Blog
The Markets
Will deflation continue?
In May, Pew Research asked Americans about the biggest problems facing our nation. The top three answers were:1
- Inflation;
- The ability of Democrats and Republicans to work together; and
- The affordability of health care.
Last week, there was some good news about the first issue. Inflation became deflation as the Consumer Price Index (CPI) fell in June after remaining unchanged in May. Headline inflation was ‑0.1 percent month over month.2
Megan Leonhardt of Barron’s reported on the CPI’s findings: “The details under the hood, so to speak, also largely provided good news for consumers and Fed officials. Goods deflation continued — driven by falling new and used vehicle prices—while services costs also trended down. And housing costs, a persistently stubborn sector when it comes to progress in taming inflation, increased just 0.2% on the month — a slowdown from the consistent monthly readings of 0.4%.”3
Cooling inflation may lead the Federal Reserve (Fed) to begin lowering the federal funds rate – and that would make borrowing less expensive.3 Optimism about lower rates led to a bond market rally, and a realignment in the stock market. Rita Nazareth of Bloomberg explained:
“Wall Street traders betting the Federal Reserve will be able to cut rates soon sent bond yields tumbling — while driving a big rotation out of the tech megacaps that have powered the bull market in stocks. Further signs that inflation is slowing down fueled speculation the Fed will be able to move as early as September. Optimism over lower rates sparked a shift into riskier corners of the market — as money exited the long-favored safety trade of big tech.”4
Last week, major U.S. stock market indices moved higher with the Dow Jones Industrial Average hitting its first record high for 2024, reported Jacob Sonenshine.5 The yield on the benchmark 10-year U.S. Treasury note moved lower last week.6
Over the weekend, after this commentary was written, there was an attempt to assassinate former President Donald Trump. We condemn this senseless act. We will stay alert to how this affects financial markets.
Data as of 7/12/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 0.9% | 17.7% | 25.6% | 8.6% | 13.3% | 11.0% |
| Dow Jones Global ex-U.S. Index | 2.1 | 8.0 | 11.8 | -1.1 | 3.9 | 1.9 |
| 10-year Treasury Note (yield only) | 4.2 | N/A | 3.9 | 1.4 | 2.1 | 2.6 |
| Gold (per ounce) | 1.2 | 15.8 | 23.2 | 10.3 | 11.3 | 6.3 |
| Bloomberg Commodity Index | -1.7 | 2.1 | -2.6 | 2.4 | 4.5 | -2.5 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) 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; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
A QUIZ FOR SOCCER FANS. Over the last couple of weeks, fans of the world’s most popular sport were riveted as the men’s championships played out in Europe and the United States. Last weekend, Spain took on England at the UEFA EURO 2024 championship in Berlin, Germany, while Argentina and Colombia duked it out for the CONMEBOL Copa AméricaTM title in Miami, Florida. Fans of the beautiful game (soccer) can test their knowledge of the tournaments by taking this brief quiz.
- In the history of European Championship matches, 30 own goals have been scored. (An own goal is when a team scores on itself.) How many own goals were tallied in the 2024 tournament prior to last weekend?
- Two
- Four
- Seven
- Ten
- Colombia beat Uruguay in the Copa América semifinal. For some of that match, Colombia had 10 players on the field after losing a player to a red card. How long did the team compete with only 10 players?
- 15 minutes
- 45 minutes
- 60 minutes
- During injury time (aka stoppage time)
- Spain’s Lamine Yamal was the youngest player to start in the Champions league and the youngest to score at the European Championship. How old was he when he scored?
- 15
- 16
- 17
- 18
- Who holds the record for the most assists – passes that lead directly to goals – in the Copa América tournament?
- Luis Suarez
- Lionel Messi
- Luis Figo
- James Rodriguez
- Bonus question: Which women’s team won the 2024 CONCACAF W Gold Cup?
- Mexico
- United States
- Canada
- Brazil
What’s your favorite bit of soccer trivia?
Weekly Focus – Think About It
“The thing about football – the important thing about football – is that it is not just about football.”7
―Terry Pratchett, author
Answers: 1) d8; 2) b9; 3) b10; 4) d11; 5) b12
* These views are those of Carson Coaching, 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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 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.
