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;
  2. The ability of Democrats and Republicans to work together; and
  3. 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.

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%.”

Cooling inflation may lead the Federal Reserve (Fed) to begin lowering the federal funds rate – and that would make borrowing less expensive. 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.”

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. The yield on the benchmark 10-year U.S. Treasury note moved lower last week.

Over the weekend, 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 Y-T-D 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, 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 América™ title in Miami, Florida. Fans of the beautiful game (soccer) can test their knowledge of the tournaments by taking this brief quiz.

  1. 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?
    1. Two
    2. Four
    3. Seven
    4. Ten

  2. 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?
    1. 15 minutes
    2. 45 minutes
    3. 60 minutes
    4. During injury time (aka stoppage time)

  3. 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?
    1. 15
    2. 16
    3. 17
    4. 18

  4. Who holds the record for the most assists – passes that lead directly to goals – in the Copa América tournament?
    1. Luis Suarez
    2. Lionel Messi
    3. Luis Figo
    4. James Rodriguez

  5. Bonus question: Which women’s team won the 2024 CONCACAF W Gold Cup?
    1. Mexico
    2. United States
    3. Canada
    4. Brazil

What’s your favorite bit of soccer trivia?

Answers: 1) d; 2) b; 3) b; 4) d; 5) b

Weekly Focus – Think About It

“The thing about football – the important thing about football – is that it is not just about football.”

—Terry Pratchett, author

Wishing you and your families well,
Sean M. Dowling, CFP, EA
President, The Dowling Group Wealth Management

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  • Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
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  • The 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.
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Sources:

https://www.pewresearch.org/politics/2024/05/23/publics-positive-economic-ratings-slip-inflation-still-widely-viewed-as-major-problem/

https://www.bls.gov/news.release/pdf/cpi.pdf

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)

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)

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)

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)

https://www.goodreads.com/quotes/tag/soccer

https://en.wikipedia.org/wiki/List_of_UEFA_European_Championship_own_goals

https://sports.yahoo.com/rash-red-card-curbs-colombias-005800066.html

https://apnews.com/article/yamal-spain-euro-2024-youngest-scorer-5f30ffdc3dbf58087a353b6ef2584a69

https://copaamerica.com/en/news/james-record-assists-copa-america-colombia-uruguay

https://en.wikipedia.org/wiki/CONCACAF_W_Gold_Cup

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