4 http://www.sca.isr.umich.edu
6 https://www.barrons.com/market-data
8 https://www.reuters.com/legal/legalindustry/us-data-privacy-laws-enter-new-era-2023-2023-01-12/
9 https://foundation.mozilla.org/en/docs/design/branding/sub-brands/privacy-not-included/
[1]3 https://pro.bloomberglaw.com/insights/privacy/state-privacy-legislation-tracker/#
[1]4 https://www.washingtonpost.com/technology/2024/04/07/congress-privacy-deal-cantwell-rodgers/?_pml=115 https://www.azquotes.com/quote/531591