Sources:
2 https://www.bls.gov/news.release/pdf/cpi.pdf
3 https://www.barrons.com/livecoverage/cpi-inflation-june-report-data-today?mod=article_inline (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/07-15-24_Barrons_Pivotal%20Inflation%20Data%20Fuel%20Optimism%20for%20Sept%20Rate%20Cut_3.pdf)
4 https://www.bloomberg.com/news/articles/2024-07-10/stock-market-today-dow-s-p-live-updates (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/07-15-24_Bloomberg_Stock%20Rotation%20Hits%20Megacaps%20on%20Bets%20Fed%20Will%20Cut_4.pdf)
5 https://www.barrons.com/articles/tech-stocks-small-caps-1817f4f9?refsec=the-trader&mod=topics_the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/07-15-24_Barrons_Tech%20Stocks%20Have%20Fallen%20Out%20of%20Favor_5.pdf)
6 https://www.barrons.com/market-data/bonds?mod=md_subnav (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/07-15-24_Barrons_Data_6.pdf)
7 https://www.goodreads.com/quotes/tag/soccer
8 https://en.wikipedia.org/wiki/List_of_UEFA_European_Championship_own_goals
9 https://sports.yahoo.com/rash-red-card-curbs-colombias-005800066.html
[1]0 https://apnews.com/article/yamal-spain-euro-2024-youngest-scorer-5f30ffdc3dbf58087a353b6ef2584a69
[1]1 https://copaamerica.com/en/news/james-record-assists-copa-america-colombia-uruguay [1]2https://en.wikipedia.org/wiki/CONCACAF_W_Gold_Cup
Are we at an inflection point?
The transition to renewable energy has been moving forward and may be reaching an inflection point. In 2023, global renewable energy capacity increased by almost 50 percent, reported the International Energy Agency (IEA). Renewable capacity reached all-time highs in the United States, Europe and Brazil. However, the leader in new capacity is China. In 2023, the country “commissioned as much solar PV [photovoltaic] as the entire world did in 2022,” stated the IEA’s Renewables 2023 report.1
In the United States, solar power is responsible for a relatively small amount (3.9 percent in 2023) of all electricity generated; however, solar is growing faster than any other source of electricity. One reason for the growth is Big Tech companies’ commitment to clean energy. Four of the “Magnificent Seven” were responsible for “40% of the demand for large, utility-scale solar projects in the U.S. over the past five years,” reported Spencer Kimball and Gabriel Cortés of CNBC. 2
“To call solar power’s rise exponential is not hyperbole, but a statement of fact. Installed solar capacity doubles roughly every three years, and so grows ten-fold each decade. Such sustained growth is seldom seen in anything that matters. That makes it hard for people to get their heads round what is going on. When it was a tenth of its current size ten years ago, solar power was still seen as marginal even by experts who knew how fast it had grown. The next ten-fold increase will be equivalent to multiplying the world’s entire fleet of nuclear reactors by eight in less than the time it typically takes to build just a single one of them,” reported The Economist.3
The IEA forecasted that by 2028 renewable energy sources will generate more than 42 percent of the world’s electricity. Wind and solar PV energy sources are expected to deliver about 25 percent of global electricity.1
There are some obstacles to renewable energy growth, though. Current constraints include siting, permitting and grids, reported BloombergNEF.4 From 2000 to 2018, just 20 percent of U.S. renewable energy projects that sought to be connected to the power grid were actually connected.2
“Grids were not originally set up for such a fast-paced energy system; their tools and processes were developed in a slower, less volatile world…[Renewable energy source] infrastructures are already available and rapidly increasing. However, taking advantage of renewables requires a power grid that can accommodate these intermittent energy sources,” reported McKinsey & Company’s Adam Barth and colleagues.5
Last week, major stock market indices finished higher with the Standard & Poor’s 500 Index chalking up its 31st record high for 2024 during the week, reported Jacob Sonenshine of Barron’s.6 Many maturities of U.S. Treasury bonds finished this week slightly higher than they ended last week.7
Data as of 6/21/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 0.6% | 14.6% | 25.2% | 9.0% | 13.1% | 10.8% |
| Dow Jones Global ex-U.S. Index | 0.2 | 3.6 | 8.0 | -2.3 | 3.1 | 1.5 |
| 10-year Treasury Note (yield only) | 4.3 | N/A | 3.7 | 1.5 | 2.1 | 2.6 |
| Gold (per ounce) | 0.2 | 12.4 | 21.6 | 9.6 | 10.8 | 5.9 |
| Bloomberg Commodity Index | -0.7 | 3.1 | -2.9 | 3.6 | 5.2 | -2.9 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) 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; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
COIN CONUNDRUM. What do you do with loose change? Many people have informal collecting stations: a money jar in the kitchen, a slide of coins on the dryer, or a jangle of change in a backpack. Oyin Adedoyin of The Wall Street Journal reported via MSN:
“Coins are as good as junk for many Americans. Buses, laundromats, toll booths, and parking meters now take credit and debit cards and mobile payments. Using any form of physical currency has become more of an annoyance, but change is often more trouble than it is worth to carry around. The U.S. quarter had roughly the buying power in 1980 that a dollar has today.” 8
Sometimes, coins are exchanged for dollars at the bank, but a lot of change ends up in the trash. A waste management company in Pennsylvania recovers $500,000 to a million dollars in coins each year as it sorts metal from other waste.8
And that’s just the face value of the coins.
