{"id":5345,"date":"2017-07-04T03:18:11","date_gmt":"2017-07-04T03:18:11","guid":{"rendered":"https:\/\/swwadvisors.com\/?p=5345"},"modified":"2017-07-04T03:18:11","modified_gmt":"2017-07-04T03:18:11","slug":"weekly-market-commentary-july-3-2017","status":"publish","type":"post","link":"https:\/\/advisors2.bradcable.com\/swwadvisorsdavid\/weekly-market-commentary-july-3-2017\/","title":{"rendered":"Weekly Market Commentary \u2013 July 3, 2017"},"content":{"rendered":"

The Markets<\/strong><\/p>\n

This is the way the quarter ends \u2013 with a central bank scare.<\/p>\n

Central bankers are stodgy. They speak carefully. For many, reading the words \u2018Federal Reserve\u2019 is enough to cause boredom to set in and web surfing to ensue.<\/p>\n

Last week, though, the European Central Bank and Bank of England cracked the \u2018open secret\u2019 (i.e., central banks will provide less stimulus and increase rates at some point), and investors did not like what they heard.<\/p>\n

Central bankers were quick to say they didn\u2019t necessarily mean what people had heard, but the rumor of less accommodative monetary policy was already moving markets.\u00a0Barron\u2019s<\/em>\u00a0wrote:<\/p>\n

\u201cBut make no mistake: Last week was a game changer. Federal Reserve Chair Janet Yellen fretted about the high level of asset prices, the Bank of England\u2019s Mark Carney hinted at a rate hike, and Mario Draghi suggested the European Central Bank could be nearing the end of its bond buying\u2026The market didn\u2019t take it sitting down. Long-term Treasury yields surged, resulting in a wider spread off of short-term bond yields.\u201d<\/p>\n

A wider spread between short- and long-term Treasuries could be good news. The\u00a0Federal Reserve Bank of Cleveland<\/em>\u00a0explained:<\/p>\n

\u201cThe slope of the yield curve \u2013 the difference between the yields on short- and long-term maturity bonds \u2013 has achieved some notoriety as a simple forecaster of economic growth. The rule of thumb is that an inverted yield curve (short rates above long rates) indicates a recession in about a year, and yield curve inversions have preceded each of the last seven recessions\u2026\u201d<\/p>\n

Central bankers comments affected U.S. stock markets, too. The technology sector lost its allure, while the possibility of rising interest rates made the financials sector more attractive. It didn\u2019t hurt that all major institutions passed the Fed\u2019s stress tests for the first time. That could translate into share buybacks and higher dividends, reported\u00a0Financial Times.<\/em><\/p>\n

There were some notable statistics during the second quarter of 2017. For instance:<\/p>\n

Investors were preternaturally calm<\/strong>
\nThroughout second quarter, investors have been confident the Standard & Poor\u2019s 500 Index would offer a smooth ride. The CBOE Volatility Index (VIX), a.k.a. the fear gauge, has only closed below 10 sixteen times; seven occurred during the second quarter of 2017.<\/p>\n

Consumer sentiment was quite positive<\/strong>
\nConsumers were feeling highly optimistic throughout the quarter. In June, the\u00a0University of Michigan Consumer Sentiment Survey<\/em>\u00a0reported, \u201cAlthough consumer confidence slipped to its lowest level since Trump was elected, the overall level still remains quite favorable. The average level of the Sentiment Index during the first half of 2017 was 96.8, the best half-year average since the second half of 2000\u2026\u201d<\/p>\n

Investor sentiment shifted into neutral<\/strong>
\nLast week, the number of investors who were neutral (rather than bullish or bearish) about markets hit its highest level in a year. The\u00a0AAII Blog<\/em>\u00a0reported:<\/p>\n

\u201cThis year\u2019s record highs for the S&P 500 and the NASDAQ have encouraged some individual investors, but the Trump administration\u2019s ability (or lack thereof) to move forward on economic and tax policy remains on the forefront of many others\u2019 minds. Also playing a role in influencing sentiment are earnings, valuations, concerns about the possibility of a pullback in stock prices, and interest rates\/monetary policy.\u201d<\/p>\n

