Reminder: Read Our Year-End Tax Tips
In case you missed it: TDG’s Year-End Tax and Financial Planning Guide was posted this weekend. We hope you find these tips useful, and we encourage you to call us at 203‑967‑2231 if you have any questions or would like to ensure your plan is optimized.
The Markets
Investors look to the future.
Last week, employment and manufacturing data confirmed that the United States economy continued to strengthen in November, but positive economic news was overshadowed by investors’ concerns about the spread of coronavirus and Federal Reserve policy.
Let’s start with the economic news.
More Americans Were Working
The Bureau of Labor Statistics (BLS) reported that unemployment dropped to 4.2 percent in November – a level the country wasn’t expected to achieve before 2024, according to Eli Rosenberg of The Washington Post. The labor force participation rate improved, too, meaning that more people are returning to work.
Fewer new jobs were created than analysts expected, but that wasn’t surprising given the BLS’ track record during the pandemic. From June through September, it underestimated employment gains by 626,000, according to Andrew Van Dam of The Washington Post. In the latest report, the BLS revised October’s numbers to be higher by 15,000.
Manufacturing Strengthened
The manufacturing industry made gains in November, too. The Institute for Supply Management Purchasing Managers’ Index (PMI) came in at 61.1 for November. The reading for new orders, which measure future demand, was 61.5. “A [PMI] level of 50 indicates that the manufacturing economy is growing. Above 60 is a very strong level,” reported Allen Root of Barron’s.
Positive economic data didn’t inspire investors last week, though. That may be because economic data reflects what has happened in the past. Investors are more concerned about what may happen in the future and how markets may be affected. As a result, investors focused on:
The Omicron Variant Spread
Last week, a new variant of the coronavirus spread in the U.S. states. Initial indications suggest Omicron may be milder than previous variants, reported Deena Beasley of Reuters. However, that did not quell investors’ concerns. Josh Nathan-Kazis of Barron’s reported:
“Fearing new lockdowns that had been ruled out as recently as a week ago, investors are at times panic-trading based on anecdotes and passing comments by CEOs. The S&P 500 index moved more than 1% nearly every day this week, gyrating up and down on new guesses about what Omicron will mean for the world.”
Federal Reserve Policy Changes
Investors pondered Fed Chair Jerome Powell’s testimony before the Senate Banking Committee. Powell “…reiterated that he and fellow policymakers will consider at their upcoming meeting a faster wind-down to the Fed's bond-buying program, a move widely seen as opening the door to earlier interest rates hikes,” reported Jonnelle Marte and Lindsay Dunsmuir of Reuters. Historically, rising interest rates have slowed economic growth.
Major U.S. stock indices finished the week lower, according to Ben Levisohn of Barron’s. U.S. Treasury yields moved lower.
| Data as of 12/3/21 | 1-Week | Y-T-D | 1-Year | 3-Year | 5-Year | 10-Year |
|---|---|---|---|---|---|---|
| Standard & Poor's 500 Index | -1.2% | 20.8% | 23.8% | 17.6% | 15.5% | 13.7% |
| Dow Jones Global ex-U.S. Index | -0.4 | 2.8 | 6.0 | 7.6 | 7.2 | 4.4 |
| 10-year Treasury Note (yield only) | 1.3 | N/A | 0.9 | 3.0 | 2.4 | 2.1 |
| Gold (per ounce) | -1.9 | -6.4 | -3.5 | 12.8 | 8.8 | 0.1 |
| Bloomberg Commodity Index | -4.3 | 22.7 | 29.3 | 4.9 | 1.6 | -4.2 |
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; 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, Federal Reserve Bank of St. Louis, 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.
Pandemic Cravings
The pandemic changed the way we eat – and the way we get our food. The food delivery industry in the U.S. doubled during the pandemic, reported Kabir Ahuja, Vishwa Chandra, Victoria Lord, and Curtis Peens of McKinsey & Company.