U.S. coins often cost more to make than they are worth. The biennial report from the United States Mint showed that, in 2022, the United States spent:9
- 2.7 cents to make a penny,
- 10.4 cents to make a nickel,
- 5 cents to make a dime, and
- 11 cents to make a quarter.
“Currently, Congress must pass a law to either specifically make changes to statutory coin composition or provide authority for the Mint to change to an alternative metal under certain conditions,” stated the report. Depending on the solution, a change could save the government $12 to $24 million.9
The Mint recommended that Congress take steps to remedy the issue. Legislation was introduced to the 116th Congress, which governed from 2019-2021 (the Coin Metal Modification Authorization), and the 117th Congress, which governed from 2021-2023 (Cost Savings Act). So far, it has not been passed.9
Weekly Focus – Think About It
“Don’t tell me where your priorities are. Show me where you spend your money, and I’ll tell you what they are.”10 ―James W. Frick, former development officer, University of Notre Dame
* These views are those of Carson Coaching, 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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 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.
Sources:
[1] https://www.iea.org/reports/renewables-2023/executive-summary
2 https://www.economist.com/leaders/2024/06/20/the-exponential-growth-of-solar-power-will-change-the-world (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/06-24-24_Economist_The%20Exponential%20Growth%20of%20Solar%20Power%20Will%20Change%20the%20World_2.pdf)
4 https://about.bnef.com/blog/us-clean-power-at-inflection-point-bnef-summit-new-york/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/06-24-24_BloombergNEF_US%20Clean%20Power%20at%20Inflection%20Point_4.pdf)
6 https://www.barrons.com/articles/stock-market-rally-ending-5ed9e442?refsec=the-trader&mod=topics_the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/06-24-24_Barrons_Its%20Been%20a%20Good%20Bull%20Run%20for%20Stocks_6.pdf)
9 https://www.usmint.gov/wordpress/wp-content/uploads/2023/04/2022-USM-Biennial-Report_P5_FINAL.pdf [Pages 4, 6, 8-9] 10 https://www.goodreads.com/author/quotes/21470345.James_W_Frick
The Markets
Overall, May was a good month for investors.
The adage, “Sell in May and go away,” would have been poor advice last month. Major stock indices in the United States finished the month higher. Connor Smith of Barron’s reported:1
- The Nasdaq Composite was up 6.9 percent for May,
- The Standard & Poor’s 500 Index gained 4.8 percent, and
- The Dow Jones Industrial Average finished 2.3 percent higher.
Despite the positive returns, May was also a volatile month for stocks as investors worried about inflation and whether the Federal Reserve will begin to lower rates in 2024, reported Paul La Monica of Barron’s.2
For much of last week, stocks trended lower.3 The Conference Board’s Consumer Confidence Index surprised by exceeding economists’ expectations for May, but it had little effect on investors as the report wasn’t rosy.4
Confidence improved “…amid optimism about the labor market, but worries about inflation persisted and many households expected higher interest rates over the next year…The mixed survey…also showed more consumers believed that the economy could slip into recession in the next 12 months,” reported Lucia Mutikani of Reuters.5
Late in the week, markets regained lost ground after the Personal Consumption Expenditures Price Index (one of the Federal Reserve’s preferred inflation gauges) data arrived. The Index showed that core inflation, which excludes volatile food and energy prices, ticked lower from March to April. Headline inflation remained steady month to month.6
Year to year, headline inflation was 2.7 percent in April and core inflation was 2.8 percent.6
Major U.S. stock indices finished the week lower.7 The yield on the benchmark 10-year U.S. Treasury finished the week close to where it started the week.8
Data as of 5/31/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -0.5% | 10.6% | 26.3% | 7.9% | 13.9% | 10.6% |
| Dow Jones Global ex-U.S. Index | -0.8 | 4.3 | 13.9 | -2.5 | 4.3 | 1.7 |
| 10-year Treasury Note (yield only) | 4.5 | N/A | 3.6 | 1.6 | 2.1 | 2.5 |
| Gold (per ounce) | 0.2 | 13.0 | 19.5 | 7.3 | 12.6 | 6.5 |
