Weekly Market Commentary, May 30, 2018

May 30, 2018  | By Robare & Jones

The Markets

The Federal Reserve’s latest minutes confirmed expectations the Fed will continue to raise interest rates gradually and members see no reason to deviate from their plan. Oil prices dropped after an extended rally on concerns Russia and OPEC’s supply reduction efforts will wane as prices rise.

The overall effect on U.S. stocks was modest. The S&P 500 rose 0.3 percent. Global stocks, as measured by the MSCI ACWI, dropped 0.4 percent as European stocks declined on political news from Italy and Spain. Bond yields fell on the news from the Fed and the decline in oil prices, pushing prices of existing bonds higher. The Bloomberg BarCap Aggregate Bond Index soared 0.7 percent.

 

Data as of 05/25/2018 1-week YTD 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) 0.3% 1.8% 12.7% 9.0% 10.4% 7.0%
Dow Jones Global ex-U.S. -1.1 -1.6 8.9 2.5 3.5 0.0
10-year Treasury Note (Yield Only) 2.9 NA 2.3 2.1 2.1 3.9
Gold (per ounce) 1.2 0.5 3.7 3.2 -1.1 3.7
Bloomberg Commodity Index 0.6 3.1 8.6 -4.0 -7.2 -8.3
DJ Equity All REIT Total Return Index 2.4 -4.3 0.1 5.7 6.3 6.5

S&P 500, Gold, Bloomberg 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 Total Return 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.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

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Working Out the Bugs

There was a lot of news about new inventions last week. Some devices appear to have potential while others have been delivering unexpected results. Take a look at recent innovation news:

  • Droning on. Remember the vehicles Galactic storm troopers rode into battle against the Ewoks in Star Wars? They’re now available on Earth. Hover bikes look a lot like a super-sized drone that can carry a person. They can travel up to 13 miles or 20 minutes, at speeds up to 43 miles an hour, before recharging is needed.
  • Shhh. It’s listening. Smart speakers made the news last week after it was widely reported that one had recorded a family’s conversation and sent it to someone on their contact list. A writer for MIT Technology Review investigated further, checking her smart speaker history. She found:

“…in the past several months it has also tuned in, frequently several times a day, for no obvious reason. It’s heard me complain to my dad about something work-related, chide my toddler about eating dinner, and talk to my husband – the kinds of normal, everyday things you say at home when you think no one else is listening.”

  • Diagnosed by math. There’s a new algorithm in town. The U.S. Food and Drug Administration (FDA) just gave the thumbs-up to artificial intelligence that helps surgeons detect wrist fractures, reported MIT Technology Review. In fact, the FDA is “writing new rules to speed up approvals for AI-based devices and tools.”
  • Folding wingtips. It seems like poor design, but some planes’ wingspans are too wide for standard airport gates. Instead of asking airports to build special gates, the Federal Aviation Administration approved folding wingtips on Friday.

We know change is constant. Adapting to change is the challenge.

 

Fun Story

Golden Knights built a Stanley Cup finalist in their first season ever

History was made on May 20, 2018 when the Las Vegas Golden Knights made it to the Stanley Cup finals. This is the Golden Knights’ first year as a team, which makes it the best first-year expansion team ever in all of professional sports. How the owner and management were able to construct a championship team from scratch is truly remarkable. Aided by a few players who’ve had the best season of their lives, that magic formula has positioned the Golden Knights to be the 2018 Stanley Cup champions.