Weekly Market Commentary: March 21, 2016

Provided by geralt/Pixabay
Provided by geralt/Pixabay

There is ongoing debate about whether markets behave in rational ways.

The efficient market hypothesis suggests it’s impossible to outperform the stock market because current share prices reflect all relevant information. In other words, stocks should always trade at fair value and it should be impossible to invest in a stock that is overpriced or underpriced.

The Economist reported there are two issues efficient market theorists have trouble explaining. The first is market bubbles, “where entire markets get out of whack with traditional valuation measures and then collapse.” The other is pricing anomalies. For instance, value stocks are inexpensive relative to their asset values and tend to outperform over the long term. In a perfect market, pricing anomalies shouldn’t occur.

During the past few weeks, U.S. stock markets have recovered from losses suffered earlier in the year and moved into positive territory for 2016. The shift into positive territory has some suggesting markets may not be correctly priced, but there is disagreement about whether it currently is overvalued or undervalued.

According to Barron’s, the recent strong performance of U.S. stock markets hasn’t been inspired by sound decisions and rational economic behavior. “The market’s valuation, at 17 times consensus analyst earnings-per-share estimates for 2016, looks stretched again, given that easy monetary policy and rising oil prices – not earnings growth – are responsible.”

Wharton Professor of Finance Jeremy Siegel disagreed. “On an absolute basis [the stock market is] slightly more highly valued than average but relative to interest rates, which are extremely low, it is actually undervalued in my opinion.”

Investors who believe markets perform well most of the time, but not all of the time, may want to take opportunities like these to look for companies whose shares may be mispriced, as well.

Data as of 3/18/16 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) 1.4% 0.3% -2.4% 9.7% 9.9% 4.6%
Dow Jones Global ex-U.S. 1.6 -1.0 -11.0 -1.6 -0.9 -0.3
10-year Treasury Note (Yield Only) 1.9 NA 2.0 2.0 3.3 4.7
Gold (per ounce) -1.0 17.9 9.1 -7.9 -2.5 8.5
Bloomberg Commodity Index 1.0 2.8 -17.8 -16.3 -13.3 -6.6
DJ Equity All REIT Total Return Index 2.2 4.0 2.4 9.8 11.8 6.3

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; the DJ Equity All REIT Total Return Index does include reinvested dividends 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, Barron’s, djindexes.com, London Bullion Market Association.

Views From The Lake – Episode 1

In this episode we interview Mike Matthiessen, President of the Tournament of Roses. We also go behind the scenes of the making of a Rose Parade Float as well as get some great footage at the Showcase of Floats. Alex Chalekian discusses the Top 5 Mistakes Made by 30 Year Olds.

Weekly Advisor Analysis: March 15, 2016

Global stocks were mixed for the week, largely driven by the European Central Bank’s (ECB) move to cut rates further into negative territory. All our major domestic indices posted positive returns with the S&P 500 and the Dow Jones Industrial Average both up over 100 basis points at 1.09 percent and 1.19 percent, respectively. The tech-heavy NASDAQ Composite was up 0.65 percent. European stocks seesawed in response to the ECB with the STOXX Europe 600 Index closing the week up less than 1 percent despite significant up and down days. Asian stocks were down slightly with Japan’s Nikkei 225 Average Index down 0.45 percent and China’s Shanghai Composite Index down 2.22 percent.

Oil

Oil had a volatile week as a number of factors were impacting investor sentiment. OPEC’s possible production agreement, global oversupply, and shifts in seasonal production all influenced the price. The market continues to focus on the Organization of the Petroleum Exporting Countries (OPEC) and whether or not they can come to an agreement with other non-OPEC members to cap production and drive up prices. While there is a lot of talk among the member states, it doesn’t appear there will be consensus anytime soon. Indeed, Saudi Arabia has publicly stated it will maintain production at current levels for at least the next five years. These are hardly the words of a country that is willing to cooperate and lower its oil production. In addition, the oil market will likely also suffer from seasonal oversupply as we enter the spring and summer months. Refineries typically ramp up production in spring to keep up with the seasonal demand shift as the summer months tend to have the highest demand for oil and gasoline products. We continue to believe oil prices will remain lower for longer because, as prices move into the $40-$45 per barrel range, more producers will be profitable and ramp up production. This will ultimately increase supply and likely depress prices again, assuming demand stays the same or it does not outpace the growth in supply. In fact, our analysts don’t see oil past $60 per barrel until closer to 2020.

