It’s been a pretty interesting year so far, so I thought I’d write a little update.
The three major stock market indices have been doing very well so far this year. As of last Friday (7/21), the S&P 500 has a year to date total return (TR)* of 11.67%, while the Dow is up 10.67%. Technology led the way with the tech heavy Nasdaq up 19.36% (TR). Even more specifically, large tech companies such as Amazon and Alphabet (parent of Google) led the QQQ**to a gain of 22.78% (price only*).
Internationally, many stock markets performed even better than ours. The MSCI EAFE Index^ was up 16.94% (TR), outperforming the S&P 500 for the first time in several years. And the MSCI Emerging Markets Index***, was up 25.01%.
Interest rates pulled back a bit domestically. The ten year US Treasury rate closed at 2.26% (7/24/2017), down from 2.45% at the beginning of the year, but up from 1.57% a year ago. This helped the Bloomberg Barclays US Aggregate Bond Index gain 2.93% (TR) year to date. Perhaps more interesting was the international scene where rates continued to rise. The German ten year government bond reached a 52 week high of 0.51% (up from -0.04 a year ago). And the Japanese ten year closed at 0.06% up from -0.23% a year ago.
The stock and bond markets are a little at odds with each other so far this year. Bond market investors seem to be watching the economic data and worrying about a slowdown in the economy. While unemployment is at a multi-year low, inflation is still nearly non-existent. And GDP is hovering around the relatively low 2% mark. When the market is concerned about the economy, investors tend to seek out the safety of bonds, which lowers yields.
Meanwhile, stock market investors seem to be more concerned with corporate earnings. After a prolonged revenue recession (corporate revenues decreased year over year for six consecutive quarters), we’ve seen growth for the last three quarters. And this is being reflected in the overall stock market’s performance so far this year.
Lingering in the shadows is the current political situation. After some optimism about a unified Government (both houses and the White House controlled by the same party), the political gridlock has not let up. And as the Republicans struggle to pass a new healthcare law, the prospect of any significant corporate tax reform dims. This tax reform was much anticipated after the election.
The second half of the year will be interesting at the very least. Can we continue to gain in both the stock and the bond markets? Will we see any substantial legislation on tax reform? Will the economy break out of the doldrums? Only time will tell.
*Total Return includes the effects of price changes as well as dividends being reinvested. Price only is just the change in the price of the stock or index
**QQQ is an exchange traded fund that consist of the 100 largest Nasdaq companies excluding any financial companies
^The MSC EAFE Index is designed to represent the performance of lasrge and mid-cap securities across 21 developed markets, including countries in Europe, Australasia and the Far East, excluding the U.S. and Canada
***The MSCI Emerging Markets Index consists of 24 countries representing 10% of world market capitalization. The Index is available for a number of regions, market segments/sizes and covers approximately 85% of the free float-adjusted market capitalization in each of the 24 countries
*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Verity Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.
Check the background of this investment professional on FINRA’s BrokerCheck.
A Financial Advisor registered through CUSO Financial Services, L.P., Gavin has 25 years of experience as an advisor in the Puget Sound area.
“I believe every client is unique and deserving of a personalized financial plan that will help them reach their individual financial goals. Before I make any recommendations, I like to get to know my clients. By asking the right questions, and developing an honest, trusting relationship, I can really get a sense of what’s going to work best for them.”
Gavin graduated from the University of Washington with a BA in Business Administration and started his financial career with US Bank in the Investment Department. Prior to joining Verity in 2006, he spent eight years with Piper Jaffray.
So what is Gavin’s vision for his dream retirement?
“My dream retirement would be absolutely worry free: financially, emotionally, and in every aspect of life. My finances would be in order so expenses for travel, luxuries, and gifts for the kids, grandkids, and great-grandkids would be taken care of. My kids would be financially sound, so I would be confident in their prosperity. This would give me the freedom to travel and play and do whatever it is I want to do.”
When Gavin’s not working, he enjoys spending time with friends and family, watching Husky football and taking weekend trips around the Northwest.
Gavin is registered to transact securities business in the states of AZ, CA, CO, FL, HI, ID, IL, KS, MN, NV, NY, OR, UT, VA and WA.
*Non-deposit investment products and services are offered through CUSO Financial Services, LP (“CUSO Financial”) (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CUSO Financial. Verity Credit Union has contracted with CUSO Financial to make non-deposit investment products and services available to credit union members. Atria Wealth Solutions, Inc. (“Atria”) is not a broker-dealer or Registered Investment Advisor and does not provide advice. CUSO Financial is a subsidiary of Atria.
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