A few weeks back this newsletter cautioned that some economic monitoring data could be a little noisy for a few weeks.

Noisy is the statistician’s preferred word for ‘less reliable’. The ‘noise’ is the part of the data that is incoherent and it can tend to taint the good and honest data. At a minimum the noise is damaging if for no other reason than its presence reduces the sample sizes of the ‘good’ data; the result is that error rates go up. When error rates go up you can expect to see reports updated with larger than normal revisions. I cannot help but think there are some of these coming down the pike shortly.

The Non-farm Payroll report released Friday morning showed a decline of 33,000. That’s disappointing since the forecast was for an increase of 90,000. However the forecast was a jobs forecast and not a weather forecast so Hurricanes Harvey and Irma were not factored in.

Still, there was some good news as the average hourly earnings managed to eke out a gain even in excess of the forecasts and the employment participation rate saw another monthly gain.

Other recent indicators also lean to a solid economy and pretty decent jobs situation. This week, a survey of services firms (covering restaurants, construction, retail, stores, banks and others) found that they expanded in September at their fastest monthly pace since 2005. That followed a survey of manufacturers, which found an equally strong gain. Factory activity expanded at the fastest pace in more than 13 years.

Now, no doubt you will find some news coverage of this with a decidedly negative twist such as “40,000 private sector jobs destroyed”. Pay no attention to these stories as they are nearly always not presented in a meaningful context.


Market Minute 10/6/2017 – In Stocks We Trust

Despite all of the positive news in the world of markets recently, I continue to see headlines warning us that the next big drop is coming. I guess that’s a good sign. If everyone saw nothing but blue skies, I would be worried. But just for a moment, I’d like to take you back.

Stretch WAY back in your memory – like ten years back. The S&P 500 Index peaked on October 9, 2007. In March 2008, just six months later, Wall Street giant Bear Stearns collapsed. Lehman Brothers followed before the end of the year, and the global financial crisis was in full swing.

When all was said and done, the U.S. economy experienced its worst downturn since the Great Depression. Stocks, as represented by the S&P 500 Index*, fell by as much as 56%. A stock portfolio valued at $100,000 in October 2007 was worth $44,000 by March 2009. Today, that same portfolio is worth $200,000. That is not a typo. Data from Fisher Financial newsletter October 2017.

That is 7% returns per year, including during the downturn. Based on the Rule of 72, that’s a double in roughly 10 years.

How can the market have doubled in the past 10 years? In that time, we have had a global financial crisis of epic proportions, the rise of ISIS and deadly terror attacks in major European cities, horrific natural disasters, the European sovereign debt crisis, the downgrade of U.S. government debt, the rise of a nuclear North Korea, tax hikes, and countless other events too numerous to mention.

It can happen because we have also had technological advancements and innovations that seemed more like science fiction than reality a decade ago. The past 10 years have brought us self-driving cars, multi-use space rockets, human-like robots, genetic engineering, home delivery of goods by drones, 3D-printed glands and organs, streaming television, bionic eyes, the tablet on which I am writing this commentary, and tons of others. We can only imagine what the next 10 years will bring. 

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 info@denkinvest.com.

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.