Wealth Management

 General Market News

Authored by Brad McMillan, CFA^®, CAIA, MAI, managing principal, chief investment officer, at Commonwealth Financial Network^®.

© 2019 Commonwealth Financial Network^®

Disclosure: Certain sections of this commentary contain forward-looking statements based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets. All indices are unmanaged and investors cannot invest directly into an index. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. It excludes closed markets and those shares in otherwise free markets that are not purchasable by foreigners. The Bloomberg Barclays Aggregate Bond Index is an unmanaged market value-weighted index representing securities that are SEC-registered, taxable, and dollar-denominated. It covers the U.S. investment-grade fixed-rate bond market, with index components for a combination of the Bloomberg Barclays government and corporate securities, mortgage-backed pass-through securities, and asset-backed securities. The Bloomberg Barclays U.S. Corporate High Yield Index covers the USD-denominated, non-investment-grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below.

Authored by Brad McMillan, CFA^®, CAIA, MAI, managing principal, chief investment officer, at Commonwealth Financial Network^®.

© 2019 Commonwealth Financial Network^®

Disclosure: Certain sections of this commentary contain forward-looking statements based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets. All indices are unmanaged and investors cannot invest directly into an index. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. It excludes closed markets and those shares in otherwise free markets that are not purchasable by foreigners. The Bloomberg Barclays Aggregate Bond Index is an unmanaged market value-weighted index representing securities that are SEC-registered, taxable, and dollar-denominated. It covers the U.S. investment-grade fixed-rate bond market, with index components for a combination of the Bloomberg Barclays government and corporate securities, mortgage-backed pass-through securities, and asset-backed securities. The Bloomberg Barclays U.S. Corporate High Yield Index covers the USD-denominated, non-investment-grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below.

At the end of last year, the big question was, “Will 2019 bring the end of the recovery?” All of the data seemed to point to an answer of “Not yet.” And so far, that answer still holds. The big picture suggests growth is likely to continue for the rest of the year, which should, in turn, support the financial markets. But there’s more to the story . . .

Headlines Vs. Fundamentals

To date, it has been an eventful year. Markets moved up, pulled back sharply, and then bounced again. The economy was slow to start, picked up during the first quarter, and now may be slowing again. Meanwhile, the political story has included the Mueller report, a China trade deal and then a trade war, a postponement of Brexit, and looming tensions with Iran.

Reacting to all of these headlines would have been a bad strategy. Because while the markets have been more volatile this year, the fundamentals—the underpinnings of our economy—have remained solid.

Take job growth, for example. Although there has been volatility in the monthly job gains, the overall growth rate has remained steady at more than 2 million jobs per year. Over the past 40 years, when job growth has been at this level, a recession has been at least a year away. Yes, we have seen some weakening recently, but the year-on-year trend remains strong.

Similarly, consumer confidence levels remain high, at levels last seen in 2001, and the year-on-year change is positive. We have never had a recession without a decline in confidence of at least 20 points over the previous year. This should buy us another 12 months or more.

Business confidence is weaker than both job growth and consumer confidence, currently sitting at close to its lowest levels of the past several years. Despite that, it is still solidly expansionary, suggesting continued—though slower—growth.

Even the yield curve spread shows risk is not likely immediate. Although the yield curve is on the verge on inverting, an inversion would only start the recession clock ticking. Historically, the initial inversion has preceded a recession by a year or more, which once again leaves us in the green for the balance of 2019.

Looking at these fundamentals, it’s clear that conditions are better than the headlines suggest. We have never had a recession with job growth as strong as it is, with confidence where it is, and with the yield curve where it is. Some slowing is likely, but slowing is still growing, with calendar-year expectations for economic growth sitting between 1.5 percent and 2 percent.

The Fed and Monetary Policy

Given the healthy data mentioned above, we could have reasonably expected inflation to rise—and it did, but not by much. More, the most recent data suggests that, with slowing growth, inflation has started to pull back again. Although the Fed decided in 2018 that the risks of not raising rates were greater than those of raising them, in 2019 it has put that policy on hold because of this slowdown.

