Global stock markets kept climbing last week. The S&P 500 rose 0.9% and is now up 5.1% this year. Global stocks climbed even more as the MSCI ACWI rose 1.1%. The Bloomberg BarCap Aggregate Bond Index slid 0.4% last week and is down 0.9% this year. Concerns over higher rates pushed bonds lower. As of this writing, the U.S. Senate was unable to muster enough Democratic votes to avoid a government shutdown. Whether or not it is resolved by publication, we are not overly concerned. Past government shutdowns have had little effect on the stock market, and we do not expect this one to be different.
Carson Group Research
2017 produced an extremely calm year with very steady returns. There were only eight days when the market moved by more than 1% during the calendar year. As the year moved, the calmness grew. None of the eight 1% moves occurred in the fourth quarter. The last one happened on August 17. While markets continue to deliver more of the same in 2018, we expect volatility to increase during the year and the number of 1% moves to rise substantially.
Source: Carson Group, Morningstar Direct
Key points for the week
- Global stocks remain in rally mode.
- Economic recovery is mostly benefitting low-skilled workers.
- Chinese GDP comes in above expectations, while risks remain.
What are we reading?
Below are some areas of the market we paid particularly close attention to this week. For further information, we encourage our readers to follow the links.
Low-wage workers are beginning to generate more rapid wage gains than those at higher levels. As the slow and steady economic growth continues to push unemployment lower, the scarcity of entry-level workers is driving wages of low-skill positions higher. Walmart’s recent decision to raise its starting wage from $9 to $11 an hour is one example of the trend towards higher wages.
The Chinese economy grew 6.9% in 2017 and 6.8% in the fourth quarter. Both numbers were above expectations, and 2017’s growth was slightly higher than 2016’s. But economists expect the robust growth to slow in 2018. Debt levels continue to climb and government-sponsored infrastructure projects remain too large a percentage of overall growth.
Fun story of the week
In Canada, KFC is promoting a special that allows customers to buy buckets of chicken with bitcoin. The bitcoin bucket costs .0010272 bitcoin or $20 Canadian dollars. KFC Canada’s website posted a bitcoin page, which provides live updates on how much bitcoin is required to purchase a bitcoin bucket. KFC’s announcement that it “sold out” of the buckets came as no surprise as transaction fees exceeded $50 and processing times took nearly two hours.
This newsletter was written and produced by CWM, LLC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.
S&P 500 INDEX
The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
MSCI ACWI INDEX
The MSCI ACWI captures large- and mid-cap representation across 23 developed markets (DM) and 23 emerging markets (EM) countries*. With 2,480 constituents, the index covers approximately 85% of the global investable equity opportunity set.
Bloomberg U.S. Aggregate Bond Index
The Bloomberg U.S. Aggregate Bond Index is an index of the U.S. investment-grade fixed-rate bond market, including both government and corporate bonds.