WWA

European Central Bank

In what was largely anticipated by the markets, the European Central Bank (ECB) nudged its key interest rate further negative last Thursday in an attempt to lower rates and buoy the European markets. However, the scope of the move was greater than many analysts had expected. The rate was lowered to -0.40 percent, from -0.30 percent, and the ECB expanded its asset-purchase program from $60 billion to $80 billion euros a month which includes corporate bonds. Global equities were generally up in response initially but turned down later in the day when the ECB president, Mario Draghi, said he did not anticipate the need to reduce rates further. Global markets appeared to shrug those comments off and finished Friday firmly in positive territory. While many investors have grown accustomed to central banks maintaining a negative interest rate policy (NIRP), the phenomenon is still very new to the financial markets. Because of this, little is known about the market’s reaction to even lower negative rates or prolonged periods of NIRPs. Going into 2016, the Eurozone, Switzerland, Sweden, and Denmark all had negative interest rates maintained by their respective central banks. Japan jumped into the fray after cutting its key rate below zero in January, but the Japanese equity markets suffered a bout of selling on the news. The Bank for International Settlements, a Switzerland-based conglomerate of central banks, is warning the markets the efficacy of negative interest rate policies could be diminishing. Indeed, they point to the market’s reaction to Japan’s negative interest rates that saw large flows into sovereign government bonds despite many of them trading at negative rates. However, we would note there were other global events that overshadowed Japan’s policy shift and drove investors to seek relative safety in the form of those high-quality government bonds.

WWAA

Short-Term Yields Rise

Interest rates can be a useful bellwether when measuring the risk appetite for investors. Generally, higher interest rates indicate investors are more willing to take on market risk, primarily through equities and non-fixed income investments. In contrast, lower interest rates signal the market is taking a more cautious approach as investors move into bonds. This dynamic is driven by the relationship between bond prices and interest rates. As investors sell bonds and buy stocks, the prices on those bonds fall and the interest rates go up. The opposite happens when they move back into bonds: yields will fall as the prices go up with demand. According to the data, short-term yields on two-year Treasury bonds jumped to their highest mark since the first week of January as investors started moving into equities. This was primarily in reaction to the ECB’s policy actions and stronger-than-expected U.S. economic data. While this doesn’t guarantee a permanent shift in investor sentiment, it is an indication the markets are willing to wade a little deeper into the equity markets and take on some more risk.

Fun Story of the Week

Have you ever wondered why buttons for men’s shirts are on the right but on the left for women? There are some interesting theories as to why there is a difference and it serves as an everyday reminder of the history of clothing, tradition, and warfare. Yes, warfare. For men, having the buttons on the right can be traced directly to military dress. Men often wore swords and, being the majority of people are right-handed, that meant the sword and scabbard were worn on the left. One of the more prominent theories is, when sword fighting, men would typically reach across their body to grab the sword on their left while unbuttoning the jacket with the left hand to allow for more flexibility. This, of course, doesn’t explain why women’s buttons are on the other side. There are a few theories that attempt to explain the difference and one such theory has to do with horse riding. Women who rode horses did so sidesaddle, facing the left side of the horse. By putting buttons on the left side, it helped reduce the breeze that would flow into the shirt as they rode along. Another theory, and perhaps a more reasonable one, posits that, when clothing was becoming standardized, many women did not, in fact, dress themselves. While it may be hard to believe today, buttons were once very expensive and were a favorite of the wealthy. So, when women wore elaborately buttoned clothing, having the buttons on the left side made it easier for the servants to help them get dressed.

Here’s Some Good News…

Medical
DarkoStojanovic/Pixabay

Healthcare spending is expected to increase more slowly during 2016! It’s projected to grow by 6.5 percent this year, according to a report from PWC. That’s still a lot faster than inflation. The Economist projects overall consumer prices in the United States will increase by 1.2 percent this year.

The report suggested several factors are contributing to lower healthcare spending, including:

  • The Affordable Care Act’s Cadillac Tax. PWC reported the tax “…is motivating businesses to enact high cost-sharing. Their workers are already responding to the higher deductibles by scrutinizing what services are necessary and which are not…cost sharing can backfire if the employee foregoes preventative care and faces years of chronic illness.” Twenty-five percent of employers offer only high-deductible healthcare plans for employees.
  • Virtual healthcare. Telemedicine appears to be the next big thing in medicine. Doctors making house calls using real-time audio and video is the gold standard for service, according to the Modern Medicine Network. Remote patient monitoring, pre-recorded videos, and computer-assisted or message-based communications also are being offered.
  • New health advisors. A new variety of healthcare company is making information about facilities, providers, services, and pricing more accessible. In some cases, financial incentives encourage employees to seek treatment at a preferred facility.