Expectations are for no more increases this year, plus a real possibility of cuts. Inflation is now expected to stay below 2 percent, and longer-term rates should end the year around current levels, with the yield on the 10-year Treasury between 1.75 percent and 2.25 percent.

What About the Stock Markets?

Steady growth and interest rates suggest that global stock markets are likely to continue to trade on fundamentals, such as revenue and earnings growth. Here in the U.S., revenue growth remains healthy, and while earnings growth has slowed, it is expected to remain positive. This should support the markets through the rest of the year.

With earnings growing, the real issue will be valuations. Historically, high confidence levels have driven up valuations, and we have seen that in recent years. As confidence moderates and growth slows, however, we can expect valuations to stop rising, meaning further appreciation will depend on earnings growth.

Given projected earnings growth and steady valuations, the S&P 500 is likely to end 2019 between 2,900 and 3,000. There is upside potential if earnings growth surprises or if valuations recover to the high levels seen in 2016 and 2017. But there may be more downside risk, if economic growth slows or if valuations drop on lower confidence. Still, this estimate is a reasonable base case.

Prospects Bright, but No Guarantees

Solid economic fundamentals should continue to support markets through the remainder of 2019, with moderate appreciation likely—if current trends hold. None of this, however, is guaranteed. Here in the U.S., we’ll need to keep an eye on potential impeachment of the administration by the Democrat-controlled House; the ongoing trade war between the U.S. and China; and, most notably, the upcoming debt ceiling confrontation between Congress and the administration. Abroad, we have pending issues in Europe, including Brexit and Italy, as well as a rising confrontation with Iran.

Even if growth does slow, though, or we see any of the other potential issues erupt, the underlying strength of the economy is likely to limit the damage. We’ve seen many similar situations in the not-so-distant past—and they didn’t knock the economy or markets off their paths.

When you look back at the recovery so far, this scenario is very similar to what we have seen for most of the past 10 years: slow growth threatened by multiple risks. And, just as we have seen over the past 10 years, although the concerns are real, the big picture is very much like what we have become accustomed to. Despite the worries, it’s still not a bad place to be.

Authored by Brad McMillan, CFA^®, CAIA, MAI, managing principal, chief investment officer, at Commonwealth Financial Network^®.

© 2019 Commonwealth Financial Network^®

Disclosure: Certain sections of this commentary contain forward-looking statements based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets. All indices are unmanaged and investors cannot invest directly into an index. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. It excludes closed markets and those shares in otherwise free markets that are not purchasable by foreigners. The Bloomberg Barclays Aggregate Bond Index is an unmanaged market value-weighted index representing securities that are SEC-registered, taxable, and dollar-denominated. It covers the U.S. investment-grade fixed-rate bond market, with index components for a combination of the Bloomberg Barclays government and corporate securities, mortgage-backed pass-through securities, and asset-backed securities. The Bloomberg Barclays U.S. Corporate High Yield Index covers the USD-denominated, non-investment-grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below.

 General market news               

From awards recognition, to babies being born, a lot has happened since our last newsletter!

Authored by Sam Millette, a fixed income analyst on the Investment Management and Research team at Commonwealth Financial Network®, member FINRA/SIPC, an independent broker/dealer–RIA.

With the firm since June 2015, he analyzes individual municipal bonds, responds to advisor inquiries, provides analytics and research support to the Preferred Portfolio Services® Select SMA municipal bond strategies, and assists with market research and commentary. Sam graduated from Tufts University with a degree in economics. Currently, he is a level 1 candidate for the CFA®.

