Up!

Four major U.S. benchmark stock indices closed at record highs for four consecutive days during Valentine’s Day week, reported Financial Times (FT).

To date, positive corporate earnings and robust investor confidence have offset fiscal and political uncertainty and helped push U.S. stock markets higher, said sources cited by FT. With 82 percent of companies in the Standard & Poor’s 500 Index reporting, corporate earnings are up 4.6 percent for the fourth quarter of 2016, and the Investors Intelligence Advisors Sentiment survey showed bullishness at a 12-year high last week, according to CNBC.com.

While bullish performance is welcome by stock investors, a Barron’s article titled, ‘Memo to Investors: What Goes Up Must Come Down,’ listed the responses of traders at a firm whose chief market strategist asked:

“In order to stay long U.S. equities, you have to believe…what? Here are some answers: Trump’s recent troubles are just the typical pains of any new administration. The Federal Reserve hikes rates twice, not three times, in 2017, and the yield on 10-year Treasuries stays at or below 3 percent. Oil prices remain stable. The Street, for once, is too pessimistic on earnings, but since analysts already forecast profit growth of 10.5 percent in 2017 and 11.7 percent in 2018, lower taxes must goose growth.

To this list, [the chief strategist] added the following: Trump doesn’t introduce overtly protectionist policies. U.S. growth stays in the 2 percent to 3 percent range until Trump’s economic agenda passes Congress. And no geopolitical event either increases global energy prices or dampens U.S. consumer confidence.”

Stock markets may be highly valued, but the Conference Board Leading Economic Index, which was designed to determine highs and lows in the business cycle, indicates the U.S. economy is doing well. The index increased for three consecutive months (November through January). The Conference Board’s director of business cycles and growth research, Ataman Ozyildirim, said,

“The January gain was broad based among the leading indicators. If this trend continues, the U.S. economy may even accelerate in the near term.”

* These are the general views of Jonathan DeYoe and they should not be construed as investment advice for any individual.

* 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 indices 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.

* The original “Weekly Commentary” was prepared by Peak Advisor Alliance. Jonathan DeYoe is a member of Peak Advisor Alliance and adds, subtracts and edits before publishing.

* 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.

* Consult your financial professional before making any investment decision.

* Stock investing involves risk including loss of principal.

* “Up!”

Sources:
https://www.ft.com/content/1bb7875e-f488-11e6-95ee-f14e55513608 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-21-17_FinancialTimes-US_Economy_Props_Wall_Street_Rally_as_Investors_Wait_on_Trump_Policies-Footnote_1.pdf)
https://insight.factset.com/hubfs/Resources/Research%20Desk/Earnings%20Insight/EarningsInsight_021717.pdf
http://www.cnbc.com/2017/02/14/professional-investors-are-getting-fired-up-for-economic-boom.html
http://www.barrons.com/articles/memo-to-investors-what-goes-up-must-come-down-1487399135?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-21-17_Barrons-Memo_to_Investors-What_Goes_Up_Must_Come_Down-Footnote_4.pdf)
https://www.conference-board.org/data/bcicountry.cfm?cid=1
http://eqstl.com/obe-creator-new-smart-pet-bowl-wins-first-ever-pet-care-innovation-prize-powered-purina/
https://www.nytimes.com/2017/02/15/business/smallbusiness/wine-products-for-cats-and-dogs.html?ref=smallbusiness
http://www.nationalgeographic.com/people-and-culture/food/the-plate/2016/06/do-cats-really-need-their-own-wine-/
https://www.ted.com/talks/chimamanda_adichie_the_danger_of_a_single_story/transcript?language=en

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