Monthly Archives: June 2015

Greek Exit

Weekly Market Commentary

June 29, 2015

 

The Markets

Not quite as popular as Branjelina and Kimye, ‘Grexit’ (short for Greek Exit) has gained traction as a nickname during the past few months. The British press appropriated a variation, Brexit, when they discovered that the Bank of England was researching the potential risks of renegotiating membership in the European Union, or possibly even leaving the group—but that’s another story.

This is about Greece, and it’s a Grexhausting tale. Last week, The Economist explained the state of affairs this way,

“…euro-zone finance ministers failed for the third time in four days [on June 25] to find a breakthrough in their talks over Greece’s bail-out…But four days before its twice-extended bail-out expires and a €1.5 billion ($1.7 billion) payment to the [International Monetary Fund] IMF falls due, Greece and its far-left prime minister, Alexis Tsipras… still have no deal.”

By Saturday, a deal was off the table. After days of negotiations, CNN Money stated, “Prime Minister Alexis Tsipras…could not accept the terms being offered by Europe and the IMF. He said he would recommend that Greeks vote against them in a referendum on July 5.” The move was perceived to be a delaying tactic and, when Greece requested bailout extension, European finance ministers refused.

Greece owes about 1.5 billion euros to the IMF, and a payment is due on Tuesday. In the meantime, the European Central Bank (ECB) has been providing emergency funding—a line of credit currently worth about $95 billion—to keep Greek banks from collapse.

It’s unclear whether Greece will be able to make the payment due to the IMF this week. If it does not, Bloomberg Business reported the country is at risk of joining a rather disreputable club: countries that have failed to repay the IMF on time. Current membership includes Sudan, Somalia, Zimbabwe, Cuba, Cambodia, and Honduras.

CNN Money explained that Greeks are queuing at ATMs, banks are strapped for cash, and the European Central Bank may decide to curtail emergency funding. On Sunday, in an attempt to manage the financial fallout, Greece decided to keep its banks closed on Monday and close the Athens stock exchange.

One expert cited by the International Business Times suggested that a Greek default could make international credit markets unavailable to the country for many years. In addition, Greece may experience rapidly accelerating inflation and economic decline.

If the economic effects of default prove less dire than anticipated, other debt-strapped Eurozone countries such as Italy, Spain, and Portugal, may decide to follow suit. The possibility has many worried about the future of the Euro.

There is a good chance markets will be volatile this week as events play out.

Data as of 6/26/15 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) -0.4% 2.1% 7.4% 16.8% 14.4% 5.8%
Dow Jones Global ex-U.S. 0.7 5.6 -4.0 9.8 5.3 3.4
10-year Treasury Note (Yield Only) 2.5 NA 2.5 1.6 3.0 3.9
Gold (per ounce) -2.7 -2.4 -10.8 -9.4 -1.5 10.3
Bloomberg Commodity Index 1.3 -3.1 -25.8 -8.3 -4.6 -4.4
DJ Equity All REIT Total Return Index -2.5 -4.2 6.1 10.9 13.4 7.3

S&P 500, Dow Jones Global ex-US, 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. 

has Your car joined the internet of everything? Auto buyers have mixed feelings about cars and connectivity.

A McKinsey & Company survey found that more than 25 percent of participating car buyers in Brazil, China, Germany, and the United States prioritized automobile connectivity ahead of traditional features like engine power and fuel efficiency. Thirteen percent wouldn’t even consider purchasing a vehicle unless it had Internet access. 

At the other end of the spectrum, 37 percent of respondents said they would not buy a car that was connected to the Internet — although here were significant regional differences. Concerns about potential privacy violations were highest in Germany (51 percent), the United States (45 percent), and Brazil (37 percent). Just 21 percent of Chinese respondents said digital safety and data privacy was an issue.

Of greater concern to respondents was the chance that connected vehicles could be hacked. Fifty-nine percent of Germans and Brazilians were worried that others could take control of connected vehicles and manipulate them. Fifty-three percent of the Chinese shared this concern, and 43 percent of Americans.

Hacking is a serious issue. Last summer, a group of automobile engineers, policy-makers, security experts, and high school and college students had a confab. The topic of discussion was the security of connected automobiles. Autoblog wrote that a student was tasked with remotely infiltrating a car; an assignment some security experts predicted would take months of planning. They were wrong. The student spent $15 on equipment, built his own circuit board, and took control of the car.

After a technician from the National Highway Traffic Safety Administration laboratory used his mobile phone to switch off the engine of a test car being driven by a representative from Consumer Reports, the magazine cautioned readers against plugging any unknown or unscreened devices—even thumb drives with music—into their cars’ USB or OBD-II diagnostic ports.

Connected cars are here, but there are a few bugs to be worked out.

Weekly Focus – Think About It

“Beware of little expenses. A small leak will sink a great ship.”