These gains are more than offset by factors that are pushing healthcare spending higher, including:

  • High-cost specialty drugs. PWC reported specialty drugs are becoming a focus for the pharmaceutical industry. “With 700 specialty products currently in development, these investments will soon surpass traditional drug investments…According to a recent Express Scripts report, total national prescription spending increased 13.1 percent last year to about $980 per person.”
  • Cyber security investments. Healthcare organizations are spending heavily on cyber security to protect patients from data breaches. The cost of a breach is about $200 per patient record. The cost of security is about $8 per patient record.

It’s critical to factor healthcare spending into retirement plans. In 2015, the Employee Benefits Research Institute (EBRI) found a 65-year-old man needs $124,000 in savings and a 65-year-old woman needs $140,000 if each wants a 90 percent chance of having enough money saved to cover healthcare expenses in retirement. EBRI’s analysis did not include the savings needed to cover long-term care expenses.

Weekly Market Commentary: March 14, 2016

Provided by geralt/Pixabay
Provided by geralt/Pixabay

Stim-u-late mar-kets! Come on! It’s monetary easing.*

The European Central Bank (ECB) was singing a tune that invigorated financial markets last week. The Wall Street Journal explained:

“The fresh measures included cuts to all three of the ECB’s main interest rates, €20 billion a month of additional bond purchases atop the ECB’s current €60 billion ($67 billion) program, and an expansion of its quantitative easing program to highly rated corporate bonds – all more aggressive steps than analysts had anticipated. The central bank also announced a series of ultracheap four-year loans to banks, some of which could be paid to borrow from the ECB.”

Most national indices in Europe gained ground last week. The Financial Times Stock Exchange Milano Italia Borsa (FTSE MIB), which measures the performance of the 40 most-traded stocks on the Italian national stock exchange, was up almost 4 percent. Spain’s Indice Bursatil Español Index (IBEX 35), which is comprised of the most liquid stocks trading on the Spanish continuous market, gained more than 3 percent. Major markets in the United States moved higher, as well.

Of course, the harmony provided by global oil markets proved pleasing to investors, too. An International Energy Agency (IEA) report suggested more equitable supply and demand balances could mean oil prices have bottomed out.

Barron’s offered a word of caution, “Investors shouldn’t get too comfortable when it seems that oil moves and central-bank maneuvers are the main reason stocks go up or down, not earnings and economic growth.”

*Set to the tune of Kool and the Gang’s ‘Celebration.’ You know, “Cel-e-brate good times! Come on! It’s a celebration.”

Data as of 3/11/16 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) 1.1% -1.1% -0.9% 9.1% 9.2% 4.7%
Dow Jones Global ex-U.S. 1.1 -2.5 -9.6 -2.3 -1.6 1.3
10-year Treasury Note (Yield Only) 2.0 NA 2.1 2.1 3.4 4.8
Gold (per ounce) -1.0 19.1 10.0 -7.1 -2.2 8.8
Bloomberg Commodity Index 2.0 1.8 -19.6 -16.5 -13.3 -6.8
DJ Equity All REIT Total Return Index 1.7 1.7 4.7 9.0 11.0 6.4

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; the DJ Equity All REIT Total Return Index does include reinvested dividends 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, Barron’s, djindexes.com, London Bullion Market Association.

Are You Leaving the Same Amount to All of Your Beneficiaries?

Father Holding Daughter's Hand
Spirit-Fire/Flickr

One-third of all parents with wills have divided their estates unequally among their children, according to the National Bureau of Economic Research (NBER). The study found bequests in complex families – families with stepchildren or estranged children – are more likely to be unequal. The Squared Away Blog reported:

“…parents with stepchildren are considerably less likely to include all of their children than are parents who have only biological offspring. This is more true for women with stepchildren than for men with stepchildren. Divorced and widowed parents are even less likely to divide their assets evenly if they have stepchildren.”

