While we typically write about things other than the market in our blog, last week, between tech, the Fed and Amazon in the news, we wanted to share a few thoughts for the individual investor.
First, on Friday June 9th, Tech took a breather. After the bell that Friday, the pundits were all over the map on whether the move down in tech that day had a deeper meaning or perhaps it was just a momentary break and the rally would continue. Since June 8th, the Nasdaq Composite (over 50% weighting in technology) is down 3%.
According to Barron’s (June 19th), last week, the difference between the 10-year Treasury yield and the three-month—the yield curve—fell to a spread of 114 basis points (1.14 percentage points), the smallest since July 2016, according to Bespoke Investment Group. As Barron’s put it, for stock investors, such a move can be scary because it suggests slower growth. It might even be a precursor to an inversion of the yield curve. An inversion is when short-term yields are higher than those at the long end…historically, an indicator of recession.
And finally, on Friday, June 16th, Amazon announced it’s bid to buy the $16 billion in revenue generating Whole Foods. While both Amazon and Whole Foods stock prices soared, other names in Groceries fell, including such giants as Costco, Wal-Mart, and Target (all of whom carry not only groceries but retail as well).
So, if you missed out on the market news because you were focused on other things, or, perhaps you took your annual summer vacation with the family, here’s some food for thought…
There are two sides to everything and such is the case with all three of the noteworthy happenings of the past week.
- Tech’s fall—some say buy the dips, others say sell before it falls further.
- Flattening yield curve—some say, precursor to recession, tough road for stocks ahead…others say, with the flattening of the curve, history as a guide…the following 6 months the Standard & Poor’s Index rose, led by tech.
- Amazon’s bid for Whole Foods—some say this is the beginning of food deflation and other’s say, it’s just the beginning of a bidding war, let’s see who wins.
If you follow the markets as we do, you will likely have an opinion on the three topics we’ve mentioned. However, if you, like many Americans, scratch your head wondering who’s right? Who should you listen to? What is really happening? Well, these are the times you go back to the basics of your financial plan and recommit. Reconfirm that you’re on track with both your planning and your asset allocation. If you’re not and you find you’re out of balance, it may be a reasonable time to rebalance.
Important Note: The views expressed in this post are as of the date of the posting and are subject to change based on market and other conditions. This post contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and should not be taken to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Lenity Financial, Inc. unless a client service agreement is in place.