Hurricanes, Scary Headlines and How to React
Weekly Commentary, September 8th, 2017
- Equity markets were mixed with the S&P 500 down slightly for the week at -0.52%, while international markets (EFA) were up 0.78%.
- Fixed income markets were also mixed with high-quality bonds (AGG) benefiting from the negative headlines +0.42% for the week, while high-yield bonds (JNK) were down 0.42%.
- Dividends Continue to Grow - The Janus Henderson Group reported that worldwide stock dividend payments rose 5.4% year-over-year to $447.5 billion in Q2'17, according to Bloomberg. The financial and technology sectors were among those showing strong dividend growth. Stock dividends are projected to reach a record $1.21 trillion worldwide in 2017, up 3.9% from last year's payout.
- European Central Bank Announcement – As expected, ECB President Mario Draghi announced that the bank would be leaving its monetary policies unchanged for the time being. International risk markets, especially in Europe, rallied sharply after the announcement.
- North Korea – Last weekend North Korea appeared to test a hydrogen bomb that would be capable of significant destruction, though nothing has been confirmed. With tensions remaining high, risk markets are likely range bound until some sort of resolution is reached.
- U.S. Dollar – after a four-year run culminating with a 15-year peak on January 7th of this year, the U.S. dollar has experienced its worst year-to-date drop in value since 1986 having declined over 9% so far in 2017. One positive, the decline has helped boost the returns for U.S. holders of international equities.
- Commentary: This week’s Commentary helps provide a context for investors trying to make sense of the headlines dominating the news cycle, including a guest piece by Brian Wesbury, Chief Economist at First Trust. Wesbury looks at how economies and financial markets deal with large natural disasters, and debunks some of the common misconceptions that get floated around during times like this.
To read the full commentary, click below!