| Bloomberg Commodity Index | -1.9 | 4.4 | 5.1 | 3.0 | 5.8 | -2.6 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) 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; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
YOUNGER GENERATIONS ARE FRUSTRATED WITH BABY BOOMERS. The saving and spending habits of baby boomers, born between 1946 and 1964, have been discussed in the news and on social media lately. Much of the discussion has focused on the wealth accumulated by the world’s baby boom generation. Boomers have, broadly speaking, acquired significant wealth over their lifetimes. The Economist reported that baby boomers in the United States comprise “20% of the country’s population, own 52% of its net wealth, worth $76 [trillion].”9
Instead of congratulating a group that is likely to live longer in retirement than previous generations have, some conversations accuse boomers of hoarding wealth,9 while others suggest that policy mistakes by leaders in the cohort have held back younger generations economically.10
Whether these discussions reflect the beliefs of younger generations is unclear. Regardless, boomers have solid reasons for spending slowly. These include:
Leaving an inheritance for younger generations. “Many boomers recognize how lucky they are to have accumulated such enormous wealth. They want to pass it on to their children, many of whom are struggling to buy a house or pay school fees… The flow of bequests from the dead to the living, as a share of GDP, is rising fast across the rich world. Americans inherit about 50% more each year than they did each year in the 1980s and 1990s, for instance.”9
Living longer in retirement. Longevity risk is a significant concern for baby boomers, many of whom may spend 30 years or more in retirement. According to the Employee Benefits Research Institute’s Retirement Confidence survey, 32 percent of workers and 26 percent of retirees are not confident they will have enough money to live comfortably through retirement.11
Keeping a reserve – just in case. British research found that older people who do not believe they will need long-term care are likely to spend their savings more quickly, while those who believe there is a possibility of becoming less mobile or developing dementia are likely to spend more slowly.9
Planning for retirement is not a simple task, especially with the possibility of reduced Social Security benefits ahead.12 A new report from Goldman Sachs found that a majority of millennials and Gen Z are ahead on planning and saving for retirement, while almost half of the Gen X and baby boomer generations are behind.13
If you have any questions about retirement or estate planning, please get in touch.
Weekly Focus – Think About It
“Wealth consists not in having great possessions, but in having few wants.”14
―Epictetus, philosopher
* These views are those of Carson Coaching, 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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 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.
Sources:
[1] https://www.barrons.com/livecoverage/stock-market-today-053124/card/nasdaq-roars-in-late-trading-as-stocks-finish-strong-month-MvOOyCtoznraH3ttkx5m (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/06-03-24_Barrons_Nasdaq%20Rallies%20as%20Stocks%20Finish%20Strong%20Month_1.pdf)
2 https://www.barrons.com/articles/inflation-pce-fed-stocks-55fa0173?refsec=markets&mod=topics_markets (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/06-03-24_Barrons_Inflation%20Data%20Offer%20Good%20News%20for%20Stocks_2.pdf)
3 https://finance.yahoo.com/quote/%5EGSPC/
4 https://www.conference-board.org/topics/consumer-confidence
5 https://www.reuters.com/markets/us/us-consumer-confidence-unexpectedly-improves-may-2024-05-28/
6 https://www.bea.gov/sites/default/files/2024-05/pi0424.pdf
7 https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/06-03-24_Barrons_Data_7.pdf)
9 https://www.economist.com/finance-and-economics/2024/05/26/baby-boomers-are-loaded-why-are-they-so-stingy (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/06-03-24_The%20Economist_Baby%20Boomers%20are%20Loaded_9.pdf)
11 https://www.ebri.org/docs/default-source/rcs/2024-rcs/2024-rcs-release-report.pdf?sfvrsn=2447072f_1 [page 5]
12 https://finance.yahoo.com/news/20-cuts-social-security-may-123017196.html
The Markets
Perception versus reality.
