Presented by Mark Gallagher

General Market News
• After two weeks of volatility, rates were relatively flat last week. The 10-year Treasury yield opened at 1.77 percent on Monday, and the 30-year and the 2-year opened at 2.27 percent and 1.59 percent, respectively.
• The S&P 500 and Nasdaq Composite indices both moved higher last week, while the Dow Jones Industrial Average ticked down slightly. The best-performing sectors were health care, REITs, and financial services. Health care moved higher on a strong beat from managed care provider UnitedHealth. The worst-performing sectors were energy, technology, and consumer staples, with oil (West Texas Intermediate) dropping by 1.7 percent for the week.
• One focus of the past week was the bank earnings of JPMorgan Chase, Bank of America, and Citigroup. Despite pressure on net-interest income, all three banks beat expectations, as fee income helped offset weakness in income on deposits.
• On Wednesday, September’s retail sales report was released. Headline sales disappointed, falling 0.3 percent against expectations for a 0.3 percent gain. Part of this decline can be attributed to falling gas prices. But even the core retail sales figure, which strips out the impact of gasoline and vehicle prices, disappointed by remaining flat for the month.
• On Thursday, September’s building permits and housing starts were released. Permits fell by 2.7 percent against expectations for a 5.3 percent drop. Housing starts fell by 9.4 percent during the month, against expectations for a 3.2 percent decline. Despite the decline in September, housing starts remain near post-recession highs.

Source: Bloomberg

Source: Morningstar Direct

What to Look Forward To
On Tuesday, September’s existing home sales report is set to show a modest 0.5 percent decline for the month. Despite the anticipated decline in monthly sales, however, existing home sales are expected to show strong year-over-year growth. Such a result would mark the third straight month of year-over-year growth in existing home sales. This trend is encouraging given the weakness we saw in 2018 and the beginning of this year.

On Thursday, September’s durable goods orders report will be released. Economists expect orders to decline by 0.6 percent during the month, believing that uncertainty regarding trade will slow business investment. As forecasted for the industrial production figures, the General Motors strike is likely to play a part in the predicted slowdown. Core durable goods orders, which strip out the impact of volatile transportation orders, are expected to decline by 0.3 percent.

Also on Thursday, September’s new home sales are scheduled to be released. As with sales of existing homes, new home sales are expected to show a modest 0.4 percent monthly decline, with strong year-over-year growth. Compared with existing home sales, new home sales represent a smaller and more volatile portion of the market. If new home sales decline, the broader housing market is unlikely to be affected.

Finally, we’ll finish the week with the second and final reading of the University of Michigan consumer confidence survey for October. The index is not expected to change from the preliminary reading of 96 earlier this month. If confidence remains unchanged from the start of October, this result would represent a healthy recovery from the drop to 89.8 that we saw in August and would mark the second straight month of increasing confidence. Given the slowdown we saw in September’s retail sales, continued improvements to consumer confidence would go a long way to calm concerns about a potential slowdown in the fourth quarter.

Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg Barclays US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg Barclays US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg Barclays US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com.

Authored by the Investment Research team at Commonwealth Financial Network.

© 2019 Commonwealth Financial Network ®

Presented by Mark Gallagher

General Market News
• Volatility continues to be the main story in rates, as the 10-year Treasury opened last week at 1.5 percent and closed the week at 1.76 percent. The 30-year Treasury was back below 2 percent briefly but closed the week at 2.24 percent. The 2-year Treasury went from 1.35 percent to 1.59 percent. The Treasury market will be closed today in recognition of the holiday, but we should continue to expect volatility in the rates markets going forward.
• Global equities were up across the board as the U.S. and China agreed to a phase-one trade deal. Additional global tensions eased with positive news regarding a potential Brexit deal. The news came as British Prime Minister Boris Johnson offered concessions to Ireland during his discussion with Irish Prime Minister Leo Varadkar.
• The risk-on trade was on for investors as global trade tensions eased. The result was a rally in more cyclical sectors such as industrials, technology, energy, and consumer discretionary. Those defensive sectors (i.e., utilities, consumer staples, REITs) that had been leading in the prior three weeks lagged. Potential trade headwinds still linger via future U.S.-China trade discussions, Brexit, U.S.-EU trade deals, and the United States-Mexico-Canada Agreement, however.
• On Tuesday, the September Producer Price Index was released. Producer prices fell by 0.3 percent during the month, which caused year-over-year producer inflation to fall to 1.4 percent.
• Thursday saw the release of the Consumer Price Index. Consumer prices were flat during the month, against expectations for a modest 0.1 percent increase. Year-over-year consumer inflation fell to 1.7 percent. Both consumer and producer inflation now sit comfortably below the Federal Reserve’s stated 2 percent inflation target, which could help justify further rate cuts during the fourth quarter.
• On Friday, the University of Michigan consumer sentiment survey was released. Consumer confidence rose by much more than expected, from 93.2 in September to 96 in October, against expectations for a modest decrease to 92. This was a very welcome result that helped calm fears of weakening consumer sentiment and spending as we kick off the fourth quarter.