— Benjamin Franklin, Founding Father of the United States

Best regards,

John Raudat, AIF, CFS, PPC

P.S.  Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

Securities offered through LPL Financial Member FINRA/SIPC.

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* These views are those of Peak Advisor Alliance, and not the presenting Representative or the Representative’s Broker/Dealer.

* The views and perspectives should not be construed as investment advice.

* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.

*Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

* The 10-year Treasury note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.

* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Past performance does not guarantee future results. Investing involves risk, including loss of principal.

* You cannot invest directly in an index.

* Consult your financial professional or engaging firm for whom this commentary is written before making any investment decision.

* Stock investing involves risk including loss of principal.

Sources:

[1] http://www.bloomberg.com/news/articles/2015-05-22/boe-reveals-staff-working-on-risks-surrounding-possible-brexit

[2] http://www.economist.com/news/europe/21656331-greece-and-its-creditors-are-halfway-reaching-deal-it-sometimes-seems-they-always-will-be

[3] http://money.cnn.com/2015/06/26/news/economy/greece-europe-bailout-referendum/

[4] http://www.npr.org/sections/thetwo-way/2015/06/28/418276486/greece-tries-to-stanch-bank-run-ahead-of-looming-default

[5] http://www.bloomberg.com/news/articles/2015-06-01/will-greece-join-these-deadbeats-that-missed-debt-payments-to-the-imf-

[6] http://www.ibtimes.com/what-happens-if-greece-defaults-imf-ecb-leaves-eurozone-1972135

[7] http://www.mckinsey.com/insights/manufacturing/whats_driving_the_connected_car

[8] http://www.autoblog.com/2015/02/18/14-year-old-hacker-caught-industry-by-surprise-featured/

[9] http://www.consumerreports.org/cro/news/2015/05/keeping-your-car-safe-from-hacking/index.htm

[10] http://www.brainyquote.com/quotes/quotes/b/benjaminfr135836.html#gLMzLJuVHUkjiFDm.99

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If It Looks Like A Bond

Weekly Market Commentary

                  June 8, 2015

The Markets

If it looks like a bond, and it acts like a bond…oh…that’s the problem. Government bonds aren’t acting the way investors expect.

Last week, 10-year U.S. Treasuries – which, typically, are thought to be safe and stable investments – suffered the biggest one-week sell off since June 2013, according to The Wall Street Journal. Treasuries finished the week yielding 2.4 percent, a gain of 0.3 percent. In the world of stodgy, backed-by-the-full-faith-and-credit-of-the-U.S.-government-bonds, that’s a big change.

The performance of U.S. bonds paired with that of German government bonds. BloombergBusiness reported 10-year Bunds delivered their worst weekly performance since 1998. On Friday, the German benchmark bond settled at 0.8 percent after rising to almost 1 percent on Thursday. In late April, the yield on Bunds was at an all-time low of 0.049 percent.

So, what’s going on? Why are bond values fluctuating so much? Barron’s said the problem is a lack of liquidity in fixed-income markets:

“The global financial system is awash in liquidity, created by central banks as they have driven short-term interest rates to zero (or even below) and expanded their balance sheets by the equivalent of trillions of dollars. And so the world is swimming in cheap money. At the same time, liquidity is said to be at a low ebb in the financial markets, especially for bonds… As a result, transactions that once didn’t cause prices to budge now send them lurching from trade to trade… And the advice from central bankers on both sides of the Atlantic about this new volatility? Get used to it.”

One reason for the lack of liquidity is the relative scarcity of market makers, reported Barron’s. In the past, banks made markets – buying and selling for their own accounts – which created liquidity, but new regulations have curtailed those activities.

Looking beyond bond market illiquidity, there was economic good news in the United States: employment numbers improved. However, investors worried that could push the Federal Reserve toward a rate increase sooner rather than later, and U.S. stock markets finished flat to lower for the week.

Data as of 6/5/15 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) -0.7% 1.7% 7.9% 17.6% 14.8% 5.7%
Dow Jones Global ex-U.S. -1.7 4.5 -4.5 10.4 6.3 3.4
10-year Treasury Note (Yield Only) 2.4 NA 2.6 1.6 3.2 4.0
Gold (per ounce) -2.3 -2.9 -7.0 -10.7 -0.8 10.5
Bloomberg Commodity Index -0.7 -3.9 -24.8 -7.7 -3.9 -4.3
DJ Equity All REIT Total Return Index -2.1 -3.8 5.0 12.2 14.9 7.5

S&P 500, Dow Jones Global ex-US, 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. 

When a government has a lot of debt, is it better to implement an austerity plan and pay the debt down? Or, take advantage of low interest rates and invest in the country?