A recent Harris poll, conducted on behalf of The Guardian newspaper, found that there is some confusion about the state of the American economy and U.S. stock market performance. A significant proportion of the Americans who participated think the economy and the stock market are in rough shape.1 Here are a few of the misperceptions uncovered by the poll:
- Misperception No. 1: The United States is in a recession, according to 56 percent of poll respondents.1
Reality: The U.S. is not in a recession. The economy has been expanding, not shrinking. Here are the statistics for recent U.S. economic growth (after adjusting for inflation):
2020: – 3.5 percent (pandemic year)2
2021: + 5.8 percent3
2022 + 1.9 percent3
2023 + 2.5 percent3
2024: + 1.6 percent (first quarter 2024) 3
- Misperception No. 2: The Standard & Poor’s (S&P) 500 Index is down for the year, according to 49 percent of poll respondents.1
Reality: The S&P 500 was up 11.2 percent, year to date, through the end of last week. In 2024, the Index has charted 24 all-time highs, reported Jan-Patrick Barnert, Alexandra Semenova, Geoffrey Morgan and Michael Msika of Bloomberg.5
- Misperception No. 3: Inflation has been rising, according to 72 percent of poll respondents.1
Reality: Inflation has been trending lower. In April, inflation was 3.4 percent over the previous 12 months. While that rate is higher than the Fed’s target rate, it is far lower than inflation in June 2022 when it peaked at 9.1 percent.5
The confusion may be related to the fact that prices remain higher than they once were. There was some positive news on that front, last week. Several major retailers announced they are lowering prices on groceries and other items, reported Jaclyn Peiser of The Washington Post.6
- Misperception No. 4: U.S. unemployment is near a 50-year high, according to 49 percent of poll respondents.1
Reality: Unemployment is near a 50-year low. The average U.S. unemployment rate from 1947 through 2023 was 5.7 percent.7 In recent years, the unemployment rate has been:
2020: 8.1 percent (Pandemic year)7
2021: 5.3 percent7
2022: 3.6 percent7
2023: 3.6 percent7
2024: 3.9 percent8 (April 2024, year over year)
Major U.S. stock indices finished the week mixed. The Nasdaq Composite Index finished the week higher, while the S&P 500 Index was flat for the week, and the Dow Jones Industrial Average lost ground.9 Yields on most maturities of U.S. Treasuries rose over the week.10
Data as of 5/24/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 0.03% | 11.2% | 29% | 8.4% | 13.2% | 10.7% |
| Dow Jones Global ex-U.S. Index | -1.1 | 5.2 | 12.8 | -1.8 | 4.3 | 1.8 |
| 10-year Treasury Note (yield only) | 4.5 | N/A | 3.7 | 1.6 | 2.3 | 2.5 |
| Gold (per ounce) | -2.5 | 12.7 | 20.3 | 7.6 | 12.8 | 6.3 |
| Bloomberg Commodity Index | -0.7 | 6.5 | 4.4 | 4.7 | 5.9 | -2.5 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) 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; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
LOOKING FOR A GRADUATION GIFT? Graduation season is well underway. If you’re looking for a gift for a high school or college graduate, consider giving one or more shares of appreciated stock. This is usually done by transferring shares from your account to the recipient’s account.11
There can be significant benefits to gifting an appreciated asset, including:
- Realizing a tax advantage. When people gift shares of appreciated stock, they may realize a tax advantage. Typically, when shares that have increased in value are gifted to another person, the gift giver does not owe capital gains tax on the shares.
- Allowing the asset to grow over time. The gift recipient may owe tax when they sell the shares, depending on the sale price and the recipient’s tax bracket. If the shares remain invested, though, they have an opportunity to grow over time.
- Creating a teaching opportunity. When gifting shares, share the story of the stock with the recipient. Why did you buy it? How much has it appreciated? Do you think the recipient should keep it or sell it? Gifting shares creates an opportunity to share knowledge and increase financial literacy.
The government limits the amount of money that can be gifted to an individual without paying a gift tax. The annual gift tax exclusion is $18,000 per recipient in 2024. In general, a person can give up to $18,000 per recipient without having to pay a tax on the gift.12 Appreciated shares can also make great birthday and holiday gifts.
There can be complexities when gifting an appreciated asset. If you would like to explore the idea, give us a call.
Weekly Focus – Think About It
Instructions for living a life:
Pay attention.
Be astonished.
Tell about it.
―From Sometimes by Mary Oliver13
* These views are those of Carson Coaching, 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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 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.
