What a roller coaster of a quarter!
July 12, 2018
When it comes to the American Association of Individual Investors (AAII) Sentiment Survey, respondents tend to be more bullish than bearish about U.S. stock markets. The survey's historical averages are:
38.5 percent bullish
31.0 percent neutral
30.5 percent bearish
As the second quarter of 2018 began, investors were feeling less optimistic than usual. (About 36.6 percent were bearish and 31.9 percent bullish.) Their outlook was informed by a variety of factors, according to an early April article in The New York Times, which said:
"First there was the risk that the economy might be growing too fast, which could prompt central banks to hike interest rates sooner than expected. Then there was the risk of a trade war ignited by the White House imposing tariffs on certain products, an action that quickly prompted countries like China to erect trade barriers of their own. Next came the threat of a government crackdown on technology companies, after revelations of their misuse of customer data."
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As the quarter progressed, investor optimism increased on signs of economic strength. In early June, CNBC reported the economy appeared to be "operating close to full employment, with an unemployment rate at 3.8 percent, inflation still hovering at or below 2 percent, and business and consumer confidence strong."
FactSet Insight wrote, "The S&P 500 reported earnings growth of 25 percent for the first quarter — the highest growth since Q3 2010." In mid-June, the AAII survey showed 44.8 percent of respondents were feeling bullish, 21.7 percent were bearish, and 33.5 percent were neutral.
As talk of tariffs and trade wars resumed, investor optimism plummeted though.
"Many — but not all — individual investors anticipate continued volatility and/or think that the current political backdrop could have a further impact on the stock market. Trade policy is influencing some individual investors' sentiment as well. While many approve of the Federal Reserve's plan to continue gradually raising interest rates, some AAII members are concerned about the impact that rising rates will have. Also influencing sentiment are valuations, tax cuts, earnings growth, and economic growth."
THERE'S A CARBON DIOXIDE (CO2) SHORTAGE. REALLY, IT'S TRUE.
Many people agree the world has too much CO2. It's the reason representatives from countries around the world signed the Paris Climate Agreement. They committed to "adopt green energy sources, cut down on climate change emissions, and limit the rise of global temperatures," reported National Public Radio.
The effort has been less successful than many had hoped, according to the International Energy Association (IEA). After several years without increases, energy-related emission rose by 1.4 percent in 2017.
Emissions rose primarily in Asia, although the European Union (EU) saw increases, too. The biggest decline was in the United States.
Despite realizing a 1.5 percent increase in emissions, the EU is experiencing a shortage of food-grade CO2. The Economist reported:
"Food-grade CO2 is a vital ingredient: it puts the fizz in carbonated drinks and beer, knocks out animals before slaughter and, as one of the gases inside packaging, delays meat and salad from going off. A shortage of the stuff has therefore created havoc in food makers' supply chains."
This article was provided by Peterson Wealth Management. For information, call 775-423-8007, or visit PetersonWM.com.