The Markets
Thanksgiving and football go together like turkey and stuffing.
For some families, though, this year may be more like a turducken, stuffed with American football and the sport the rest of the world knows as football (soccer). The men’s World Cup, which is played every four years for national glory, the Jules Rimet trophy, and millions of dollars in prize money, began on Sunday and will end on December 18.
During the tournament, researchers may track the influence of sentiment on markets. According to Mark Hulbert of MarketWatch, previous research has found that a team’s performance – especially a loss – can have a short but powerful effect on the national mood.
“You would be excused for being skeptical that a soccer tournament has anything to do with the stock market. But you need to understand how disheartened a country’s investors can become after their team loses in the World Cup. A significant body of academic research has found that their dejection has a pronounced impact on the stock market,” reported Hulbert. “…our moods play a powerful role on our investment decisions. We tell ourselves that we base our portfolio decisions solely on sober and rational analysis. As the academic research into the World Cup Effect reminds us, this isn’t always so.”
Investors in the United States were a bit dejected last week. Stronger-than-expected retail sales in October indicated consumer demand remained strong, despite the Federal Reserve’s efforts to slow spending by raising rates. Hawkish commentary from multiple members of the Federal Reserve also affected markets as it suggested the Fed is not ready to pause its inflation fight any time soon, reported Ben Levisohn of Barron’s.
Last week, major U.S. stock indices moved lower, and yields on shorter-term Treasuries moved higher. The yield on a 2-month Treasury bill finished the week at 4.2 percent, while the yield on the benchmark 10-year Treasury ended the week at 3.8 percent.
| Data as of 11/18/22 | 1-Week | Y-T-D | 1-Year | 3-Year | 5-Year | 10-Year |
|---|---|---|---|---|---|---|
| Standard & Poor’s 500 (Domestic Stocks) | -0.7% | -16.8% | -15.7% | 8.3% | 9.0% | 11.1% |
| Dow Jones Global ex-U.S. | 0.0% | -19.5% | -20.7% | -1.3% | -1.1% | 2.2% |
| 10-year Treasury Note (Yield Only) | 3.8% | N/A | 1.6 | 1.8% | 2.4% | 1.6% |
| Gold (per ounce) | -0.4% | -3.8% | -5.8% | 6.1% | 6.4% | 0.1% |
| Bloomberg Commodity Index | -1.8% | 15.8% | 11.9% | 13.6% | 5.9% | -2.1% |
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; U.S. Treasury; 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.
IT’S THAT TIME OF THE YEAR.
In mid-November, people begin to prognosticate and predict, offering their thoughts about what the future may hold. While everyone else is future-gazing, we thought it might be interesting to look at some past predictions and see how they panned out.
- A shorter alphabet and taller Americans. In 1900, John Elfreth Watkins, Jr. published an article in the Ladies Home Journal titled, “What May Happen in the Next Hundred Years”. He forecasted that the population of the United States would reach 350 to 500 million people, Americans would be one to two inches taller, and life expectancy would increase to age 50 from age 35. He also thought the letters ‘C’, ‘X’ and ‘Q’ would be eliminated from the alphabet because people would begin to spell words the way they sound.
- Remote work and uploading brains. At the 1964 New York World’s Fair, science-fiction writer and futurist Arthur C. Clarke said, “Trying to predict the future is a discouraging and hazardous occupation.” That didn’t stop him, though. Clark predicted that advancements in communication, especially satellites, would make it possible for people to be in instant contact with each other. They would be able to get in touch, no matter where they were, allowing everyone to work remotely. He also suggested that a machine might be developed to transfer information directly to the human brain, making it possible to become an instant expert on any topic.
- ESG and economic indicators that reflect values. In a 1968 edition of Harvard Business Review, environmentalist and futurist Hazel Henderson predicted that companies would be motivated to pollute less, build mass transit, recycle goods and pursue other actions through a combination of social pressure, media attention and the desire for financial gain. She also thought economic indicators would be adapted to reflect “a healthy bottom line in financial terms as well as an additional bottom line that addresses people’s growth needs and their psychological, spiritual and cultural values.”
Through the end of 2022, we expect there will be predictions about the war in Ukraine, the likelihood of recession, changes in energy supplies, the future of social media, and much more. If you have any questions about how our changing world may affect your financial goals and investment portfolio, please let us know.
Weekly Focus – Think About It
“It’s tough to make predictions, especially about the future.”
Securities offered through American Portfolios Financial Services, Inc. (APFS), Member FINRA, SIPC. Advisory services offered through American Portfolios Advisors, Inc. (APA) and/or Novem Group, SEC-Registered Investment Advisers. Novem Group is independent of APFS and APA. Please refer to your representative’s FINRA BrokerCheck for firm affiliations. Any opinions expressed in this forum are not the opinion or view of Novem Group, APFS, or APA and have not been reviewed for completeness or accuracy. Any comments or postings are for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk, may result in a loss of principal, and are not suitable for all types of investors. Past performance does not guarantee future results.
* 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.
* 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.
* 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.
* Consult your financial professional before making any investment decision.
Sources:
https://www.sportingnews.com/us/soccer/news/world-cup-winners-prize-money-purse-teams-players-qatar-2022/uw8fhhfqczen1nxsuicczreu
https://www.marketwatch.com/story/why-the-stock-market-gets-a-red-card-during-soccers-world-cup-11666051089
https://www.barrons.com/articles/stock-market-dow-nasdaq-sp500-recession-interest-rate-hikes-51668818597?refsec=the-trader&mod=topics_the-trader
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202211
https://www.flickr.com/photos/jonbrown17/2571144135/sizes/o/in/photostream/
https://www.youtube.com/watch?v=YwELr8ir9qM
https://www.ethicalmarkets.com/wp-content/uploads/2018/09/Should-business-tackle-societys-problems-HBR.pdf
https://www.ontheissuesmagazine.com/1996fall/f96_Stahura.php
https://www.goodreads.com/quotes/261863-it-s-tough-to-make-predictions-especially-about-the-future