Source: Bloomberg

Source: Morningstar Direct

What to Look Forward To
On Wednesday, September’s retail sales report is set to be released. Economists expect to see 0.3 percent growth in headline sales, which would mark the seventh straight month of sales growth. Core retail sales, which strip out volatile auto and gas prices, are also expected to show 0.3 percent growth. Given the improved consumer confidence in September, it would not be surprising to see another strong retail sales result.

Wednesday will also see the release of the National Association of Home Builders Housing Market Index. This measure of home builder confidence is expected to remain flat at 68 in October, after rising to an 11-month high in September. Low interest rates and high buyer demand are expected to help bolster confidence. On Thursday, September’s building permits and housing starts are set to be released. Both are expected to fall following a surge in August.

Also on Thursday, September’s industrial production report is set to be released. Economists expect production to decline by 0.1 percent, driven by a 0.3 percent decline in manufacturing output. Manufacturing confidence fell in September and spent the second straight month in contradictory territory. August saw a 0.6 percent jump in industrial production, but trade war escalations and the start of the General Motors strike in September are likely to weigh on production.

Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg Barclays US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg Barclays US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg Barclays US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com.

Authored by the Investment Research team at Commonwealth Financial Network.

© 2019 Commonwealth Financial Network ®

Presented by Mark Gallagher

General Market News
• The 10-year Treasury yield reached a high of 1.75 percent last week and opened at 1.50 percent on Monday. In the same time frame, the 30-year went from a high of 2.20 percent to below 2 percent, and the 2-year went from 1.68 percent to 1.35 percent. This volatility is likely here to stay, but as we’ve mentioned before, the general trend over the next year should lean toward lower rates.
• Global equities were mostly down last week, as concerns over global growth ticked up. Equities sold off following a 10-year low in the Institute for Supply Management (ISM) Manufacturing index. It showed a decline from 49.1 to 47.8, against an expected increase to 50. As this is a diffusion index, the decline further below 50 shows that the manufacturing sector of the economy continues to contract.
• We also saw softness in the ISM Nonmanufacturing index, which hit a 3-year low on Thursday. It fell from 56.4 to 52.6, against an estimated decline to 55. Although the value is still above 50, indicating expansion, it does reveal some concern about the slowdown in manufacturing leaking into the broader service sector of the economy. This result was offset partially by an increase in expectations for an October federal funds rate cut.
• The top-performing sectors last week were technology, health care, and consumer staples. Technology was supported by reports that Apple’s iPhone production was raised by 10 percent. The worst-performing sectors were energy, materials, and industrials. The 5.5 percent drop in West Texas Intermediate crude oil led to weakness in the energy sector.
• On Friday, the employment report was a mixed bag. Nonfarm payrolls came in at 136,000, slightly below expectations of 145,000. The August jobs numbers were revised upward by 38,000. Unemployment declined from 3.7 percent to 3.5 percent, while underemployment declined from 7.2 percent to 6.9 percent, all postrecession lows. One drawback to the report was that average hourly earnings were flat versus an expectation of 0.2 percent month-over-month growth.
• The international trade balance was also released on Friday. It showed a slight widening to $54.9 billion versus the prior period of $54 billion, as the trade war with China continues to affect the balance of trade. The U.S. also recently won a WTO ruling, which allowed the U.S. to put $7.5 billion of tariffs on EU goods. This move could affect the trade balance going forward.

Source: Bloomberg

Source: Morningstar Direct

What to Look Forward To
On Tuesday, September’s Producer Price Index is set to be released. Economists expect to see a modest increase of 0.1 percent for the month, as declining fuel prices helped calm inflationary pressures. On an annual basis, producer inflation is expected to come in at 1.8 percent. Core producer inflation, which strips out the effect of food and energy prices, is expected to show monthly and annual growth of 0.2 percent and 2.4 percent, respectively.

On Wednesday, the minutes from the Federal Reserve’s (Fed’s) September meeting will be released. This will be a closely followed release, as the Fed cut the federal funds rate by 25 basis points at that meeting. Three of the voting members voted against the rate cut. The minutes are expected to provide details into why they dissented and what it could take to make them vote for further rate cuts. Given the disappointing data we’ve seen since the September meeting, market participants widely expect the Fed to cut interest rates by another 25 basis points at its December meeting.

