Headline Risk Returns / Don’t Fear the Headlines.
Volatility isn’t a new phenomena, it has just returned from a 3 year vacation. And now, this market is as streaky as a slice of bacon.
U.S. stock markets have been sliding higher. They’ve been sliding lower.
Barron’s reported the Standard & Poor’s 500 Index has tumbled from gains to losses and back again for 10 weeks in a row. The Dow Jones Industrial Index has tagged along with nine weeks of flip-flops. You’d almost think they were running for office.
There are market optimists. There are market pessimists.
The American Association of Individual Investors (AAII) weekly survey of investor sentiment reported 34.6 percent of respondents were bullish. That’s up from the previous week. Thirty-five percent of respondents were bearish. That’s also up from last week. What’s down? Neutral sentiment. More people are forming opinions about the possible direction of the market.
There are questions that need to be answered.
Will the Federal Reserve begin to raise rates this week? Some say yes. Some say no. Barron’s said it’s too close to call. There is no clear consensus, Fed officials have given mixed signals, and the bond market has not priced in a rate hike. If the Fed does raise rates, experts cited by Barron’s said markets could get ugly for a little while or they could remain calm. A lot depends on the wording of the Fed’s statement.
Have Chinese markets stabilized? MarketWatch reported the Shanghai Composite Index finished last week higher. It was the first positive weekly outcome in a month. Chinese authorities, once again, are taking steps to stabilize markets. The Economist offered this thought, “As China’s financial markets develop, its stock market will become less bumpy. For now, investors must remember that many things are bigger in China, including the daily ups and down of its stock market.”
Will the U.S. government shut down again? It’s in the hands of our elected officials.
Data as of 9/11/15 |
1-Week |
Y-T-D |
1-Year |
3-Year |
5-Year |
10-Year |
| Standard & Poor’s 500 (Domestic Stocks) |
2.1% |
-4.8% |
-1.8% |
11.0% |
12.1% |
4.7% |
| Dow Jones Global ex-U.S. |
1.8 |
-7.2 |
-14.1 |
1.7 |
0.8 |
1.2 |
| 10-year Treasury Note (Yield Only) |
2.2 |
NA |
2.5 |
1.7 |
2.8 |
4.2 |
| Gold (per ounce) |
-1.6 |
-8.3 |
-11.4 |
-14.1 |
-2.4 |
9.4 |
| Bloomberg Commodity Index |
0.5 |
-14.8 |
-26.9 |
-15.7 |
-8.3 |
-6.1 |
| DJ Equity All REIT Total Return Index |
2.2 |
-7.0 |
0.2 |
7.2 |
10.8 |
6.3 |
S&P 500, Gold, DJ-UBS 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 TR 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.
*The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in this 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 London afternoon gold price fix as reported by the London Bullion Market Association.
* The DJ 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 TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* 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.
* “Headline Risk Returns”
Sources:
http://www.aaii.com/sentimentsurvey
http://www.barrons.com/articles/barrons-fed-rate-hike-too-close-to-call-1442036635
http://www.marketwatch.com/story/asian-stocks-waver-ahead-of-fed-decision-2015-09-11
http://www.economist.com/blogs/freeexchange/2015/08/chinas-stockmarket-0
The post Headline Risk Returns / Don’t Fear the Headlines appeared first on Happiness Dividend Blog – Personal Finance, Education and Investment Guidance.