The blog reported there were some mitigating factors. Wealthier parents were more likely to include stepchildren and children with whom they had little or no contact during their lifetimes than less wealthy parents. However, parents who suffered from poor health were less likely to divide their estates equally. Bequests sometimes were used as an incentive to provide long-term care.

Since children may interpret unequal inheritance as an expression of unequal love, why do parents play favorites? Researchers at Ohio State University delved into the question in 2003 and reported altruism (equalizing income differences among children), exchange (bequests in return for services), and/or evolution (bequests to biological children rather than adopted or stepchildren) played a role when distribution of assets was uneven.

Weekly Market Commentary: March 7, 2016

Provided by geralt/Pixabay
Provided by geralt/Pixabay

When Mark Twain’s death was reported in the United States, he was alive and well in London. He responded to news accounts with a note saying, “The report of my death was an exaggeration.”

Last week’s jobs data suggest the same is true of reports that a recession is imminent in the United States. Barron’s explained:

“Thank goodness the mid-February fears of recession that brought markets to their knees – and the 10-year Treasury yield to a low of 1.53 percent – were overblown. Friday’s nonfarm payrolls report was the latest confirmation. It showed that 242,000 jobs were created last month, far more than expected and up from the previous month’s reading, which was itself revised higher.”

The employment data weren’t all positive, though. Average hourly earnings declined when it was expected to increase and the number of hours worked was lower, on average, than it has been for two years.

Regardless, The Wall Street Journal said employment, consumer, and business spending reports helped calm investors’ fear the U.S. economy was losing momentum. Some investors sold bonds, which helped push the yield on 10-year Treasury notes higher.

Investors also were encouraged by last week’s oil price rally, according to CNBC. A better demand outlook, coupled with cuts in supply, boosted oil prices by 9.5 percent in one week.

U.S. stock market performance reflected investors’ renewed optimism. USA Today said, “Stocks have rebounded from their worst start to a year ever, with the benchmark S&P 500 trimming its year-to-date loss to 2.15 percent after being down by more than 10 percent on February 11.” At the end of last week, the Standard & Poor’s 500 Index was about 6 percent below its record high.

Data as of 3/4/16 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) 2.7% -2.2% -5.1% 9.5% 8.7% 4.6%
Dow Jones Global ex-U.S. 5.0 -3.6 -13.2 -2.1 -2.5 -0.3
10-year Treasury Note (Yield Only) 1.9 NA 2.1 1.9 3.5 4.7
Gold (per ounce) 4.2 20.3 6.5 -6.7 -2.2 8.5
Bloomberg Commodity Index 3.9 -0.2 -23.2 -16.8 -14.3 -7.0
DJ Equity All REIT Total Return Index 3.9 0.0 0.6 8.4 10.7 6.2

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; the DJ Equity All REIT Total Return Index does include reinvested dividends 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.

Did Comedian Louis C.K. Compare Donald Trump to Hitler?

 

The answer to that is yes! In an email blast to his fans, Louis C.K. announced the next episode of his web series “Horace and Pete,” and the comedian added a long postscript asking readers not to vote for Trump.

Add Louis C.K. to the growing list of celebrities to publicly criticize Donald Trump.

Below is the full text of the email postscript.

P.S. Please stop it with voting for Trump. It was funny for a little while. But the guy is Hitler. And by that I mean that we are being Germany in the 30s. Do you think they saw the shit coming? Hitler was just some hilarious and refreshing dude with a weird comb over who would say anything at all.

And I’m not advocating for Hillary or Bernie. I like them both but frankly I wish the next president was a conservative only because we had Obama for eight years and we need balance. And not because I particularly enjoy the conservative agenda. I just think the government should reflect the people. And we are about 40 percent conservative and 40 percent liberal. When I was growing up and when I was a younger man, liberals and conservatives were friends with differences. They weren’t enemies. And it always made sense that everyone gets a president they like for a while and then hates the president for a while. But it only works if the conservatives put up a good candidate. A good smart conservative to face the liberal candidate so they can have a good argument and the country can decide which way to go this time.

Trump is not that. He’s an insane bigot. He is dangerous.

He already said he would expand libel laws to sue anyone who “writes a negative hit piece” about him. He says “I would open up the libel laws so we can sue them and win lots of money. Not like now. These guys are totally protected.” He said that. He has promised to decimate the first amendment. (If you think he’s going to keep the second amendment intact you’re delusional.) And he said that Paul Ryan, speaker of the house will “pay” for criticizing him. So I’m saying this now because if he gets in there we won’t be able to criticize him anymore.