© 2019 Commonwealth Financial Network®

Disclosure: Certain sections of this commentary contain forward-looking statements based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets. All indices are unmanaged and investors cannot invest directly into an index. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. It excludes closed markets and those shares in otherwise free markets that are not purchasable by foreigners. The Bloomberg Barclays Aggregate Bond Index is an unmanaged market value-weighted index representing securities that are SEC-registered, taxable, and dollar-denominated. It covers the U.S. investment-grade fixed-rate bond market, with index components for a combination of the Bloomberg Barclays government and corporate securities, mortgage-backed pass-through securities, and asset-backed securities. The Bloomberg Barclays U.S. Corporate High Yield Index covers the USD-denominated, non-investment-grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below.

 General market news               

The market has concluded that the Fed’s decision to keep rates steady, along with the accompanying statement from yesterday's meeting, is unreservedly dovish. The expectation is for two more rate cuts this year, starting in July. Markets are, unsurprisingly, cheering. Lower rates are good for economic growth and for stocks. In fact, that reasoning would explain why the Fed would cut. If the Fed does cut, it will be stimulative and should help sustain the expansion—as intended.

Indeed, we may get cuts. But before we join in the cheering, we should think a bit more about what those rate cuts might mean beyond an immediate boost to markets.

Real risks to the economy

The first concern is that, if the Fed does cut, it would be signaling that it sees real risks to the economy. Yesterday, Powell stated several times that the base case was for continued growth but that risks to that growth had risen. As dovish as the market deemed yesterday’s announcements to be, the Fed still thinks the economy is basically okay. If we do get a cut, it would mean the Fed has decided the economy is at real and immediate risk. Think about what that perspective might mean for markets.

Recession-fighting ammunition

The second concern is that, if the Fed thinks the economy is okay but cuts anyway, it will use some of its recession-fighting ammunition before it is really needed. Powell and company have been emphatic about how they needed to raise rates to prepare for the next recession. The faster and earlier they cut rates, the sooner they will exhaust their ability to stimulate. Will they really cut if the economy continues to chug along?

The Powell pivot

The third concern is over the Fed’s credibility. After hiking rates last year and talking strongly about the need to construct policy without considering the financial markets, the sudden perceived dovishness has been termed the Powell pivot. I have written on this shift before, and yesterday’s meeting was another step in this direction. At a minimum, this perceived dovishness revives the notion of a Fed put (now the Powell put). In addition, given the president’s recent public pressure on the Fed, it compromises the Fed’s independence. If we were to get another financial crisis, a less independent Fed might be less able to act credibly in the markets. So, this decision matters beyond the question of inflation.

Maybe not so dovish?

For all these reasons, I suspect the actual intent is not as dovish, nor will rates cuts be as fast, as markets are now expecting. Many of the current worries are headline driven, especially around trade, and could be resolved with an agreement. The willingness to cut rates, if needed (which is what the Fed is saying), is not the same thing as the determination or the need to do so soon.

When you look at the details of the meeting, you see further evidence of this argument. The median interest rate projection was unchanged for this year. Half of all committee members don’t see any rate hikes at all this year. There is certainly movement toward an easier policy, but it is not an unstoppable trend—and could again be changed by incoming data.

Two pieces of the puzzle

There are two pieces to this puzzle: the economy and rates. Right now, I suspect the market is expecting the best of all possible worlds: continued economic growth and lower rates. More likely is that we will get continued growth and flat rates, or slower growth and lower rates. These latter two options aren’t bad, but they are certainly not as positive as the first scenario.

Surprise ahead for markets?

What the Fed has indicated in its statement is that scenarios two and three are the likely options (i.e., continued growth and flat rates, or slower growth and lower rates) but that we won’t get a fourth case (i.e., slower growth and flat rates). Further, it makes no commitment to moving toward the first scenario (i.e., continued economic growth and lower rates).

If we truly have a data-dependent Fed, which is what I took from yesterday, the Fed will act only as needed. And that is not what markets are expecting.

Authored by Brad McMillan, CFA®, CAIA, MAI, managing principal, chief investment officer, at Commonwealth Financial Network®.