Sources:
1 https://www.theguardian.com/us-news/article/2024/may/22/poll-economy-recession-biden (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-27-24_The%20Guardian_Majority%20of%20Americans%20Wrongly%20Believe%20US%20is%20In%20Recession_1.pdf)
2 https://www.bea.gov/sites/default/files/2021-01/gdp4q20_adv.pdf [Table 1] (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-27-24_BEA_Gross%20Domestic%20Product%204th%20Quarter%20and%20Year%202020_2.pdf)
3 https://www.bea.gov/sites/default/files/2024-04/gdp1q24-adv.pdf [Table 1] (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-27-24_BEA_Gross%20Domestic%20Product%201st%20Quarter%202024_3.pdf)
4 https://www.bloomberg.com/news/articles/2024-05-18/tokyo-to-new-york-stock-markets-are-on-a-record-hitting-spree-around-the-world (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-27-24_Bloomberg_From%20Tokyo%20to%20New%20York%20Stock%20Markets%20Are%20On%20a%20Spree_4.pdf)
5 https://www.bls.gov/regions/mid-atlantic/data/consumerpriceindexhistorical_us_table.htm
6 https://www.washingtonpost.com/business/2024/05/24/grocery-prices-falling/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-27-24_The%20Washington%20Post_Grocers%20Are%20Finally%20Lowering%20Prices%20as%20Consumers%20Pull%20Back_6.pdf)
7https://data.bls.gov/timeseries/LNU04000000?periods=Annual+Data&periods_option=specific_periods&years_option=all_years [Average is in pdf] (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-27-24_BLS_Labor%20Force%20Statistics%20from%20the%20Current%20Population%20Survey_7.pdf)
8 https://www.bls.gov/news.release/pdf/empsit.pdf
9 https://www.schwab.com/learn/story/stock-market-update-close
[11] https://www.investopedia.com/ask/answers/07/giftofstock.asp
[12] https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes [How many annual exclusions are available?] [13]https://readalittlepoetry.com/2014/09/10/sometimes-by-mary-oliver/
The Markets
Reading the economic tea leaves.
Tasseography practitioners read tea leaves to forecast the future.1 Some economic data serve a similar purpose. Policymakers, central bankers, economists, and investors look at leading economic indicators to forecast where the economy may be headed.2 Classic leading indicators include:
Consumer confidence. Consumer spending is the largest contributor to economic growth in the United States. When consumers feel confident about their finances, the economy may continue to grow, and vice versa.2
The slope of the yield curve. When yields for short-term U.S. Treasuries are higher than yields for long-term U.S. Treasuries, then a recession may be ahead. “Yield curve inversions have preceded each of the last eight recessions,” reported the Federal Reserve Bank of Cleveland.3
Stock market performance. Since investors make decisions based on how they believe the earnings of companies and the value of companies’ stocks will change over time, a rising or falling stock market is considered to offer insight to where the economy may be headed.4
“The leading indicators for the U.S. economy fell in April for the second month in a row…The leading index declined mainly because of weaker business orders, fewer permits to build new homes and a decline in stock prices last month. Stocks have since rebounded, however, to fresh record highs,” reported Jeffry Bartash of MarketWatch. “The economy slowed in the first quarter after heady growth in the second half of 2023. It’s unlikely to speed up much until inflation tapers off and the Federal Reserve cuts interest rates.”5
Some analysts believe rate cuts are still on the table for 2024, reported Sam Meredith of CNBC.6 Last week, theConsumer Price Index showed headline inflation (which measures price changes for a fixed basket of goods) and core inflation (which removes food and energy from the basket) both moved lower from March to April.7
Investors found a lot to like in the inflation data. U.S. stocks finished the week higher with the Dow Jones Industrial Average closing above 40,000.8 Yields on most maturities of U.S. Treasuries moved lower over the week, lifting bond prices.9
Data as of 5/17/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 1.5% | 11.2% | 27.5% | 8.4% | 13.2% | 10.9% |
| Dow Jones Global ex-U.S. Index | 1.7 | 6.3 | 12.1 | -1.0 | 4.3 | 2.0 |
| 10-year Treasury Note (yield only) | 4.4 | N/A | 3.6 | 1.6 | 2.4 | 2.5 |
| Gold (per ounce) | 1.3 | 15.6 | 21.7 | 9.0 | 13.4 | 6.3 |
| Bloomberg Commodity Index | 2.9 | 7.2 | 4.3 | 4.3 | 5.8 | -2.4 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) 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; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
WHICH STATE LOOKS THE MOST LIKE THE UNITED STATES? Fifty states joined the Union from 1787 through 1959.10 Every one of them has a distinct history and culture. States’ names originated from Latin, English, Spanish, French, Polynesian, Algonquian, Siouan, Iroquoian, Uto-Aztecan, and other languages.11 In Alabama, there are deep sea fishing rodeos12 and in Arizona there are sidewalk egg-frying contests.13 In Georgia, they like salted peanuts in cola,14 and in Michigan they call soda “pop.”15 Nebraska cheers for the Cornhuskers, while Oregon flies with the Ducks.
