Weekly Market Commentary January 13, 2020

Posted on by Christian Crowell

Fast Facts

Invader Alert- A North Carolina couple called the cops after being woken by loud banging noises from downstairs—only to find that the apparent intruder was a robot vacuum cleaner. Thomas Milam said that when the banging began, he and his wife cowered in the bedroom closet and phoned 911. Police found a brand-new robotic vacuum that had somehow turned itself on, got stuck, and kept bumping against a wall. “It’s definitely better to be safe than sorry,” said Milam. “I still would have called the police, because you just never know.”

Tumblegeddon- Several motorists spent New Year’s Eve trapped in their cars on a Washington state highway by giant piles of tumbleweed 30 feet high. After high winds blew in the weeds, five cars and one truck were buried for hours before snow plows were able to clear the road. “People were still stuck at midnight and rang in the new year trapped under the weeds,” said State Trooper Chris Thorson, who described the incident as “Tumblegeddon.”

Happy Birthday!- Kane Tanaka is living her dream. The Japanese great-grandmother celebrated her 117th birthday last week, stretching out her record as the world’s oldest person. Tanaka said that she set herself the goal of becoming the planet’s most senior citizen after turning 100. When she was recognized as such by the Guinness Book of Records last year, Tanaka declared it the happiest day of her life. To celebrate hitting 117, the supercentenarian dressed up in a gold kimono for a party at her nursing home, where she was surrounded by friends and family. After taking a bite of her birthday cake, Tanaka declared: “Tasty, I want some more.”

 Weekly Focus – Think About It

“Stay committed to your decisions but stay flexible in your approach.”

                                                                                      -Tony Robbins

The Markets

It was a nerve-wracking week.

Iran fired 22 ballistic missiles at the Ain Al Asad air base near western Iraq and a second base in northern Iraq following last week’s U.S. drone strike that killed a top Iranian military commander. Newsweek reported the bases suffered minimal damage and there were no casualties from the attack. However, Iran mistakenly downed a commercial airliner, killing all on board, reported CBS News.

U.S. stock prices faltered after the initial attack, but recovered quickly when both sides, “…step[ped] back from further violent escalation…,” reported Barron’s.

U.S. Treasury bond yields dropped sharply last week before rebounding. Financial Times reported the possibility of war caused global investors to seek out investments perceived to be safe havens. Record amounts of cash moved into bond investments, particularly U.S. Treasuries, during the week ended last Wednesday.

Australia was ravaged by wildfires. Citing the Insurance Council of Australia, NPR reported, “The wildfires have killed more than two dozen people, more than a billion animals. They’ve destroyed more than 1,800 houses, an untold number of commercial buildings and thousands of acres of prime farmland…” At the end of last week, 130 fires were burning and 50 were uncontained, according to the BBC. The damage could mark the end of Australia’s nearly 30-year economic expansion.

Puerto Rico was shaken by a 5.9 magnitude earthquake. The quake followed a magnitude 6.4 quake that hit the same region four days earlier, reported the Associated Press. Since December 28, the region has been hit by, “…more than 1,280 earthquakes, of which more than 100 were felt and more than 70 were of magnitude 3.5 or greater.”

On Friday, a tepid U.S. employment report cooled U.S. stock returns. However, Barron’s reported all three major U.S. indices closed, “within a half-percentage point of their highest-ever closes.”

More milestones of the past decade. As we mentioned last week, the period from 2010 through 2020 was filled with memorable events. We covered a few in last week’s commentary. Here are some more:

  • Gangnam Style. In 2012, Korean pop music went viral with Gangnam Style. Its online video became the first to be viewed one billion times.
  • Total solar eclipse. For the first time since June 1918, a solar eclipse was visible across the entire United States in August 2017. We won’t have to wait so long for the next one. Good Housekeeping reported it will happen in 2024.
  • Economic confidence increased. In January 2010, Gallup reported just 9 percent of Americans said it was a good time to find a quality job. By the end of 2019, the number had increased to 66 percent.
  • Bionic men, women, and children. Bionic people are no longer limited to the realm of science fiction. Prosthetics “…are morphing into mind-controlled extensions of the human body that let their wearers feel what they’re touching,” reported CNET.
  • Trillion-dollar stock valuations. Late in the decade, three companies in the technology sector saw their stock valuations reach thirteen digits. Not all have remained at that level.
  • Global middle class expansion. At the end of last year, about one-half of the world belonged to the middle class, according to the World Data Lab. Middle class means different things in different countries. Middle class income ranged from $3,872 a year to $38,720 a year.
  • The U.S. wealth gap. The Louis Federal Reserve explained the gap like this: The ‘income pie’ in the United States grew from $7 trillion in 1989 to almost $12.9 trillion in 2016. The share of pie going to the top 10 percent of earners increased from 42 percent to 50 percent. Lower earners’ shares shrank.

Best regards,

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.

This material is intended to provide general financial education and is not written or intended as tax or legal advice and may not be relied upon for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. This material is for informational purposes only and is not an offer to sell or a solicitation to buy any securities.

Securities and Advisory Services offered by John Klevens through KMS Financial Services, Inc. Member FINRA/SIPC and an SEC Registered Investment Adviser. Klevens Capital Management and KMS are separate and unaffiliated.

Portions of this newsletter have been prepared by Peak Advisor

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* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm.
* 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.
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* 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.
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* Consult your financial professional before making any investment decision.

Sources:
The Week Magazine
www.goodhousekeeping.com
https://www.newsweek.com/military-aircraft-runway-among-damage-iraqi-base-struck-iran-missiles-1481129
https://www.cbsnews.com/live-updates/iran-plane-military-unintentionally-shot-down-jetliner-2020-01-11/
https://www.barrons.com/articles/the-dow-jones-industrial-average-rises-189-points-for-the-week-despite-mideast-tensions-51578705947?mod=hp_DAY_4 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/01-13-20_Barrons-The_Dow_Rises_189_Points_for_the_Week_Despite_Mideast_Tensions-Footnote_3.pdf)
https://www.barrons.com/market-data?mod=BOL_TOPNAV (Overview chart) (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/01-13-20_Barrons-Overview_Market_Data-Footnote_4.pdf)
https://www.barrons.com/market-data?mod=BOL_TOPNAV (Bonds chart) (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/01-13-20_Barrons-Bonds_Market_Data-Footnote_5.pdf)
https://www.ft.com/content/3eaf8fe8-3334-11ea-9703-eea0cae3f0de (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/01-13-20_FinancialTimes-Bond_Funds_had_Record_Inflow_as_Iran_Crisis_Spiralled-Footnote_6.pdf)
https://www.npr.org/2020/01/12/795235653/australias-massive-fires-threaten-to-slow-decades-long-economic-boom
https://www.bbc.com/news/world-australia-50951043
https://apnews.com/fd6b234395379a876bddc74e1b882d43
https://en.wikipedia.org/wiki/Gangnam_Style
https://www.goodhousekeeping.com/life/g29729623/things-you-forgot-happened-this-decade-2010-to-2019/?slide=25
https://news.gallup.com/opinion/gallup/273377/gallup-decade-review-2010-2019.aspx
https://www.cnet.com/news/prosthetic-hands-get-a-sense-of-touch/
https://www.barrons.com/articles/amazon-stock-parts-1-trillion-market-cap-51570474138
https://worlddata.io/blog/emerging-trends-in-the-global-middle-class-a-private-conversation-with-dr-homi-kharas
https://www.stlouisfed.org/open-vault/2019/august/wealth-inequality-in-america-facts-figures