On Thursday, we’ll get a look at consumer inflation with the release of the Consumer Price Index for September. Consumer prices are expected to show an increase comparable to producer prices, with 0.1 percent monthly and 1.9 percent annual growth forecasted. Core prices that strip out gas and food are expected to come in slightly higher, with 0.2 percent and 2.4 percent monthly and annual growth, respectively. If results meet the forecasts, they would mark an 11-year high for core consumer inflation. There is potential for further price increases, as tariffs enacted at the beginning of the month on Chinese goods focused largely on consumer products.

Finally, we’ll finish the week with the release of the University of Michigan consumer confidence survey, which is expected to show a slight decline from 93.2 in September to 92 in October. These numbers are down sharply from a recent high of 100 in May. High levels of consumer confidence have supported the strong growth in consumer spending we’ve experienced in the past two quarters, so this projected drop is worth monitoring. It could indicate that consumers are losing confidence in the economic expansion and may be less willing to spend freely going forward.

Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg Barclays US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg Barclays US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg Barclays US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com.

Authored by the Investment Research team at Commonwealth Financial Network.

© 2019 Commonwealth Financial Network ®

Presented by Mark Gallagher

Positive month for markets caps off turbulent quarter
U.S. markets had a positive September, which helped offset volatility earlier in the quarter. The S&P 500 returned 1.87 percent in September and 1.70 percent for the quarter. The Dow Jones Industrial Average performed better, with a 2.05 percent monthly gain and quarterly growth of 1.83 percent. The Nasdaq Composite lagged, with a 0.54 percent monthly gain, taking the index to a 0.18 percent gain for the quarter.

These positive results for the month came despite worsening fundamentals. According to Bloomberg Intelligence (as of September 30, 2019), the S&P 500 is expected to show a year-over-year earnings decline of 3.2 percent for the third quarter. This result is down from the 3 percent decline forecast at the end of August. Although the estimates are negative, earnings season will kick off in earnest midmonth. As such, we’ll have a better picture of the actual results next month. Looking forward, analysts expect 3.3 percent growth in the fourth quarter. This growth could likely help support further market gains. From a technical perspective, all three major U.S. indices were supported, spending the entire month above their respective 200-day trend lines.

International stocks had a strong September. But the month’s positive results did not offset volatility seen earlier in the quarter. The MSCI EAFE Index gained a solid 2.87 percent in September but still had a quarterly loss of 1.07 percent. Emerging markets also gained during the month, at 1.94 percent, but showed a drop of 4.11 percent for the quarter. In both developed and emerging markets, rising political concerns and slowing growth figures weighed on investors.

Technicals were mixed for international stocks. The MSCI EAFE Index for developed international markets fell below its trend line at the start of the month. Still, it recovered and spent the rest of the month above trend. Emerging markets were another story. Here, the index spent the majority of the month below the trend line. September marks the second straight month in which technicals for emerging markets have been a headwind.

Finally, fixed income markets had a tough month. Whipsawing interest rates created volatility, despite the Federal Reserve’s move to cut the federal funds rate by 25 basis points at its September meeting. The 10-year Treasury yield started the month at 1.47 percent. It then rose to a midmonth high of 1.90 percent and finished the period at 1.67 percent. This result is down from the 2.03 percent yield seen at the beginning of the quarter.

The Bloomberg Barclays U.S. Aggregate Bond Index declined by 0.53 percent during the month, on higher rates during that time period. But it rose by 2.27 percent during the quarter, as rates went down. High-yield bonds, which are less affected by interest rate changes, had a better month with a gain of 0.36 percent. This move led the high-yield index to a 1.33 percent gain for the quarter.

Headlines hit markets, but not much
In September, there were many headline-grabbing events. For example, the drone attack on Saudi Arabian oil facilities took out an estimated half of Saudi production capacity. It was a major news story that touched on many sensitive geopolitical concerns. Still, there was no sustained impact on U.S. equity markets. Oil prices did spike as high as 20 percent immediately following the attack. But they ended September well below midmonth highs, as the U.S. and Saudi governments committed to tapping reserves and prioritizing repairs at the damaged facilities. Further, oil prices remain well below levels seen a year ago, and markets seemed to shrug off this event.

The continuing U.S.-China trade war and the slow and steady march toward Brexit also made news in September. The escalated trade war hurt markets in August, but neither story had much influence on markets in September. On the trade war front, new negotiations between the U.S. and China are scheduled for October. This announcement helped drive up equity markets at the beginning of the month. Unfortunately, this bump didn’t last long, as the S&P 500 ended the month below post-announcement highs.

