Regular readers of our newsletter are aware that we are – for the most part — in good humor over the health of the economy in general and more specifically the markets. Our job is to grow wealth for our clients and also to protect it. Naturally an expanding economy makes our mission a little less challenging. Is everything going as swimmingly as we would like? No. But we’ll happily deal with what we’ve got. Whatever one may hear from both soothsayers and naysayers, year-to-date GDP growth may not be spectacular — but it’s better than anything we’ve seen in a long time. Still, you might ask “Can we get a little closer to spectacular and what would it take to get there?” Well, as with so many things these days, it’s complicated.

Unemployment claims continue to decrease and the unemployment rate continues to fall accordingly. That’s good. The employment participation rate is increasing and that is another good sign. And now, another really important sign has finally appeared: wages are rising. In fact, the most challenging thing employers are facing is finding people who are properly trained and qualified for the available jobs. While that is not wholly a good thing, it does mean that those employers are willing to pay premium compensation for the candidates who ultimately do get hired. Contrarily, the economic sector that tends to have to some of the lowest wages is doing a disproportionate share of the job creation. That sector is restaurants / hotel / leisure. The overall effect is; yes, wages are rising but not across all areas of employment.

Another thing that we have to work overtime to interpret is the economic impact of hurricanes Harvey and Irma. Fortunately, while serious, the damage is seemingly much lower than had been feared. A side effect will be that certain economic indicators may be falsely influenced by the weather-related disruption. North Korea remains a potential outside influence as well.

We understand that there will always be obstacles to success. Our responsibility is to navigate through the maze in a way that is helpful and healthy for our clients. There will always be outliers and distractions. So, we like to place emphasis on longer time frames; towards the more stable data. In that regard, we continue to be encouraged by things like the Consumer Confidence Index not merely trending up but hitting new highs. We like to see that the Mortgage Bankers Purchase Index is trending up. And, of course the major US financial markets are running at record or near record levels. In fact, BTN Research reports: “The S&P 500 gained just +0.3% (total return) in August 2017, its 10th consecutive “up” month and 17th of its last 18 months that have been positive on a total return basis.  The last time the S&P 500 had a streak this long was the 10 consecutive months that ended in September 1995 or 22 years ago”.

Market Minute 9/15/2017 –October- Beginning of the Investment Year

Yes, it’s true that January marks the official start to each year.  But as many people have heard, after a weak (traditionally) August and September, October begins the (again traditionally) start of the stronger part of the investment year.  This month gives us the opportunity to have a good objective look at where we are in our investments for the year, and focus our attention on ending the year with strong numbers.  With that in mind, and although clients have heard us talk about this since March or earlier, we can’t resist making yet another comment emphasizing where the investment strength is in today’s world.

It’s been six years now that the US markets have been the sweet spot in investor’s portfolios, and when something is working it’s sometimes difficult to continue to search for the ‘better’.  Good is, after all…… ‘good’.  With that in mind please have a look at this graph.

(Source: FastTrack software)

The green line is a representation of the growth of money invested in the US markets since the beginning of this calendar year, as represented by the S&P500 Index*.  It’s certainly no secret that investors who have focused on US markets are having a terrific year.  As of last night, the US S&P Index is up 12.9% so far for the year.  That would be a pretty good year all by itself, and we’re just about to get into the strongest part of the year.

But take a good look at the red line, which represents the emerging markets part of the world- as represented by the EEM, a basket of emerging market countries’ largest companies.  While it has most certainly been a more volatile trajectory, it appears obvious that the emerging markets have been a stronger place to be.  Actual returns for this basket of emerging market companies are up 30% as of last night.  WOW! 

Now we’re not suggesting that anyone direct all of their investment funds to emerging market countries, and for that matter, we’re not suggesting that anyone make any investment decision based on a couple of charts.  However, for those who are still focused primarily on US markets, note that the emerging areas are gaining strength vs. the US.  Perhaps it’s time to consider adding in the rest of the world to your holdings.

Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
10000 N. 31st Avenue, Suite C-262
Phoenix, AZ 85051

Phone (602) 252-8700
Fax (602) 252-8701
Toll-Free (877) The-Denk

This weekly article reflects news, commentary, opinions, viewpoints, analyses and other information developed by Denk Strategic Wealth Partners and/or select but unaffiliated third parties. DSWP provides Market Information for illustrative and informational purposes only. If you wish to receive this weekly commentary by email please contact us at 602-252-8700 or by e-mail at

Ronald Denk is an Advisory Representative offering services through Denk Strategic Wealth Partners, A Registered Investment Advisor. He is also a Registered Representative, offering investments through Lincoln Financial Securities Corporation, Member FINRA/SIPC.

Denk Strategic Wealth Partners is not affiliated with Lincoln Financial Securities Corporation. Information in this commentary is the sole opinion of Denk Strategic Wealth Partners. Past performance is no guarantee of future returns. All market related investments involve various types of risk, which include but are not restricted to, credit risk, interest rate risk, volatility, going concern risk, and market risk.

The Update provides information of a general nature regarding legislative or other developments. None of the information contained herein is intended as legal advice or opinions relative to specific matters, facts, situations or issues. Additional facts, information or future developments may affect the subjects addressed in this document. You should consult with an attorney, accountant or DSWP planner about your particular circumstances before acting on any of this information because it may not be applicable to your situation.

Lincoln Financial Securities and Denk Strategic Wealth Partners and their representatives do not offer tax advice. Please see your tax professional regarding your individual needs.

*The indices are representative of domestic markets and include the average performance of groups of widely held common stocks. Individuals cannot invest directly in any index and unlike investments, indices do not incur management fees, charges, or expenses, therefore specific index returns will be higher. Past performance is not indicative of future results.