The U.S. economy appears to be growing, albeit slowly. Last week, the\u00a0Federal Reserve Bank of Atlanta<\/em>\u00a0forecast real GDP (Gross Domestic Product) growth during the second quarter of 2017 at 2.7 percent.<\/p>\n

YOU SAY POTATO, I SAY POTATO.<\/strong>\u00a0A persistent debate among the geek set is how to pronounce the abbreviation for Graphics Interchange Format (GIF). You know, GIFs, the animated images you see online. Graphics starts with a hard \u2018g\u2019 sound, but pronunciation conventions suggest that \u2018g\u2019 makes a soft sound before the vowel \u2018i.\u2019\u00a0The Economist<\/em>\u00a0wrote:<\/p>\n

\u201cSome questions will be pondered for all eternity. What is the meaning of life? Where do you go when you die? And, even more puzzlingly, what is the right way to pronounce \u201cGIF?\u201d\u2026Debates over whether it begins with a hard \u201cg,\u201d as in \u201cgift,\u201d or a soft one, as in \u201cgiraffe,\u201d can make discussions about religion or politics look civil by comparison. Well aware of the risk that taking a side could lead to protests, boycotts, or worse, the Oxford English Dictionary and Merriam-Webster have maintained strict neutrality. They proclaim that both pronunciations are acceptable, betraying nary a hint of favoritism.\u201d<\/p>\n

It\u2019s interesting that dictionaries, those arbiters of correct spelling and pronunciation, would stake out neutral ground. After all, in the early days of the United States correct spelling was open to interpretation. In the American Constitution, the word \u2018choose\u2019 is spelled \u2018chuse\u2019 and \u2018Pennsylvania\u2019 was spelled \u2018Pensylvania\u2019 (the Liberty Bell inscription has one \u2018n,\u2019 as well). Also, \u2018defense\u2019 was spelled \u2018defence.\u2019<\/p>\n

The first American dictionary wasn\u2019t published until 1806. Its author, Noah Webster, decided many spelling conventions were artificial, so he imposed the standards he preferred, changing \u2018musick\u2019 to \u2018music,\u2019 \u2018centre\u2019 to \u2018center,\u2019 and \u2018women to wimmen.\u2019 Not all of his changes were accepted.<\/p>\n

This year, in an effort to resolve the GIF issue once and for all, a forum for computer programmers surveyed 50,000 users in 200 countries. Sixty-five percent believed a hard \u2018g\u2019 pronunciation was correct, while 26 percent believed the soft \u2018g\u2019 was right.<\/p>\n

The survey results inflamed soft \u2018g\u2019 users, who claim it was rigged.<\/p>\n

Weekly Focus \u2013 Think About It<\/strong><\/p>\n

\u201cMy seven-year-old grandson sleeps just down the hall from me, and he wakes up a lot of mornings and he says, \u2018You know, this could be the best day ever.\u2019 And other times, in the middle of the night, he calls out in a tremulous voice, \u2018Nana, will you ever get sick and die?\u2019 I think this pretty much says it for me and most of the people I know, that we’re a mixed grill of happy anticipation and dread.\u201d
\n–Anne Lamott, American novelist and non-fiction writer<\/em><\/p>\n

 <\/p>\n

* These views are those of Peak Advisor Alliance, and not the presenting Representative or the Representative\u2019s Broker\/Dealer, and should not be construed as investment advice.
\n* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker\/dealer.
\n* 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.
\n* 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.
\n* 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.
\n* All indices referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
\n* 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.
\n* 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.
\n* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
\n* 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.
\n* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
\n* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
\n* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
\n* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
\n* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
\n* You cannot invest directly in an index.
\n* Consult your financial professional before making any investment decision.
\n* Stock investing involves risk including loss of principal.<\/p>\n

