If you happen to be one of the people who think that market traders are a bunch of Nervous Nellies, always looking for the dark cloud in the middle of the silver lining, well this is your week — especially with regard to the Technology sector of the markets.

True enough: the famously ‘tech-heavy’ Nasdaq has seen something of a slog this week. But there may be less here than meets the eye. After all, one man’s tech is another man’s retailer (Amazon*) or another man’s media company (Facebook, Twitter, Google*). Let’s take a half a minute to look at this last group, which could be called ‘unsociable media’ – at least according to members of Congress who, this week, invited those Silicon Valley heavyweights in for a bit of discussion (again) about the fairness of some of their business practices.

Interestingly, Jack Dorsey, CEO of Twitter, acknowledged that the system of tweet selecting had been excessively filtering some political tweeting, nearly all of it from the conservative side. But, not to worry because he says they’ve fixed it. Facebook’s COO, Sheryl Sandberg, also attempted to assuage fears by telling the lawmakers that Facebook would improve its content by being more inclusive of ‘alternative facts’. How reassuring! Meanwhile, Google’s strategic approach to the inquiring minds of Washington was to not show up at all. A couple of the congress critters asked a few questions of the chair not occupied by any Google representative. All in all, the hearings heard little. The larger questions remained as unsettled as the stomachs of the investment community.

And then there’s the actual Tech: the companies who make the physical stuff that all other tech related things need in order to actually function. A big player here is a company called Micron* which makes memory chips. It has seen phenomenal performance over the last year or so but suddenly saw a nearly 10% drop on Thursday. A couple of other chipmakers also had a bad day. Apparently, this had investors thinking they would prefer their chips without dips so I guess some of them bought Broadcom (AVGO*) instead — which happened to turn in an excellent earnings report…after the markets had closed. (That company is focused on chips that go in smartphones.) Still, with the potential of tariffs in play plus other forces we can only think, ‘let the chips fall where they may’.

Meanwhile on the old jobs front, Thursday’s ADP projection for Non-Farm Payrolls was disappointing as its 163K ‘jobs added’ number was well below the forecast of 188k. Well…what a difference a day makes. Although August payroll numbers can be less reliable than most months it was still surprising to see this morning’s actual Non-Farm Payrolls coming in above forecasts. Additionally, BLS Jobless Claims continuing to fall as well. Both bits are good news! And, one more thing to keep in mind is that the jobs number (as we keep reminding everyone) will eventually show influence in other important statistics, one of which showed up today — wages rising. Year on year average weekly earnings of workers was up 2.9%. What’s good for workers is good for retail and the economy in general. Every coin has at least two sides and this coin shows that as workers earn more, businesses will see labor costs rise. But, this coin has three sides. Productivity numbers are also improving and if wage increases are equal to productivity gains, the increased cost of labor can be offset by better productivity — negating the otherwise injury to profitability. That is some comfort to businesses and shareholders alike.

Not really a bad week at all.

Market Minute – Genius is Patience

All world markets managed to find bumps in the road over the past quarter. As the monstrous volatility of the first quarter (Q1) passed, major indexes began to rise. Then the continued instability in Europe, polarizing political and international trade concerns rose up again with negative results for markets.  Still, most US indices showed gains for Q2 and (barely) for this year to date.

However, some parts of the markets got whacked pretty good: global equity funds produced a $12.4 Billion outflow in June alone.  (Disclosure- we have been out of non-domestic holdings since mid Q1).  Yes, non-domestic equities were the belle of the ball in 2017, but in 2018 so far, not so much! 

And the key here is that a successful investor must have different, yet complementary traits in many economic environments.  In a down market – one must have optimism and a long-term view.  In an up market – discretion and restraint are imperative. Choppy markets like 2018 require patience – sometimes seemingly excessive patience.  After 2017’s great showing, the current ebbs and flows can be more than a bit frustrating. But we’ve seen this before – a time or two.  Sir Isaac Newton, often deemed to be a very smart person may have been a very good investor.  He was quoted as the source of the phrase ‘Genius is Patience’.

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 lindaw(at)denkinvest.com. If you are receiving this commentary via email and would prefer not to please let us know either by email or phone.

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.