Seeking Your Input!
Within the next few weeks, we plan on asking a favor of you – share your thoughts. Each day we work very hard to ensure that we’re providing you with meaningful support and guidance. To help us find out if we’re hitting the mark, we have engaged with a leading consultant in our industry to help us gather input from our clients. By taking 6 – 7 minutes to share your thoughts you can help us understand and deliver what you need, want, and expect from your financial advisor. The evaluation will be online, brief, painless and you have the option to include your name or remain anonymous. And, for every survey returned we’ll donate to a local charity. We’re looking forward to knowing what you think and how we can improve!
Fast Facts – Real Estate
Will Smith has something in common with us: We both aren’t going to the Oscars for the next 10 years! The Academy of Motion Pictures Arts and Sciences banned Will Smith for a decade for slapping Chris Rock at this year’s Oscars. It also said it did not do enough to address the situation when it occurred. Following the ruling, Smith said, “I accept and respect the Academy’s decision.
The FAA is seeking monster fines. The regulator has proposed its two biggest fines yet for unruly passengers: $81,950 for a passenger who struck a flight attendant, headbutted and spit at crewmembers, and $77,272 for one who bit another passenger during a flight. “if you are on an airplane, don’t be a jerk,” Transportation Secretary Pete Buttigieg said.
Grocery prices impacted by inflation. Grocery prices are expected to rise between 3% and 4% in the coming months. And that’s on top of all the other increases consumers faced over the past several months. No food category, the USDA said, decreased in price in 2021. And now the USDA revised its forecast upward for all food categories, including meats, poultry, eggs, dairy products, fats, oils, and more. The only category that the USDA revised downward was fresh vegetables.
Weekly Focus – Think About It
“Strange as it may seem, I still hope for the best, even though the best, like an interesting piece of mail, so rarely arrives, and even when it does it can be lost so easily.”
—Lemony Snicket (Daniel Handler), author
The first quarter of 2022 was jam-packed with volatility-inducing events: rising inflation, war in Ukraine, rising interest rates, sanctions on Russia, and a new COVID-19 outbreak in China.
Here’s a brief review of what happened during:
Inflation continued to rise. At the start of the year, consumers and investors were primarily concerned about inflation. In February, the Personal Consumption Expenditures Price Index showed core inflation, which excludes volatile food and energy prices, was up 5.4% year-over-year. That’s well above the Federal Reserve (Fed)’s 2% target for inflation.
The Fed began to tighten monetary policy late in 2021 by curtailing its bond-buying program. Investors expected the Fed to continue fighting inflation in 2022 by raising the federal funds target rate. Raising rates makes borrowing more expensive, which causes consumer and business spending to slow, demand for goods and services to drop, and prices to move lower, reported Carmen Reinicke of CNBC.
Russia invaded Ukraine and sanctions followed. In late February, Russia shocked the world by invading Ukraine. The war has devastated the people and the economy of Ukraine. The Kyiv School of Economics estimated that physical damage inflicted on Ukraine’s roads, bridges, rails, ports, residences, factories, airports, hospitals, and schools from February 24 to April 1 exceeded $68 billion, reported The Economist. As the human and economic costs of the war filtered through markets:
Energy prices surged around the world: Oil prices finished the quarter 33% higher – after declining 20% from their highest price during the quarter. One result was that energy and utility sectors delivered strong returns relative to other market sectors during the quarter, reported Lauren Solberg of Morningstar.
Higher energy prices exacerbated global inflation. For example, rising fuel prices lifted other prices, too. The cost of diesel fuel, which is primarily used for trucking and shipping, rose 63% in the United States during the first quarter. Higher transportation and delivery costs were reflected in the cost of other goods, including food, reported Brian Swint of Barron’s.
Global food prices increased: Ukraine and Russia were key exporters of grains and cooking oils, as well as other products. Since February, when the war began, the price of wheat has increased by almost 20%, corn by 19%, barley by 27%, and vegetable oils by 23%, according to The Economist.