There are a lot of differences between U.S. states, but which state is most like the United States? That’s the question Lenny Bronner and Andrew Van Dam of The Washington Post wanted to answer. Bronner crunched U.S. Census data to create indices that compare U.S. states to one another and to the nation. Some of their findings can be found in this quiz.16
- Which state most closely resembles the United States when it comes to income? (Hint: Its state flower is the violet.)
- Arizona
- Illinois
- Georgia
- Nevada
- Which state is most like the United States when it comes to residents’ educational achievement? (Hint: It has the oldest state park in the nation.)
- Rhode Island
- West Virginia
- Georgia
- Texas
- Which state most closely mirrors the country when it comes to employment? (Hint: Its known for a tasty sandwich.)
- Pennsylvania
- Utah
- Mississippi
- Ohio
- Bronner constructed a similarity index using 30 variables to predict which states are likely to vote similarly. Which states are the closest match to one another? (Hint: You may have a hard time believing it.)
- Arkansas – New Mexico
- California – Texas
- Florida – Wisconsin
- New Hampshire – Ohio
Financial plans are a lot like states. They reflect the unique characteristics and needs of individuals and families. If you have any questions about whether you are on track to achieve your financial goals, get in touch.
Answers: 1) b; 2) c; 3) a; 4) b
Weekly Focus – Think About It
“A nation’s culture resides in the hearts and in the soul of its people.”17
—Mahatma Gandhi, activist
* These views are those of Carson Coaching, 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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 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.
Sources:
1 https://en.wikipedia.org/wiki/Tasseography
2 https://www.investopedia.com/terms/l/leadingindicator.asp#citation-7
3 https://www.clevelandfed.org/indicators-and-data/yield-curve-and-predicted-gdp-growth
4 https://www.investopedia.com/terms/e/economic_indicator.asp
7 https://www.bls.gov/news.release/cpi.nr0.htm
8 https://www.barrons.com/livecoverage/stock-market-today-051724?mod=article_inline (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-20-24_Barrons_Stock%20Market%20News%20From%20May%2017%202024_8.pdf)
10 https://www.usatoday.com/story/news/2024/04/25/what-was-the-first-state/73278172007/
11 https://en.wikipedia.org/wiki/U.S._state#Name_origins
13 https://www.nbcnews.com/business/travel/arizona-town-cooks-sidewalk-egg-fry-flna6c10488679
14 https://www.southernliving.com/food/peanuts-in-coke
15 https://www.michiganpublic.org/arts-culture/2013-04-14/are-you-a-pop-or-soda-person
16 https://www.washingtonpost.com/business/2024/05/10/most-representative-most-unique-places-america/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-20-24_Washington%20Post_What%20State%20Best%20Represents%20America_16.pdf) 17https://www.azquotes.com/author/5308-Mahatma_Gandhi/tag/culture
The Markets
Higher rates are doing what they’re supposed to do.
Last week, Federal Reserve officials spoke about keeping the federal funds rate higher until it becomes clear that inflation will reach the Fed’s two percent target rate.1
While people typically don’t mind earning more interest on their saving and investment accounts, higher rates are painful for consumers. That pain is why higher rates help lower inflation. They discourage borrowing and cause people to buy fewer goods. Lower demand for goods and services should lead to lower inflation, reported Trina Paul of CNBC.2
So far, the biggest fly in the inflation-reduction ointment is housing. Diccon Hyatt of Investopedia explained:
“In the first two decades of the 21st century, the U.S. built 5.5 million fewer homes than were needed, the National Association of Realtors estimated in a 2021 report…The effects of that housing shortage are rippling through the economy, most obviously in the form of soaring home prices…official inflation rates, which are designed to measure the cost of living, are highly sensitive to any changes in housing costs. Housing costs make up 45% of the Consumer Price Index (CPI), the most widely watched measure of inflation.”3
May data show consumers are feeling discouraged.