One food delivery service recently published the 2021 Cravings Report. It’s chock-full of interesting tidbits about what we like to eat and how we treat the people who deliver our food. Learn more by taking this brief quiz.
- What was the top-selling delivered grocery item in 2021?
- A. Ground beef
- B. Bananas
- C. Cream cheese
- D. Potatoes
- Which of these states has some of the most polite customers in the country?
- A. Montana
- B. Mississippi
- C. New York
- D. Missouri
- Which of these states is not known for its picky eaters?
- A. Georgia
- B. Illinois
- C. Connecticut
- D. South Dakota
- What was the most popular cuisine ordered for delivery in 2021?
- A. Thai
- B. Italian
- C. Mexican
- D. Sushi
- Which of these was the most popular item ordered for delivery?
- A. California roll
- B. Pizza
- C. French fries
- D. Pad Thai
Answers: 1) B; 2) A; 3) D; 4) C; 5) C
Weekly Focus – Think About It
“You better cut the pizza in four pieces because I'm not hungry enough to eat six.”
—Yogi Berra, baseball player, manager, and coach
Wishing you and your families well,
Sean M. Dowling, CFP, EA
President, The Dowling Group Wealth Management
Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.
- 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. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
- The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
- The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
- Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
- The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
- The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
- 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.
- 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.
- You cannot invest directly in an index.
- Stock investing involves risk including loss of principal.
- The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth may not develop as predicted and are subject to change. Investing involves risk including loss of principal.
- The Price-to-Earning (P/E) ratio is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. It is a financial ratio used for valuation: a higher P/E ratio means investors are paying more for each unit of net income, thus, the stock is more expensive compared to one with a lower P/E ratio.
- These views are those of Carson Group Coaching, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
- This newsletter was prepared by Carson Group Coaching. Carson Group Coaching is not affiliated with the named broker/dealer.
- The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
- Consult your financial professional before making any investment decision.
Sources:
https://www.bls.gov/news.release/empsit.nr0.htm
https://www.washingtonpost.com/business/2021/12/03/jobs-report-november-unemployment-2021/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2021/12-06-2021_The%20Washington%20Post_U.S.%20Economy%20Adds%20210000%20Jobs%20in%20November_2.pdf)
https://www.washingtonpost.com/business/2021/11/16/government-underestimated-job-growth/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2021/12-06-2021_The%20Washington%20Post_The%20Government%20Dramatically%20Underestimated%20Job%20Growth%20This%20Summer_3.pdf)
https://www.barrons.com/articles/manufacturing-ism-survey-margins-inflation-51638374941 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2021/12-06-2021_Barrons_The%20U.S.%20Manufacturing%20Economy%20Hums%20Along_4.pdf)
https://www.barrons.com/articles/omicron-covid-variant-vaccine-booster-fda-51638575966 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2021/12-06-2021_Barrons_Omicron%20is%20a%20Big%20Unknown_6.pdf)
https://www.economist.com/finance-and-economics/a-three-decade-high-in-inflation-sows-concerns-about-americas-recovery/21806221 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2021/12-06-2021_The%20Economist_A%20Three-Decade%20High%20in%20Inflation%20Sows%20Concerns%20About%20Americas%20Recovery_8.pdf)
https://www.barrons.com/articles/stock-market-covid-omicron-federal-reserve-51638575944?refsec=the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2021/12-06-2021_Barrons_What%20Scares%20the%20Stock%20Market%20More%20than%20Covid_9.pdf)
https://www.uber.com/newsroom/the-2021-uber-eats-cravings-report/
https://www.brainyquote.com/topics/food-quotes
ADV & Investment Objectives: Please contact The Dowling Group if there are any changes in your financial situation or investment objectives, or if you wish to impose, add or modify any reasonable restrictions to the management of your account. Our current disclosure statement is set forth on Part II of Form ADV and is available for your review upon request.
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