Last week, OPEC+, which includes the Organization of the Petroleum Exporting Countries and allied oil producers like Russia, chose to cut production by two million barrels a day. The stated goal is to keep crude oil prices above $90 a barrel. The production cut, which will push gasoline and other prices higher, complicates efforts to fight inflation, reported Salma El Wardany and colleagues at Bloomberg.
According to economic data, the Federal Reserve’s inflation fight has produced mixed results, so far. Like the ghosts that visit Scrooge in A Christmas Carol, economic data offers information about what has happened in the past, what is occurring in the present, and what could happen in the future. Recently, the data has been sending mixed signals. Nicholas Jasinski of Barron’s explained:
“For the early part of this past week, a bad-news-is-good-news mentality ruled as each ‘disappointment’ was greeted with a surge. Fueled by data showing softer manufacturing activity and a sharp decline in job openings, the [Standard & Poor’s 500 Index] put together a 5.7% jump on Monday and Tuesday… It was all downhill from there, though, as hawkish remarks from Fed officials, stronger services data and Friday’s jobs report drove home the point that we’re still a ways away from an economy or labor market that justifies the end of tightening.”
Stock prices are considered to be a leading indicator. They offer information about what investors expect to happen in the future. Last week, investors changed their minds mid-week. Despite price volatility, major U.S. stock indices finished the week higher.
U.S. Treasury yields moved higher last week, too, with the yield on the two-year Treasury finishing the week at 4.3 percent, while the yield on the 10-year Treasury finished at 3.9 percent. When short-term yields are higher than long-term yields, the yield curve is “inverted,” which has historically been a sign that the bond market thinks the U.S. is headed for a recession.
“The shape of the curve is among the most widely watched financial-market barometers because it reflects bondholders’ views of where interest rates and the economy are headed. When the curve inverts, with long yields dropping below short ones, it signals expectations of a slowdown that will drive rates lower in the future,” reported Michael Mackenzie and Ye Xie of Bloomberg.
It’s difficult to know what will happen in the future. That’s why investment portfolios are built around investors’ short- and long-term financial goals. It is easy to lose sight of your goals, though, when markets are volatile. If you’re feeling overwhelmed and uncertain, please get in touch. We’re happy to talk about your concerns and help you find solutions.
|Data as of 10/7/22||1-Week||Y-T-D||1-Year||3-Year||5-Year||10-Year|
|Standard & Poor's 500 Index||1.5%||-23.6%||-17.3%||7.4%||7.4%||9.6%|
|Dow Jones Global ex-U.S. Index||2.0||-27.0||-26.1||-2.5||-2.8||1.0|
|10-year Treasury Note (yield only)||3.9||N/A||1.6||1.6||2.4||1.8|
|Gold (per ounce)||1.5||-6.8||-3.7||4.2||5.8||-0.4|
|Bloomberg Commodity Index||5.1||18.1||14.5||14.7||6.9||-2.2|
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, 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.
And the Winner Is…
They didn’t get as much press as the Nobel Prizes, but 10 Ig Nobel Prize winners were also named recently. The Igs honor “…achievements that make people laugh, then think. Good achievements can also be odd, funny, and even absurd, so can bad achievements. A lot of good science gets attacked because of its absurdity. A lot of bad science gets revered despite its absurdity.”
This year’s winners included scholars of scorpion constipation, duckling swimming, ice cream cryogenics, romantic heart rate synchronization and other scintillating scientific topics. For example,
- The Biology Prize went to Solimary García-Hernández and Glauco Machado for “Short- and Long-Term
Effects of an Extreme Case of Autotomy: Does ‘Tail’ Loss and Subsequent Constipation Decrease the Locomotor
Performance of Male and Female Scorpions”
To escape predation, some types of scorpions shed their tails, losing a portion of their digestive tracts. This causes constipation. García-Hernández and Machado’s research investigated whether scorpions’ ability to move was affected by the change. They found that running speed was unaffected over the short-term. However, over the longer-term, tail loss and constipation hurt the running speed of males but not females.
- The Economics Prize went to Alessandro Pluchino, Alessio Emanuele Biondo, and Andrea Rapisarda
for “Talent vs. Luck: The Role of Randomness in Success and Failure.”
Western culture often asserts that success is the result of talent, intelligence, hard work, commitment and other personal traits. The research found that luck plays an outsized role. The researchers used mathematics to explain “why success most often goes not to the most talented people, but instead to the luckiest.” This was the second Ig for Pluchino and Rapisarda, whose previous win was for a paper explaining that promoting people at random could make organizations more efficient.
- The Peace Prize went to Junhui Wu, Szabolcs Számadó, and their co-authors for “Honesty and
Dishonesty in Gossip Strategies: A Fitness Interdependence Analysis.”
The researchers investigated gossip and developed a mathematical model for honest and dishonest gossip. During their acceptance speech, the researchers explained, “…gossiping people can be honest or dishonest, depending on how much they value the targets and recipients of gossip.”
Each of the Ig Nobel winners received a $10 trillion Zimbabwean banknote worth about far less than one trillion dollars. The awards were presented by actual Nobel Prize winners.
Weekly Focus – Think About It
"The most difficult thing is the decision to act, the rest is merely tenacity."
—Amelia Earhart, aviator
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.
https://www.bloomberg.com/news/articles/2022-10-05/opec-panel-recommends-2-million-barrel-cut-to-output-limits (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/10-10-22_Bloomberg_OPEC+%20Rebuked%20by%20US%20After%20Cutting%20Output%20to%20Keep%20Prices%20High_1.pdf
https://www.barrons.com/articles/the-stock-market-fought-the-fedand-paid-the-price-51665187660?mod=hp_columnists (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/10-10-02_Barrons_The%20Stock%20Market%20Fought%20the%20Fed%20and%20Paid%20the%20Price_2.pdf)
https://www.bloomberg.com/news/articles/2022-10-06/bond-market-sees-once-easy-yield-curve-bets-upended-by-fed-path (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/10-10-22_Bloomberg_Bond%20Market%20Sees%20Once%20Easy%20Yield-Curve%20Bets%20Upended%20by%20Fed%20Path_5.pdf)
https://www.youtube.com/watch?v=uSELZ1A5OT8 [1:05 to 1:08]
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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