The University of Michigan’s Index of Consumer Sentiment dropped 13 percent from April to May. “[The] decline is statistically significant and brings sentiment to its lowest reading in about six months. This month’s trend in sentiment is characterized by a broad consensus across consumers, with decreases across age, income, and education groups…They expressed worries that inflation, unemployment, and interest rates may all be moving in an unfavorable direction in the year ahead,” stated Surveys of Consumers Director Joanne Hsu.4
While consumer sentiment dragged on markets, first quarter corporate earnings reports were stronger than expected, which lifted U.S. stocks. “With well over 80% of the S&P 500 having reported results, companies are on track to have increased earnings by 7.8%, well ahead of the April expectation of 5.1% growth,” reported a source cited by Lewis Krauskopf of Reuters.5
Declining sentiment caused U.S. stocks to stumble on Friday; however, major indices finished the week higher.6 Yields on many maturities of U.S. Treasuries moved higher over the week.7
Data as of 5/10/24 | 1-Week | Y-T-D | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 1.9% | 9.5% | 26.2% | 7.6% | 12.6% | 10.7% |
| Dow Jones Global ex-U.S. Index | 1.2 | 4.5 | 9.7 | -2.2 | 3.8 | 1.9 |
| 10-year Treasury Note (yield only) | 4.5 | NA | 3.4 | 1.6 | 2.5 | 2.7 |
| Gold (per ounce) | 3.4 | 14.2 | 16.5 | 8.8 | 13.0 | 8.2 |
| Bloomberg Commodity Index | 1.4 | 4.2 | 0.1 | 3.3 | 5.5 | -2.7 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) 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; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
DATA PRIVACY WILL VARY. For decades, companies have plundered the digital world for valuable treasure – information about you. When it comes to controlling how personal data are used, some people are better protected than others. It often depends on where you live.
For example, in 2016, the European Union (EU) adopted its General Data Protection Regulation (GDPR). The law is built on the idea that individuals have the right to own their personal information and decide who can use it, reported Fredric Bellamy of Reuters.8
In contrast, federal law in the U.S. allows businesses and organizations to collect personal data without the express consent of the people whose information is being collected. The government may step in to prevent or mitigate harm to the individual in certain sectors.8
In addition to choosing the type of data websites may collect, consumers can consult the free buyer’s guide created by a software firm’s foundation. The guide, called *Privacy Not Included, rates the privacy and security of connected toys, gadgets, and smart products.9 Among the many groups that have earned a warning label in the buyer’s guide are:
- Dating apps. “Most dating apps (80%) may share or sell your personal information for advertising…It’s a bit strange because…apps work on a subscription model. So with dating apps, it’s not your money or your privacy. It’s often both. We also couldn’t confirm whether half (52%) of the apps do the bare minimum to keep all your personal information safe, by meeting our Minimum Security Standards,” reported Jen Caltrider, Misha Rykov and Zoë MacDonald.10
- Automobile companies. “Car makers have been bragging about their cars being ‘computers on wheels’ for years to promote their advanced features. However, the conversation about what driving a computer means for its occupants’ privacy hasn’t really caught up…[car brands] can collect personal information from how you interact with your car, the connected services you use in your car, the car’s app (which provides a gateway to information on your phone), and can gather even more information about you from third party sources.”11 One company sold personal driving data to brokers who used the information to formulate “risk scores”. The scores were then sold to insurance companies, causing some drivers’ premiums to increase significantly.12
Some states have stepped in to provide additional protections for their residents. In March of 2024, there were “…15 states – California, Virginia, Connecticut, Colorado, Utah, Iowa, Indiana, Tennessee, Oregon, Montana, Texas, Delaware, Florida, New Jersey, and New Hampshire – that have comprehensive data privacy laws in place,” reported Bloomberg Law.13
In April, federal lawmakers proposed a law, the American Privacy Rights Act, that could give consumers control over how their information is used by companies that collect it, as well as the right to opt out of certain types of data collection, reported Cristiano Lima-Strong of The Washington Post.14
Weekly Focus – Think About It
“If you make customers unhappy in the physical world, they might each tell 6 friends. If you make customers unhappy on the Internet, they can each tell 6,000 friends.”15
-Jeff Bezos, CEO
* These views are those of Carson Coaching, 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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 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.
Sources:
2 https://www.cnbc.com/select/how-do-increasing-interest-rates-affect-inflation/
4 http://www.sca.isr.umich.edu
6 https://www.barrons.com/market-data
8 https://www.reuters.com/legal/legalindustry/us-data-privacy-laws-enter-new-era-2023-2023-01-12/
9 https://foundation.mozilla.org/en/docs/design/branding/sub-brands/privacy-not-included/
[1]3 https://pro.bloomberglaw.com/insights/privacy/state-privacy-legislation-tracker/#
[1]4 https://www.washingtonpost.com/technology/2024/04/07/congress-privacy-deal-cantwell-rodgers/?_pml=115 https://www.azquotes.com/quote/531591