Central banks continued to tighten monetary policy. The war in Ukraine complicated the outlook for economic growth and inflation around the world. Despite uncertainty about growth, many central banks tightened monetary policy to bring inflation down.
In the U.S., the Fed raised the federal funds target rate by 0.25% in March. Fed officials expect to raise rates six more times in 2022 and begin reducing the Fed’s balance sheet, a process known as quantitative tightening, at its May meeting.
Yields on U.S. Treasury notes and bonds shifted higher during the quarter and into April. The yield on the 2-year Treasury note rose from 0.78% at the start of the year to 2.53% at the end of last week, while the benchmark 10-year Treasury yield rose from 1.63% to 2.72%. When bond yields rise, bond prices fall. In the first quarter, Morningstar indices for U.S. Treasuries, corporate, high-yield, and mortgage bonds all moved lower.
A new COVID-19 outbreak in China led to a lockdown in Shanghai. On March 28, Shanghai, China, a city of 25 million people, was locked down amid a new COVID-19 outbreak. A source cited by Reshma Kapadia of Barron’s stated:
“…concern is growing about the scars it may leave on Chinese consumers — a crucial growth engine for the struggling economy but also for a host of global companies…Consumers will be more cautious this time around. Their pandemic savings are depleting, wealth has been destroyed in equities and property and wage growth has already turned down.’”
The Shanghai Composite Index dropped by almost 10% during the quarter, reported Reuters.
Overall, stock markets declined during the first quarter of 2022. The MSCI All Country World Index (ACWI) measures the performance of mid-sized and large company stocks in 23 developed markets and 24 emerging markets. It reflects the performance of about 85% of the investable stocks across the world and finished the first quarter of 2022 -5.36%.
There were some regions that delivered positive returns during the period. For example, markets in some commodity-exporting countries in Latin America, Africa, and the Middle East benefited from the supply disruptions that followed Russia’s invasion of Ukraine.
We anticipate that markets will remain volatile in the coming weeks and, possibly, months. We will continue to monitor events around the world and the ways in which they may affect markets and asset prices and we hope peace talks will conclude the war in Ukraine.
|Data as of 4/8/22||1-Week||YTD||1-Year||3-Year||5-Year||10-Year|
|Standard & Poor’s 500 (Domestic Stocks)||-1.3%||-5.8%||9.6%||15.7%||13.8%||12.5%|
|Dow Jones Global ex-U.S.||-1.5%||-8.0||-7.8||4.0||4.1||3.4|
|10-year Treasury Note (Yield Only)||2.7||NA||1.6||2.5||2.4||2.0|
|Gold (per ounce)||0.6||6.7||10.6||14.3||9.2||1.7|
|Bloomberg Commodity Index||2.0||27.5||49.7||15.2||8.0||-1.1|
A Cure for Ice Cream Headaches. When the weather gets warmer, many people consume ice cream, slushies, and popsicles to cool down. Occasionally, that leads to brain freeze, reported Joseph Nordqvist in Medical News Today.
Brain freeze is the sharp, painful headache that occurs after you’ve eaten cold foods or drinks too quickly. When something extremely cold touches the roof of the mouth, the capillaries in the sinuses cool and blood vessels narrow. While many people press a palm to their foreheads when they experience brain freeze, that’s not a particularly effective cure. Better options may be to:
- Drink warm water,
- Press your tongue to the roof of your mouth to warm the area, or
- Cover your mouth and nose with your hands and breathe so warm air flows over your palate.
Here’s something else to keep in mind: eating hot foods on hot days may cool the body effectively, so long as the foods make you sweat. Sweating helps lower body temperature.
John Klevens, CFP®
P.S. Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added.
Securities offered through Securities America, Inc., Member FINRA/SIPC. Financial Advice & Investment Advisory Services offered through PFG Advisors LLC, a Registered Investment Advisor (RIA). Klevens Capital Management, PFG Advisors LLC, and Securities America, Inc. are separate entities.
. Portions of this newsletter have been prepared by Peak Advisor
* These views are those of Carson Coaching, and 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 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.
* 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 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.
* 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.