Since the financial crisis, countries around the world have racked up a lot of debt through stimulus programs, financial bailouts, and other monetary and fiscal rescue efforts. When Should Public Debt Be Reduced?, a new paper published by the International Monetary Fund (IMF), reported advanced economies currently have some of the highest debt ratios of the past 40 years.

So, should they be paying off their debts? It all depends on how much ‘fiscal space’ your country has, according to the IMF. The Economist explained it like this:

“This concept [fiscal space] refers to the distance between a government’s debt-to-Gross Domestic Product ratio and an “upper limit”, calculated by Moody’s, a ratings agency, beyond which action would have to be taken to avoid default. Based on this measure, countries can be grouped into categories depending on how far their debt is from their upper threshold… It is a decent measure of how vulnerable a government’s finances are to a shock.”

The IMF report concluded countries already at the upper limit – like Japan, Italy, Greece, and Cyprus – are out of luck. They must take action to reduce debt levels. However, for countries that have fiscal space, there may be merit to the idea of “simply living with (relatively) high debt and allowing debt ratios to decline organically through output growth.”

In other words, if the country’s economy grows faster than its debt, the debt will become a smaller percentage of GDP, resolving the debt issue gradually over time. Given enough time and economic growth, the problem could resolve itself.

The IMF cautioned these conclusions do not constitute policy advice. The paper was intended to fuel debate about the proper course of action for rich, but indebted, countries.

Weekly Focus – Think About It

“You have brains in your head. You have feet in your shoes. You can steer yourself in any direction you choose. You’re on your own, and you know what you know. And you are the guy who’ll decide where to go.”

–Dr. Seuss, American writer and cartoonist

Best regards,

John Raudat, AIF,  CFS, PPC

P.S.  Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

Securities offered through LPL Financial Member FINRA/SIPC.

* These views are those of Peak Advisor Alliance, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.

* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.

*Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.

* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.

* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Past performance does not guarantee future results. Investing involves risk, including loss of principal.

* You cannot invest directly in an index.

* Consult your financial professional before making any investment decision.

* Stock investing involves risk including loss of principal.

* To unsubscribe from the Market Commentary please reply to this e-mail with “Unsubscribe” in the subject line, or write us at johnr@canogawealth.com

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Sources:

http://www.wsj.com/articles/u-s-government-bonds-sell-off-after-healthy-jobs-report-1433508534 (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/06-08-15_WSJ-US_Government_Bonds_Suffer_Biggest_Week_Selloff-Footnote_1.pdf)

http://www.bloomberg.com/news/articles/2015-06-05/german-bond-slump-caps-week-that-surpasses-worst-of-euro-crisis

http://www.marketwatch.com/story/it-has-been-a-rough-ride-for-global-benchmark-bonds-2015-06-05

http://online.barrons.com/articles/a-liquidity-time-bomb-in-the-bond-market-1433555105?mod=BOL_hp_we_columns (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/06-08-15_Barrons-A_Liquidity_Time_Bomb_in_the_Bond_Market-Footnote_4.pdf)

http://online.barrons.com/mdc/public/page/9_3063-economicCalendar.html?mod=BOL_Nav_MAR_hpp (Click on U.S. & Intl Recaps, “A walk on the wide side,” then scroll down to Global Stock Market Recap chart) (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/06-08-15_Barrons-Global_Stock_Market_Recap-Footnote_5.pdf)

http://www.imf.org/external/pubs/ft/sdn/2015/sdn1510.pdf

http://www.economist.com/blogs/freeexchange/2015/06/public-debt (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/06-08-15_TheEconomist-How_Much_is_Too_Much-Footnote_7.pdf)

http://www.brainyquote.com/quotes/quotes/d/drseuss414097.html

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Optical Illusion

            Weekly Market Commentary

                              June 1, 2015

The Markets

Is it possible to have an economic optical illusion?

On Friday, the Commerce Department reported the U.S. economy contracted at an annualized rate of 0.7 percent during the first quarter of 2015. The Federal Reserve sees things slightly differently.

Previously, the Commerce Department had reported our gross domestic product (GDP), which is the value of all goods and services produced in the United States, had increased at an annualized rate of 0.2 percent during the first quarter. The estimate was weaker than economists had expected and caused some analysts to wonder whether the economic recovery was stalling.

Weak first quarter GDP has caused other analysts, including those at the Federal Reserve Bank of San Francisco who penned an article entitled, The Puzzle of Weak First-Quarter GDP Growth, to wonder whether a statistical anomaly is causing first quarter GDP growth to appear weaker than it really is. Barron’s explained it like this:

“Since the expansion began in mid-2009, there have been six calendar quarters that have included the January-March quarter; for those six quarters, the average rate of growth has been just 0.4 percent. For the other 17 calendar quarters, growth has averaged 2.8 percent. One reason for this pattern seems to be faulty seasonal adjustment in the first quarter… In any case, if the same pattern persists in 2015, expect a rebound in the current quarter and through the second half of this year. And, based on data released so far, one source of the rebound would be a pickup in housing.”

