We’re Interested in Your Opinion!
For the last couple of weeks, we’ve referred to our pending client satisfaction survey and last week we finally launched! Clients received an email titled “A Message from John Klevens” which contained the link to our survey. Please take a few minutes to help us evaluate where we are as a firm, areas of satisfaction as well as potential areas of improvement. Participation is completely anonymous unless you choose otherwise and for every survey returned, we’ll donate to St. Jude’s Hospital. Thank you!
During Gil Amelio’s tenure as Apple CEO, Apple’s stock slumped and hit a 12-year low in 1997 that was at least partially caused by a single sale of 1.5 million shares of Apple stock by an anonymous party, who was later confirmed to be Steve Jobs. Jobs convinced the directors to oust Amelio in a boardroom coup and Jobs then became CEO.
The stock market got the names “bear and bull” because of caballeros (Spanish knights) in California. The caballeros put California grizzlies in battle with bulls. They observed bears swiped downward and bulls hooked upward, thus lending the analogy. This led to the California grizzly’s extinction.
We all remember the .com boom and bust, and know about the 1929 Wall Street crash, but financial bubbles aren’t anything new. All the way back in 1711, the South Sea Company was at the heart of a huge bubble, which caused share prices to collapse by 1720. Even earlier, there was tulip mania – back in 1637, some tulip bulbs were selling at 10 times the annual income of a skilled laborer.
Weekly Focus – Think About It
“Finish each day and be done with it. You have done what you could. Some blunders and absurdities no doubt crept in; forget them as soon as you can. Tomorrow is a new day. You shall begin it serenely and with too high a spirit to be encumbered with your old nonsense.”
—Ralph Waldo Emerson, philosopher and poet
Here’s a riddle: How can inflation be 8.5% and 6.5% at the same time? The answer is that it depends on how you measure it.
Determining how quickly prices are rising or falling – and where they may be headed in the future – is not simple. In the United States, millions of goods and services are bought and sold every day – shelter, food, transportation, energy, water, education, childcare, equipment and tools, medical care, furnishings, apparel, trash removal, and much more.
The government relies on two indexes: the Consumer Price index (CPI) and the Personal Consumption Expenditures Index (PCE). Each index has two versions: headline inflation and core inflation.
Last week, the Bureau of Labor Statistics (BLS) reported that CPI headline inflation was up 8.5% in March, and CPI core inflation was up 6.5%.
The BLS does not collect every price in every part of the United States. It gathers prices in 75 cities, collecting data from about 6,000 households and 22,000 department stores, supermarkets, hospitals, gas stations, and other establishments. So, the CPI is a measurement that reflects the experience of urban consumers.
CPI headline inflation
Last week, the CPI showed that headline inflation, which includes all price changes collected, was up 1.2% from February to March, and up 8.5% for the 12-month period that ended March 31. The largest increases in the CPI were:
- Used cars and truck prices: +35.3%
- Energy prices(fuel oil, gasoline, natural gas, etc.): +32.0%
- New car prices: +12.5%
- Food prices (groceries and eating out): +8.8%
CPI core inflation
The BLS also reported on core inflation, which is the CPI minus food and energy prices, and was lower than headline inflation. The core CPI was up 0.3% from February to March, and up 6.5% for the 12-month period that ended March 31.
Why would anyone want to exclude staples like food and energy from inflation?
The answer is that food and energy prices are volatile – food and energy are commodities that trade on exchanges – and can distort inflation readings. “Trying to manage monetary policy with gauges that fluctuate wildly would be like driving a car where the speedometer was constantly fluttering between 30 mph and 60 mph. Taking a long-term average may reduce the effect — but only for looking at the past history. Policymakers are forward-focused. They need guidance on where the inflation trend is headed. High volatility obscures that trend,” explained George Calhoun of Forbes.”
To sum up: headline CPI reflects Americans’ cost increases in the recent past, while core CPI is a better indicator of where inflation may be headed, reported Joseph Haubrich of the Cleveland Federal Reserve.
It’s important to note that the Federal Reserve relies on the PCE when making policy decisions. The PCE is a broader measure of inflation than the CPI. The PCE includes measurements taken in urban, non-urban, and rural areas, as well as spending by members of the military and a wider range of organizations. PCE data for March will be released on April 29.
Last week, major U.S. stock indices declined, reported Al Root of Barron’s. The yield on 10-year Treasury notes rose last week.
|Data as of 4/15/22||1-Week||YTD||1-Year||3-Year||5-Year||10-Year|
|Standard & Poor’s 500 (Domestic Stocks)||-2.1%||-7.8%||5.3%||14.8%||13.3%||12.4%|
|Dow Jones Global ex-U.S.||-0.9%||-8.8||-9.2||3.5||3.8||3.4|
|10-year Treasury Note (Yield Only)||2.8||NA||1.5||2.6||2.3||2.0|
|Gold (per ounce)||1.1||7.9||11.7||15.2||9.0||1.7|
|Bloomberg Commodity Index||4.8||33.6||53.0||17.2||9.0||-0.5|
Talkin’ ‘Bout My Generation… In the United States, we often describe groups of people by applying generational labels – Baby Boomers, Gen X, Millennials, and so on. Researchers use these generational cohorts to better understand formative experiences, world views, aging processes, and other issues. See what you know about generational demographics by taking this brief quiz.
1. How many generations live in the United States today?
a. Four (Gen Z, Millennials, Gen X, and Baby Boomers)
b. Five (Gen Z, Millennials, Gen X, Baby Boomers, and the Silent Gen)
c. Six (Gen Z, Millennials, Gen X, Baby Boomers, the Silent Gen, and the Greatest Gen)
d. Seven (Gen Alpha, Gen Z, Millennials, Gen X, Baby Boomers, the Silent Gen, and the Greatest Gen)
2. When surveyed, which of the following events did Millennials, Gen X, Boomers, and Silent Generation respondents agree occurred during their lifetimes and had a powerful impact on our country?
a. Moon landing
b. Civil Rights movement
c. Berlin Wall/ End of Cold War
d. The tech revolution
3. Which generation currently has the most economic and political power?
a. Gen Z
c. Gen X
d. Baby Boomers
e. Silent Gen
4. Which generation owns the most small businesses?
a. Gen Z
c. Gen X
d. Baby Boomers
e. Silent Gen
5. Which generation is the most influential on digital platforms?
a. Gen Z
c. Gen X
d. Baby Boomers
e. Silent Gen
The answers are below.
Answers: 1) d; 2) d; 3) d; 4) c; 5) b
John Klevens, CFP®
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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.