© 2019 Commonwealth Financial Network®

Disclosure: Certain sections of this commentary contain forward-looking statements based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets. All indices are unmanaged and investors cannot invest directly into an index. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. It excludes closed markets and those shares in otherwise free markets that are not purchasable by foreigners. The Bloomberg Barclays Aggregate Bond Index is an unmanaged market value-weighted index representing securities that are SEC-registered, taxable, and dollar-denominated. It covers the U.S. investment-grade fixed-rate bond market, with index components for a combination of the Bloomberg Barclays government and corporate securities, mortgage-backed pass-through securities, and asset-backed securities. The Bloomberg Barclays U.S. Corporate High Yield Index covers the USD-denominated, non-investment-grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below.

 General market news               

Yesterday, the tech stocks got hit hard on news that Washington will be taking a much harder look at regulating them. Trade worries continue to reverberate throughout the market. And fears of a more severe slowdown—or even a recession—are building as the yield curve remains inverted. Further, the Nasdaq moved into correction territory yesterday (defined as a decline of more than 10 percent from the peak), although as of this writing, it was showing signs of a strong bounce today. 

Given such turbulence, we find ourselves pondering that familiar question: is it time to panic? Once again, the answer is “not yet.” Although the worries are real, the foundation is solid. Let’s take a closer look.

Economy still growing

Economic growth drives market returns. As long as the economy is growing, markets

2000 or 2008), on the other hand, occurred when the economy went into recession. As long as we don’t have a recession, markets should recover from recent weakness.

So, is a recession on the horizon?

At some point, we will have a recession. But the signs indicate that it won’t be soon. We have never had a recession with hiring and consumer confidence as strong as they are right now, for example. Although we did see a pullback in both, we have since had a recovery—which is positive. With consumer spending making up more than two-thirds of the economy, it is hard to get a recession when both hiring and consumer confidence are solid.

What about the yield curve?

Historically, when the yield curve has inverted, a recession has occurred in the following 8 to 18 months. That clock may have just started. In theory, then, we could have a recession early next year. Before that, though, hiring and confidence would have to decline (see the previous paragraph). The yield curve is something to watch but is not an immediate problem.

Trade war affecting confidence

The weakness in business confidence and investment is concerning. But this worry is one based largely around the expanding trade war. Despite that, both sentiment and investment remain positive. Further, although we do see some weakening, there has not been a decline. Right now, that weakness would not be enough to take the economy down.

The economy is like an oil tanker: it moves and turns slowly. Markets are like speedboats, orbiting around the tanker. They move faster and can certainly rock more on the waves, but they follow the big boat. As long as the tanker is moving forward, so do markets.

Right now, the economy is still moving forward, which should continue to support markets. Much of the recent turbulence has come from the news, especially around trade, which has affected confidence. Lower confidence—and more uncertainty—is bad for markets and explains what we have seen recently.

Confidence can improve as quickly as it deteriorates, however, and we have seen that several times during the recovery. The most likely case is that confidence will improve again, as growth continues, albeit at a slower pace. Even if we do see more slowing and a pending recession, we will still have time to plan our next steps.

Are you comfortable with your risk?

And that is what we should be doing: keeping an eye on the economy, the markets, and our portfolios. The real lesson of the recent volatility is that we need to be comfortable with the risks we are taking. If not, we should take steps to ensure that we are comfortable.

After all, at some point we will see a recession and a bear market and will have to ride them out. As such, we must be prepared for when they happen. It just doesn’t look like that will be in the immediate future.

Authored by Brad McMillan, CFA®, CAIA, MAI, managing principal, chief investment officer, at Commonwealth Financial Network®.