The San Fran Fed report concluded, “There is a good chance that underlying economic growth so far this year was substantially stronger than reported.”

While GDP was revised downward last week, the core consumer price index (CPI), which is a measure of inflation that excludes food and energy, showed inflation increasing for the first four months of the year. If it continues apace, by year-end the CPI will rise above the 2 percent inflation target set by the Fed and will probably set the stage for an increase in the Fed funds rate.

Investors weren’t thrilled with last week’s news, and markets generally moved lower.

Data as of 5/29/15 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) -0.9% 2.4% 9.8% 16.5% 14.5% 5.9%
Dow Jones Global ex-U.S. -2.0 6.4 -2.3 9.7 6.0 3.7
10-year Treasury Note (Yield Only) 2.1 NA 2.5 1.7 3.3 4.0
Gold (per ounce) -1.1 -0.7 -5.1 -9.0 -0.6 11.1
Bloomberg Commodity Index -1.5 -3.2 -25.1 -8.4 -4.0 -3.9
DJ Equity All REIT Total Return Index -1.1 -1.7 9.9 11.9 14.3 8.0

S&P 500, Dow Jones Global ex-US, 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.

IF America’s Growth is slowing, the United States was The Little Engine That Could during 2014. We added three million jobs, unemployment fell to 5.6 percent, and GDP grew by 2.4 percent for the year. Unfortunately, despite the contentions of the San Francisco Federal Reserve’s report, we appear to be losing momentum.

So, what happened?

The Economist reported a variety of factors have contributed to the slowdown. The U.S. dollar has gained 20 percent in value against the euro during the past year, which made exports more expensive. In fact, exports were down about 3 percent, year-over-year, in March. Also, oil prices fell, which knocked 0.8 percentage points off economic growth as investment in mining structures shrank. Finally, American consumers didn’t spend as much as experts anticipated they would, despite lower oil prices. Lower-than-expected spending may reflect weak wage growth.

While growth in the United States shows signs of slowing, the Eurozone’s growth is accelerating. The region emerged from a double-dip recession in the spring of 2013, according to The Economist. Many large country’s economies, including those of Spain and France, delivered relatively strong GDP growth during the first quarter of 2015. As a whole, the Eurozone grew by 0.4 percent during the quarter, outperforming the United States.

Why is the Eurozone doing so well?

The European Central Bank took a page from the Federal Reserve’s playbook and began a round of quantitative easing (QE). QE has contributed to the euro losing value against the U.S. dollar, which has helped Eurozone exports. Also, consumers in the Eurozone have been spending the windfall created by lower oil prices.

Will the United States and the Eurozone be able to sustain positive economic growth? Only time will tell.

Weekly Focus – Think About It

“There is nothing noble in being superior to your fellow men. True nobility lies in being superior to your former self.

–Ernest Hemingway, American author

Best regards,

John Raudat, AIF, CFS, PPC

P.S.  Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

Securities offered through LPL Financial,  Member FINRA/SIPC.

*QE is a government monetary policy occasionally used to increase the money supply by buying government securities or other securities from the market.

* These views are those of Peak Advisor Alliance, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.

* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.

*Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.

* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.

* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Past performance does not guarantee future results. Investing involves risk, including loss of principal.

* You cannot invest directly in an index.

* Consult your financial professional before making any investment decision.

* Stock investing involves risk including loss of principal.

* To unsubscribe from the Market Commentary  please reply to this e-mail with “Unsubscribe” in the subject line, or write us at johnr@canogawealth.com

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Sources:

http://www.nytimes.com/2015/05/30/business/economy/us-economy-gdp-q1-revision.html?_r=0 (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/06-01-15_NYTimes-US_Economy_Contracted_0.7_Percent_in_First_Quarter-Footnote_1.pdf)

http://www.frbsf.org/economic-research/publications/economic-letter/2015/may/weak-first-quarter-gdp-residual-seasonality-adjustment/

http://online.barrons.com/articles/first-quarter-gdp-contraction-wont-last-1432945360 (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/06-01-15_Barrons-Economy_Wont_Fall_for_Long-Footnote_3.pdf)

http://www.economist.com/blogs/economist-explains/2015/05/economist-explains-13 (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/06-01-15_TheEconomist-The_Slowdown_in_the_American_Economy-Footnote_4.pdf)

http://money.cnn.com/2015/01/30/news/economy/us-gdp-disappoints-2-point-6-percent/

https://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

http://www.economist.com/blogs/economist-explains/2015/05/economist-explains-16 (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/06-01-15_TheEconomist-Why_the_Euro_Zone_is_Recovering-Footnote_7.pdf)

http://www.brainyquote.com/quotes/quotes/e/ernesthemi174758.html

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