Sources:<\/strong><\/p>\n

https:\/\/www.reuters.com\/article\/us-ecb-policy-bundesbank-idUSKBN19M3FM<\/a>
\nhttp:\/\/www.barrons.com\/articles\/a-game-changing-week-for-markets-sees-nasdaq-fall-2-1498887177?mod=BOL_hp_we_columns<\/a>\u00a0(or go to\u00a0https:\/\/s3-us-west-2.amazonaws.com\/peakcontent\/+Peak+Commentary\/07-03-17_Barrons-A_Game-Changing_Week_for_Markets_Sees_NASDAQ_Fall_2_Percent-Footnote_2.pdf<\/a>)
\nhttps:\/\/www.clevelandfed.org\/our-research\/indicators-and-data\/yield-curve-and-gdp-growth.aspx<\/a>
\nhttps:\/\/www.ft.com\/content\/d7c47dae-5dd7-11e7-9bc8-8055f264aa8b<\/a>\u00a0(or go to\u00a0https:\/\/s3-us-west-2.amazonaws.com\/peakcontent\/+Peak+Commentary\/07-03-17_FinancialTimes-Second_Quarter_Ends_with_Fierce_Rotation_Away_from_Tech_Stocks-Footnote_4.pdf<\/a>)
\nhttp:\/\/www.cboe.com\/blogs\/options-hub\/2017\/06\/02\/vix-index-closes-below-10-again-as-professor-called-vix-level-the-biggest-financial-mystery<\/a>
\nhttp:\/\/www.cboe.com\/products\/vix-index-volatility\/vix-options-and-futures\/vix-index\/vix-historical-data<\/a>\u00a0(click on \u201cVIX data for 2004 to present\u201d)
\nhttp:\/\/www.sca.isr.umich.edu<\/a>\u00a0(or go to\u00a0https:\/\/s3-us-west-2.amazonaws.com\/peakcontent\/+Peak+Commentary\/07-03-17_SurveysOfConsumers-Final_Results_for_June_2017-Footnote_7.pdf<\/a>)
\nhttp:\/\/blog.aaii.com\/aaii-sentiment-survey-highest-level-of-neutral-sentiment-in-nearly-a-year\/<\/a>
\nhttps:\/\/www.frbatlanta.org\/cqer\/research\/gdpnow.aspx<\/a>
\nhttp:\/\/theweek.com\/articles\/463959\/why-are-there-two-pronunciations-letter-g<\/a>
\nhttps:\/\/www.economist.com\/blogs\/graphicdetail\/2017\/06\/daily-chart-21<\/a>\u00a0(or go to\u00a0https:\/\/s3-us-west-2.amazonaws.com\/peakcontent\/+Peak+Commentary\/07-03-17_TheEconomist-How_Do_You_Pronounce_GIF-Footnote_11.pdf<\/a>)
\nhttps:\/\/www.usconstitution.net\/constmiss.html<\/a>
\nhttps:\/\/www.merriam-webster.com\/about-us\/americas-first-dictionary<\/a>
\nhttps:\/\/www.ted.com\/talks\/anne_lamott_12_truths_i_learned_from_life_and_writing\/transcript<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Central bankers are stodgy. They speak carefully. For many, reading the words \u2018Federal Reserve\u2019 is enough to cause boredom to set in and web surfing to ensue.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","wds_primary_category":0,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-5345","post","type-post","status-publish","format-standard","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/advisors2.bradcable.com\/swwadvisorsdavid\/wp-json\/wp\/v2\/posts\/5345","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/advisors2.bradcable.com\/swwadvisorsdavid\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/advisors2.bradcable.com\/swwadvisorsdavid\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/advisors2.bradcable.com\/swwadvisorsdavid\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/advisors2.bradcable.com\/swwadvisorsdavid\/wp-json\/wp\/v2\/comments?post=5345"}],"version-history":[{"count":0,"href":"https:\/\/advisors2.bradcable.com\/swwadvisorsdavid\/wp-json\/wp\/v2\/posts\/5345\/revisions"}],"wp:attachment":[{"href":"https:\/\/advisors2.bradcable.com\/swwadvisorsdavid\/wp-json\/wp\/v2\/media?parent=5345"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/advisors2.bradcable.com\/swwadvisorsdavid\/wp-json\/wp\/v2\/categories?post=5345"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/advisors2.bradcable.com\/swwadvisorsdavid\/wp-json\/wp\/v2\/tags?post=5345"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}