Please pick someone else. Like John Kasich. I mean that guy seems okay. I don’t like any of them myself but if you’re that kind of voter please go for a guy like that. It feels like between him and either democrat we’d have a decent choice. It feels like a healthier choice. We shouldn’t have to vote for someone because they’re not a shocking cunt billionaire liar.

We should choose based on what direction the country should go.

I get that all these people sound like bullshit soft criminal opportunists. The whole game feels rigged and it’s not going anywhere but down anymore. I feel that way sometimes.

And that voting for Trump is a way of saying “fuck it. Fuck them all”. I really get it. It’s a version of national Suicide. Or it’s like a big hit off of a crack pipe. Somehow we can’t help it. Or we know that if we vote for Trump our phones will be a reliable source of dopamine for the next four years. I mean I can’t wait to read about Trump every day. It’s a rush. But you have to know this is not healthy.

If you are a true conservative. Don’t vote for Trump. He is not one of you. He is one of him. Everything you have heard him say that you liked, if you look hard enough you will see that he one day said the exact opposite. He is playing you.

In fact, if you do vote for Trump, at least look at him very carefully first. You owe that to the rest of us. Know and understand who he is. Spend one hour on google and just read it all. I don’t mean listen to me or listen to liberals who put him down. Listen to your own people. Listen to John Mccain. Go look at what he just said about Trump. “At a time when our world has never been more complex or more in danger… I want Republican voters to pay close attention to what our party’s most respected and knowledgeable leaders and national security experts are saying about Mr. Trump, and to think long and hard about who they want to be our next Commander-in-Chief and leader of the free world.”

When Trump was told what he said, Trump said “Oh, he did? Well, that’s not nice,” he told CBS News’ chief White House correspondent Major Garrett. “He has to be very careful.”
When pressed on why, Trump tacked on: “He’ll find out.”

(I cut and pasted that from CBS news)

Do you really want a guy to be president who threatens John McCain? Because John McCain cautiously and intelligently asked for people to be thoughtful before voting for him? He didn’t even insult Trump. He just asked you to take a good look. And Trump told him to look out.

Remember that Trump entered this race by saying that McCain is not a war hero. A guy who was shot down, body broken and kept in a POW camp for years. Trump said “I prefer the guys who don’t get caught.” Why did he say that? Not because he meant it or because it was important to say. He said it because he’s a bully and every bully knows that when you enter a new school yard, you go to the toughest most respected guy on the yard and you punch him in the nose. If you are still standing after, you’re the new boss. If Trump is president, he’s not going to change. He’s not going to do anything for you. He’s going to do everything for himself and leave you in the dust.

So please listen to fellow conservatives. But more importantly, listen to Trump. Listen to all of it. Everything he says. If you liked when he said that “torture works” then go look at where he took it back the next day. He’s a fucking liar.

A vote for Trump is so clearly a gut-vote, and again I get it. But add a little brain to it and look the guy up. Because if you vote for him because of how you feel right now, the minute he’s president, you’re going to regret it. You’re going to regret it even more when he gives the job to his son. Because American democracy is broken enough that a guy like that could really fuck things up. That’s how Hitler got there. He was voted into power by a fatigued nation and when he got inside, he did all his Hitler things and no one could stop him.

Again, I’m not saying vote democrat or vote for anyone else. If Hilary ends up president it should be because she faced the best person you have and you and I both chose her or him or whoever. Trump is not your best. He’s the worst of all of us. He’s a symptom to a problem that is very real. But don’t vote for your own cancer. You’re better than that.

That’s just my view. At least right now. I know I’m not qualified or particularly educated and I’m not right instead of you. I’m an idiot and I’m sure a bunch of you are very annoyed by this. Fucking celebrity with an opinion. I swear this isn’t really a political opinion. You don’t want to know my political opinions. (And I know that I’m only bringing myself trouble with this shit.) Trump has nothing to do with politics or ideology. He has to do with himself. And really I don’t mean to insult anyone. Except Trump. I mean to insult him very much. And really I’m not saying he’s evil or a monster. In fact I don’t think Hitler was. The problem with saying that guys like that are monsters is that we don’t see them coming when they turn out to be human, which they all are. Everyone is. Trump is a messed up guy with a hole in his heart that he tries to fill with money and attention. He can never ever have enough of either and he’ll never stop trying. He’s sick. Which makes him really really interesting. And he pulls you towards him which somehow feels good or fascinatingly bad. He’s not a monster. He’s a sad man. But all this makes him horribly dangerous if he becomes president. Give him another TV show. Let him pay to put his name on buildings. But please stop voting for him. And please watch Horace and Pete. – Louis C.K.

