Investor Insights, June 1st, 2018
Five Things You Should Know
- Equity Markets – were mixed in what was a volatile holiday shortened week with the S&P 500 up 0.49%, and international markets (EAFE) down 0.34%.
- Fixed Income Markets – were both down slightly with high-quality bonds (AGG) down 0.04%, and high-yield bonds down 0.53%.
- Trade Disputes – U.S. tariffs on steel and aluminum for products from Mexico, Canada and the E.U. went into effect today, but global equity markets shrugged them off with one best days in weeks. The E.U. is filing a challenge to them with the WTO, but like the talks with China, the headlines remain scarier than the reality to date.
- E.U. Political Drama – Italy took its turn in the political disfunction spotlight again this week, but pundits fear-mongering with tales of Italy leaving the E.U. should do their homework. An exit from the E.U. was specifically left off populist platforms in the most recent elections, which is why President Matterella vetoed the choice of a euro skeptic for Finance Minister. As of Friday, a coalition government has been formed and the current polls in Italy show those supporting E.U. membership is 28% higher than those opposing. More drama from Italy, Spain or Greece is always possible but shouldn’t cause investors to panic.
- Key Insight – Income is a powerful force in investing that is too often ignored by investors looking quick gains and underestimating risk. In the video above, we look at the foolishness of trying to time bond markets, the power of income and where to find it in a low-yield world.