Threats of a no-deal Brexit from British Prime Minister Boris Johnson drove international market volatility in August. But in September? The impact of Brexit on international markets was minimal. Here, developments have moved swiftly over the past month. The British Parliament and Johnson are trying to negotiate a trade deal with the European Union before the October 31 deadline. This situation may be a source of future volatility, especially for internationally developed markets.

Economic fundamentals withstand the risks
The political risks continued to draw attention in September. Nonetheless, many economic releases came in better than expected, with consumer spending continuing to play a key role. August’s retail sales figures beat expectations. Here, we saw 0.4 percent growth against expectations for a 0.2 percent increase. This result marks the sixth straight month of retail sales growth. Consumers have been driving the economic expansion for the past two quarters.

Much of this spending growth appears to be sustainable, which is encouraging. Personal income grew by 0.4 percent in August, which marks the eighth straight month of income growth. There is also some evidence that the tight jobs market is leading to faster wage growth. Indeed, August’s employment report showed wages up 0.4 percent on a monthly basis. Wage growth over the trailing three months is currently at its highest annualized rate in 11 years. This growth bodes well for future consumer spending.

Another key area of strength was the housing sector. It showed solid growth for the second straight month. In September, homebuilder confidence increased to an 11-month high. Here, strong homebuyer demand and low mortgage rates boosted sales. In fact, both new and existing home sales grew by more than expected in August. Existing home sales were especially impressive, with August marking the second straight month of year-over-year growth. As illustrated in Figure 1, existing home sales have struggled to show any year-over-year growth over the past two years. So, these back-to-back solid months are very encouraging.

Figure 1. Existing Home Sales, September 2014–August 2019

Now, let’s move from the consumer to the business side of the economy. Nonmanufacturer confidence saw a solid rebound in August. The service sector accounts for the lion’s share of economic output. So, this result helped calm fears of a slowdown in the service sector and was a very good development. There was even a positive surprise for the manufacturing sector. Manufacturing output rose by a strong 0.5 percent in August, despite a drop in manufacturer confidence during that time.

Beware the risks ahead
Despite the positive fundamentals, risks remain that could have a dramatic effect on markets. Domestically, the beginning of impeachment proceedings at month-end will likely lead to a contentious election cycle. Of course, the direct economic impact from impeachment proceedings is difficult to forecast. But the uncertainty of this situation will likely weigh on consumer and business confidence and spending. Slowing job growth and declining consumer confidence figures are also areas to watch. Both could lead to lowered spending and economic growth.

Abroad, the ongoing U.S.-China trade war and Brexit have the potential to affect markets. As we saw in September, there is no telling what will happen with these politically sensitive issues. Plus, there is no guarantee that markets will react to new developments as expected.

Risks can hit markets at any time. When looking at the sheer number of them, it seems likely that one or more of the recent stories will disrupt markets in the near future. October is known to be a difficult month for markets, which has elevated the concerns.

Even if we do see a pullback, there is still a lot to like about the U.S. economy. These economic strengths should help cushion any market downturn. Consumer spending growth has been healthy this year, and there are few signs of a slowdown in the immediate future. The rebound in service sector confidence and manufacturing output also indicates that the fundamentals may be more resilient than they seem. Again, this strength could help protect against any short-term disruptions.

Ultimately, volatility is possible and may even be likely over the next few months. But the healthy U.S. economic background should help calm fears of a sustained downturn if and when we face market turbulence. As always, a well-diversified portfolio combined with a long-term view toward investing remains the best way forward in an uncertain world.

All information according to Bloomberg, unless stated otherwise.

Disclosure: Certain sections of this commentary contain forward-looking statements based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets. All indices are unmanaged and investors cannot invest directly into an index. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. It excludes closed markets and those shares in otherwise free markets that are not purchasable by foreigners. The Bloomberg Barclays Aggregate Bond Index is an unmanaged market value-weighted index representing securities that are SEC-registered, taxable, and dollar-denominated. It covers the U.S. investment-grade fixed-rate bond market, with index components for a combination of the Bloomberg Barclays government and corporate securities, mortgage-backed pass-through securities, and asset-backed securities. The Bloomberg Barclays U.S. Corporate High Yield Index covers the USD-denominated, non-investment-grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com.

Authored by Brad McMillan, CFA®, CAIA, MAI, managing principal, chief investment officer, and Sam Millette, senior investment research analyst, at Commonwealth Financial Network®.

© 2019 Commonwealth Financial Network ®