Leadership Change or Head Fake?

Leadership Change or Head Fake?

 

Over the last 30 days, large growth stocks as represented by the Vanguard Large Growth ETF (VUG) are positive by .08%.  Over the same period, the Vanguard Large Value ETF (VTV) is positive by 2.83%.  We have to go back to 2016, which is the last year that large value out performed large growth by a significant margin.  As you are aware, most of the high flying technology stocks are in the large growth space, so the question is, are we seeing a change in leadership?  Or will technology emerge to regain leadership.  As always, time will tell and this IS important to pay attention.

 

Last week investment results show the Nasdaq Composite was down .29%, whereas all other US Major Indexes were positive with the Dow leading, finishing up 1.41%.  The S&P500 was up .59% and the Russell 2000 Small Cap Index up .36%.  The positive in the US markets came after a report that suggested the United States and China will resume trade talks later this month. On the other side of the pond, the MSCI EAFE Index was down 1.10%. 

 

The 10 Year US Treasury Yield was relatively unchanged last week moving up from 2.86% the week prior to finish last Friday @ 2.87%.  The Barclays Aggregate Bond Index was down .02% for the week.

 

Last Trading Weeks of the Summer

 

During the last 2 weeks of the summer, volume on the major stock exchanges tends to be light as many traders and investors vacation. However, even with light trading volume, the indexes can move in exaggerated ways in either direction. Once Labor Day is in the rear view mirror, in addition to Tariffs, Turkey, Interest Rates we add the fun of Mid-Term Elections. The media will certainly be very happy knowing that they’ll be able to have our attention front and center for the foreseeable future.

 

 Tidbits

  • The size of the United States Economy reached $2.5 trillion in 1979, doubled to $5 trillion in 1988, doubled again to $10 trillion in 2000 and another double to $20 trillion in 2018.

 

  • The yield on the 10-year Treasury Note closed at 2.86% on 6/30/2018, the 4th consecutive quarter the yield has increased. The last time that happened was back in 2013.

 

  • US Treasury debt and mortgage-backed securities held by the Federal Reserve as of 8/1/2018 was $4.04 trillion, down from $4.24 trillion as of 8/02/2017. The $200 billion reduction is the result of the plan outlined by the Fed on 9/20/2017 that started in October 2017 that involved $10 billion of bonds maturing each month without reinvesting the principal. The monthly amount will increase by $10 billion each quarter before peaking at $50 billion per month in October 2018.

 

Question of the Week

 

Which 3 major countries in the world maintain the TOP CREDIT RATING from each of the 3 major credit rating agencies?

 

 a) Germany, Canada, China

b) Sweden, Germany, United States

c) China, Sweden, Germany

d) Canada, Germany, Sweden

e) Japan, Sweden, Canada

 

Answer To Last Week’s Question of the Week!

 

The question was: “What is the highest grossing movie of all time in the United States, inflation adjusted?”

 a) Titanic

b) Avatar

c) Star Wars

d) Gone With The Wind

 

The Answer is –  

d) Gone With The Wind with an inflation adjusted gross of $3,196,000,000.