© 2019 Commonwealth Financial Network®

Disclosure: Certain sections of this commentary contain forward-looking statements based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets. All indices are unmanaged and investors cannot invest directly into an index. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. It excludes closed markets and those shares in otherwise free markets that are not purchasable by foreigners. The Bloomberg Barclays Aggregate Bond Index is an unmanaged market value-weighted index representing securities that are SEC-registered, taxable, and dollar-denominated. It covers the U.S. investment-grade fixed-rate bond market, with index components for a combination of the Bloomberg Barclays government and corporate securities, mortgage-backed pass-through securities, and asset-backed securities. The Bloomberg Barclays U.S. Corporate High Yield Index covers the USD-denominated, non-investment-grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below.

 General market news               

 General market news               

What Investors Can Learn from 1998

Yesterday, we talked about why it might be 1998—or 1999—all over again. After all, many of the conditions are similar. Although growth continues for now and we may get a lifeline, you might be concerned that the economy could be settling into a recession in the next couple of quarters. Our most recent experience of a recession and market decline, 2008–2009, has left horrific memories. So, should we be panicking? In a word, no. 

In the year 2000

In 2008, we experienced a real crisis for both the economy and markets. In the year 2000, on the other hand, we saw a rather mild recession, not a systemic crisis like 2008. The market declines in 2000 were significant but, again, not as bad as those of 2008. They largely reflected the high valuations of the technology sector, rather than a general collapse of corporate profits. In other words, if we get another 2000, it likely won’t be another 2008. But if we shouldn’t be panicking, what should we be doing?

Ride it out

For many people—including younger individuals who are still accumulating wealth rather than spending it in retirement—the answer is very likely to keep doing what you’re doing. Save and invest. The great thing about market downturns is that you can buy cheap, which helps returns over time. At the same time, the loss of value of your existing investments doesn’t matter, as you won’t be spending them for some time. So, for people who are still saving, sitting tight makes a lot of sense.

Similarly, for those who have enough saved to live off the interest and dividends, or who have enough cash and low-risk investments to ride out a bear market, there is likely no need to do anything different. Bear markets pass. Unless you need the money to spend, it often makes sense to simply ride it out.

Take defensive action

There are, however, two groups of people who might want to take defensive action: those who simply can’t afford financially to see their savings decline and those who can’t afford to do so mentally. In both cases, you must do something. But what?

One simple answer is to switch some at-risk investments (e.g., stocks) to lower-risk areas. You can then draw on the lower-risk investments to spend, if necessary, and give the stocks time to recover. Another, more extreme form of this strategy is to take some of your investment portfolio to cash. Again, you will get spending power, as well as the ability to reinvest when conditions are more favorable. In fact, I wrote a book (Crash-Test Investing) about how to do just that. Although this approach has its downsides, it can reduce the risks—both financial and mental—of a market pullback.

The time is now

In any case, here is the main takeaway from 1998: you can do something, if you want or need to, but you certainly don’t have to. Both approaches work well over time, and both have merit. The course you choose depends on your own situation.

With economic conditions at yellow light status and with the market weakening, you don’t want to delay making that decision. Decisions made ahead of time, without stress, tend to be better than those made in the midst of turmoil. You may not need to do anything, but the time to decide that—on your own or in conjunction with your financial advisor—is now.

So, the real lesson of 1998 (or any time really) is to plan ahead. Now is a good time to do just that.

Authored by Brad McMillan, CFA®, CAIA, MAI, managing principal, chief investment officer, at Commonwealth Financial Network®.

© 2019 Commonwealth Financial Network®

Disclosure: Certain sections of this commentary contain forward-looking statements based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets. All indices are unmanaged and investors cannot invest directly into an index. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. It excludes closed markets and those shares in otherwise free markets that are not purchasable by foreigners. The Bloomberg Barclays Aggregate Bond Index is an unmanaged market value-weighted index representing securities that are SEC-registered, taxable, and dollar-denominated. It covers the U.S. investment-grade fixed-rate bond market, with index components for a combination of the Bloomberg Barclays government and corporate securities, mortgage-backed pass-through securities, and asset-backed securities. The Bloomberg Barclays U.S. Corporate High Yield Index covers the USD-denominated, non-investment-grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below.

 General market news               

 General market news               

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