Volatility Continues
Weekly Update – December 10, 2018
Markets went for another wild ride last week, as major domestic indexes swung back and forth. By Friday, December 7, markets had posted their worst weekly performance since March – and the S&P 500 and Dow both moved into negative territory for 2018.[1]
Overall, the S&P 500 lost 4.60%, the Dow declined 4.50%, and the NASDAQ dropped 4.92%. [2] International stocks in the MSCI EAFE also struggled, posting a 2.27% weekly loss. [3]
Let’s take a look at what is driving this challenging market performance.
Examining Recent Volatility
1. How volatile are stocks right now?
If recent market fluctuations have felt intense to you, there’s a reason: They are. The past three weeks have had the most volatility since 2008’s financial crisis. During this time, domestic indexes have ricocheted between gains and losses. The large swings have occurred both week-to-week and within daily trading. [4]
2. What is causing the volatility?
Many of the same themes we’ve discussed throughout 2018 are continuing to affect market behavior. Ultimately, many investors are worried that corporate profits and global growth will suffer if trade tension persists and the Federal Reserve continues raising interest rates. [5]
Concerns about Treasury yields were also on investors’ minds. For part of last week, 3-year Treasury notes had higher yields than 5-year notes. Called an inversion, a higher yield on shorter-term Treasuries can be a sign of a coming recession. The yield spread between 2-year and 10-year Treasury notes, which people focus on more, has not inverted. [6]
3. Should you feel concerned?
With many headlines to digest, from conspiracy charges against a Chinese tech leader to comments from the Fed, investors had a lot to consider last week. [7]The difference is how they reacted to this information. For some time, markets were basically ignoring headlines. Now, they’ve moved in the opposite direction into what one investment manager called “a period of hypersensitivity.” [8]
Consequently, recent market performance may seem unnerving. As is often the case, however, the reality may be less extreme than what appears at first glance, especially when you look at the fundamentals.
4. What do the fundamentals tell us?
While last week’s market performance saw large fluctuations, the fundamentals we received were far less dramatic. We learned that two sectors beat expectations in November: manufacturing and service. [9] Further, the November labor report revealed fewer new jobs than anticipated, but unemployment is still at historically low levels, as job and wage growth continue. [10]
Remember, risks exist in the markets and economy, and we’re analyzing these details closely. If you have any questions about your financial standing or anything you hear in the news, we are here to talk.
- 3 pounds collard greens
- 4 slices bacon, cut into ¼”-wide strips
- 1 medium onion, coarsely chopped
- 2 tablespoons cider vinegar
- ¼ teaspoon salt
- ¼ teaspoon coarsely ground black pepper
- Throw away the tough stems of the collard greens.
- Chop up and then rinse the collard greens.
- Add bacon and onion to an 8-quart sauce pot.
- Over medium heat, cook until the onion is tender, and the bacon browned, stirring occasionally, about 15 minutes.
- Turn the heat to medium-high. Slowly add the collard greens and stir until the greens are wilted.
- Lower the heat to medium-low, cover the pot, and cook until the ingredients are tender, about 10 minutes.
- Turn the heat to medium-high, uncover the pot and continue cooking, while stirring, until most of the liquid has evaporated.
- Add vinegar, salt, and coarsely ground black pepper while stirring.
You’re on the last hole. You’re on the green. It’s been a great day on the course. If you sink this, you’ll achieve a personal best, and your friends will brag about your game for the next 10 years.
Everybody’s watching. Your best game ever is at stake. Then suddenly you freeze. Too much pressure!
You’re not alone.
Pressure can ruin the best of games. So, how do the pros overcome the pressure -when the cameras are on and the announcers are whispering?
Develop a standard putting routine, a kind of generic version you can pull out of your bag for every game use.
A kind of pre-putt, it should follow the same pattern, the same timeline, every time.
Most golfers have the habit of slowing (or, with some, speeding it up) when the pressure mounts. But the delay (or the rush) reinforces the tendency to second-guess yourself.
Once you develop a standard routine, practice it frequently so you’re able to do it in pressure settings, at a moment’s notice.
If you sometimes have difficulty swallowing, you may have dysphagia.
People with dysphagia have trouble getting food to pass from their mouths to their stomachs. Nerve or muscle problems usually cause dysphagia, which is more common in older people and babies.
Problems in any part of the swallowing process can indicate dysphagia.
Dysphagia symptoms include:
- Choking while eating.
- Coughing or gagging while swallowing.
- Drooling.
- Frequent heartburn.
- Hoarseness.
- Regurgitation.
- Inability to control saliva in the mouth.
Treatment for high dysphagia includes:
- Swallowing therapy.
- Diet modifications, which may include easy-to-swallow foods.
- Tube feeding may help sufferers at a risk of pneumonia, malnutrition, or dehydration.
Treatment for low dysphagia (esophageal) may include:
- Dilation, which involves using a small balloon to widen the esophagus.
- Botulinum toxin (Botox) can be used to paralyze stiff muscles that are causing constrictions.
Tips adapted from MedicalNewsToday [14]
What’s So Wonderful About Wetlands?
The United States has degraded or destroyed half of the nation’s wetlands. In California, that amount is 90%.
So, what’s the big deal about wetlands? Why are they important? Here are ten benefits of wetlands. They:
- Protect one-third of the country’s threatened or endangered species.
- Protect communities from floods.
- Filter pollution.
- Block storm surges.
- Reduce potential wind and swell wave damage.
- Fertilize farm land.
- Foster recreation and tourism.
- Store carbon and thereby protect against climate change.
- Serve to boost employment.
- Lessen rises in sea levels.
Tip adapted from EarthShare [15]
The Retirement Wealth Management Group
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269-978-0238
zack.alkhamis@lpl.com
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Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Diversification does not guarantee profit nor is it guaranteed to protect assets.
International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.
The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
