Hey Jiminy, What’s Your Wish?
The Markets
If you’re familiar with fairy tales, you’ve probably encountered a story or two that involves the granting of wishes. Usually, these are cautionary tales. Well, there was some wishing going on around the globe last week and, if the wishes come true, the outcomes may be less beneficial than anticipated.
In the United States, some folks wish Chairwoman Janet Yellen and her peers at the Federal Reserve would set a timetable for rate hikes. Barron’s offered the opinion that abandoning a data-driven process in favor of a calendar-driven one would be a mistake. Recent improvements including a slight spike in consumer confidence, somewhat stronger consumer spending, and a generally improving job market remain mired in residue of the Great Recession. For instance:
“Housing remains in the doldrums as potential buyers cite insufficient savings, excess debt, poor credit scores, and, yes, their incomes as stumbling blocks on the road to home ownership. Higher rates won’t fix any of those problems, and even setting a schedule for rate hikes could create head winds if it causes loans to become harder to get in anticipation of the change.”
Across the pond, the United Kingdom of Great Britain and Northern Ireland (U.K.) may cover a lot less territory if Scotland wins independence in next week’s referendum. Until recently, few thought the measure had enough support to pass, but the latest polls say that it may happen. While independence may seem like a reasonable objective, there are economic and other challenges attached that could profoundly affect the new country. These include:
- What currency will the Scots adopt? (U.K. leaders have said Scotland cannot keep the Pound.)
- How will the U.K.’s national debt be divided? (By population? By gross domestic product?)
- How will markets respond to Scottish independence? (Will Scotland establish its own stock market? Will companies relocate to England?)
- How will the remainder of the United Kingdom be affected?
There is an adage that may prove appropriate here: Be careful what you wish for because you just might get it.
Data as of 9/12/14 |
1-Week |
Y-T-D |
1-Year |
3-Year |
5-Year |
10-Year |
| Standard & Poor’s 500 (Domestic Stocks) |
-1.1% |
7.4% |
18.0% |
19.5% |
13.6% |
5.8% |
| 10-year Treasury Note (Yield Only) |
2.6 |
NA |
2.9 |
1.9 |
3.4 |
4.2 |
| Gold (per ounce) |
-2.7 |
2.5 |
-7.3 |
-12.4 |
4.3 |
11.9 |
| Bloomberg Commodity Index |
-2.8 |
-3.5 |
-6.6 |
-8.8 |
-0.5 |
-1.7 |
| DJ Equity All REIT Total Return Index |
-5.0 |
15.3 |
16.1 |
14.9 |
16.6 |
8.8 |
S&P 500, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods. Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.
*The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. 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 this 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 London afternoon gold price fix as reported by the London Bullion Market Association.
* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
Sources:
http://online.barrons.com/news/articles/SB51005578970899454132304580141961085594610?mod=BOL_hp_we_columns (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/09-15-14_Barrons-The_70s_in_Reverse-Footnote_1.pdf)
http://www.economist.com/blogs/buttonwood/2014/09/markets-0 (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/09-15-14_The_Economist-What_if_the_Scots_Say_Yes-Footnote_2.pdf)
The post Weekly Perspective – September 15, 2014 appeared first on Happiness Dividend Blog – Personal Finance, Education and Investment Guidance.