Wondering What the Next Decade Might Bring?

City of the Future #1
McKay Savage/Wikimedia

America is renowned for innovation – originating ideas that change the ways in which people live and work. From the cotton gin to the assembly line, the transcontinental railroad to the automobile, the telephone to the Internet, ideas and inventions have spurred America’s economic growth during the past two centuries. Here are a few inventions that are on the horizon:

  • The Superman memory crystal: Imagine, a tiny piece of glass etched by a laser that has the capacity to save an enormous amount of data for more than 13 billion years, according to com. One tiny disc currently holds the Magna Carta, Universal Declaration of Human Rights, and King James Bible.
  • A transparent antipeep piezoelectric nanogenerator (TAPN): It may have a tongue twister of a name right now, but the TAPN could become as familiar as your phone charger in the future. All you’ll have to do is place a transparent film on the touchscreen of a smartphone or another device, and then every tap on the screen will generate electricity. Which begs the question: Could texting teenagers power the world?
  • A braille printer: A 12-year-old used Legos to build an inexpensive printer for people who are blind or suffering from macular degeneration or other conditions that affect eyesight. It used a thumbtack to punch braille dots into paper. Newer prototypes don’t rely on thumbtacks, and are expected to translate words from a computer screen into braille very quickly.
  • A fry pan that teaches cooking: Cooking will not become a lost art if a couple of hungry and cooking-challenged college students are successful. They’ve developed a smart frying pan. The pan transmits temperature data to the cook using a smartphone app that also lets the cook know when it’s time for the next step in a recipe.

The human brain is an engine for innovation, and innovation is a driver of economic growth. Let’s hope the outlook is good for brainstorms in the United States and across the globe.

Weekly Market Commentary: February 23, 2016

Provided by geralt/Pixabay
Provided by geralt/Pixabay

And the economic data says…

The United States economy is doing pretty well. So well that a March rate hike by the Federal Reserve is not entirely out of the question. Barron’s described the situation like this:

“Squawking pessimism can’t drown out what is a very respectable start to 2016. Economic data so far this year, apart from predictions of deflation and negative interest rates, could justify what was scheduled to be, but what soon seemed impossible, a rate hike at the March FOMC. Yes, global factors are a risk and are hurting the factory sector but service prices are definitely on the climb and vehicle prices and vehicle production, reflecting strength in domestic demand, are back up. Ignore the cacophony of doubt and look at the economic data for yourself!”

U.S. economic data was generally positive last week, but that wasn’t the primary driver behind the rally in U.S. stock markets, according to Reuters. Nope, that had more to do with oil prices. Despite serious political differences, Iran and Saudi Arabia appeared to reach an accord on oil production last week, when Iran endorsed a plan by Saudi Arabia to stabilize global oil prices, according to The Guardian. The agreement pushed oil prices higher mid-week.

However, late in the week, news that oil stockpiles in the U.S. were at record levels reignited worries about oversupply and oil prices fell at week’s end. U.S. stock markets followed, giving back some of the week’s gains on Friday, but all of the major indices finished more than 2 percent higher for the week.

Economic data may dominate the news next week. We’ll get more information on housing, durable goods orders, jobless claims for February, and a revised estimate for fourth quarter’s gross domestic product growth. Barron’s suggested a strong employment report in tandem with rising prices could influence the Fed’s interest rate decision.

Data as of 2/19/16 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) 2.8% -6.2% -8.6% 7.8% 7.8% 4.1%
Dow Jones Global ex-U.S. 4.4 -8.4 -17.6 -4.3 -3.2 -0.7
10-year Treasury Note (Yield Only) 1.8 NA 2.0 2.0 3.5 4.6
Gold (per ounce) -0.7 15.9 1.8 -8.5 -2.6 8.3
Bloomberg Commodity Index -0.4 -4.4 -27.2 -18.6 -14.2 -7.6
DJ Equity All REIT Total Return Index 4.1 -5.8 -6.2 6.4 9.2 5.8

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; the DJ Equity All REIT Total Return Index does include reinvested dividends 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, Barron’s, djindexes.com, London Bullion Market Association.