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The Germans made the first artificial Christmas trees out of dyed goose feathers.
The Markets

Here we come a tax-reforming…

The reconciliation of Congressional tax reform bills proceeded apace last week, and Congress is expected to vote on the measure early this week. If tax reform passes, Dubravko Lakos-Bujas, head of U.S. equity strategy with JPMorgan , thinks we may see value stocks swing back into favor. Barron’s reported:

“The spread between value and growth has reached a point historically associated with a reversal; the Russell 1000 value index is up 9 percent this year, against a gain of 27 percent in the comparable growth index. Tax reform is a catalyst for a rotation into value stocks, as value companies generate almost 80 percent of their revenue in the U.S. and are subject to an effective tax rate of 30.3 percent, the strategist observes.”

Tax reform isn’t the only driver that may support value stocks. Value also tends to outperform when interest rates are rising. If the Federal Reserve has anything to say about, rates should begin to move higher.

The Federal Open Market Committee (FOMC) increased its benchmark interest rate by one-quarter of a percentage point last week. It was the third increase during 2017.

Normally, a Fed rate hike would be expected to push Treasury rates higher; however, that didn’t happen last week. Rates on U.S. government bonds fell on Wednesday after the Fed took action, reported CNBC . It’s notable that, after three rate hikes during 2017, the yield on 10-year Treasury bonds finished last week at 2.4 percent, which was lower than at the start of the year.

Following the FOMC meeting last week, Chair Janet Yellen told CNBC , “My colleagues and I are in line with the general expectation among most economists that the type of tax changes that are likely to be enacted would tend to provide some modest lift to GDP growth in the coming years.”
Here's Another Reason To Like Emerging Markets

The MSCI Emerging Markets Index was up more than 30 percent year-to-date late last week, outperforming national indices in most developed nations. (Remember, past performance is no indication of future results.) There may be more to like about emerging markets than 2017 performance, though, wrote Ben Inker in the latest GMO Quarterly letter:

“…if there is one group of equities that deals with inflation on a pretty much continuous basis, it is emerging equities…To be clear, our fondness for emerging equities today is driven overwhelmingly by their cheaper valuations…But if worse did come to worst and inflation flared up, owning a good chunk of the only equities that remember what inflation is like seems like a decent idea.”

Do you remember inflation? 

In the 1970s, it was a household name. People wore WIN (Whip Inflation Now) buttons, earrings, sweaters, and other paraphernalia after President Ford declared inflation “public enemy number one.” The Great Inflation, as it was called, lasted from 1965 to 1982 with inflation rising above 14 percent in 1980.

While another Great Inflation isn’t expected, it’s likely inflation eventually will move higher. For most of the last decade, inflation in the United States has remained low. As economic activity picked up, late in 2016 and early in 2017, the pace of inflation increased and moved slightly above the Federal Reserve’s target level of 2 percent. Then, it dropped once again, reported Inker.

Goldman Sachs recently suggested “a sizable and relatively long-lasting drag from the earlier weakness in import and commodity prices…” is the reason for low inflation, and the company anticipates inflation will increase during 2018.

If inflation begins to move higher, the Federal Reserve is likely to continue to push interest rates higher. Higher interest rates translate into higher bond yields and that could affect investors by making investments with lower risk more attractive.

We hope you will enjoy a very happy holiday!

Weekly Focus – Think About It 

“Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair.” 
--Sam Ewing, American baseball player
12 Christmas Facts You Never Know About

Wherever Americans stand on holiday-time debates on issues ranging from what’s depicted on Starbucks cups to public displays of religious symbols, it’s hard to disagree that Christmas is still a big part of many people’s lives.

Just in time for the holidays, here are twelve facts about Christmas in America and how people celebrate:
1. Speedy Santa
US scientists calculated that Santa would have to visit 822 homes a second to deliver all the world's presents on Christmas Eve, travelling at 650 miles a second.

2. Robins
Robins on cards were a joke 150 years ago when postmen wore red tunics and were named after them.

3. Mince Pies
Although now mostly vegetarian, in Victorian times, mince pies were made with beef and spices.

4. Tangerines
The tradition of putting tangerines in stockings comes from 12th-century French nuns who left socks full of fruit, nuts and tangerines at the houses of the poor.

5. Three Wise Men?
Despite the tale of three wise men paying homage to baby Jesus, the Bible never gives a number. Matthew's Gospel refers to merely "wise men".
6. Jingle Bells
James Pierpont's 1857 song Jingle Bells was first called One Horse Open Sleigh and was written for Thanksgiving.

7. Turkey
Before turkey, the traditional Christmas meal in England was a pig's head and mustard.

8. Carols
Carols weren't sung in churches until they were introduced by St Francis of Assisi in the 13th century.

9. Stockings
Hanging stockings out comes from the Dutch custom of leaving shoes packed with food for St Nicholas's donkeys. He would leave small gifts in return.

11. World's Biggest Snowman
In 1999, residents of the state of Maine in America built the world's biggest ever snowman. He stood at 113ft tall.

12. Shopping Spree
The long shopping spree before Christmas began in America when relatives of soldiers posted overseas in the Second World War were encouraged to mail gifts early.

13. Christmas Songs
Jingle Bells was the first song broadcast from space when Gemini 6 astronauts Tom Stafford and Wally Schirra sang it on December 16, 1965.
Best Regards,
Don's Email Signiture
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You cannot invest directly in this index.

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* Past performance does not guarantee future results.
* You cannot invest directly in an index.

* Consult your financial professional before making any investment decision.

*This newsletter was prepared by Peak Advisor Alliance

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Stock investing involves risk including loss of principal.

* This information in not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

* The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basked of consumer goods and services.
 
* Harmonized Indexes of Consumer Prices are measures of consumer price inflation that have been standardized across multiple countries based on European Union definitions. A monthly report compiles HICP trends for 16 economies, alongside conventional Consumer Price Indexes (CPI) as measured by national governments.
  
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Sources:
12 Christmas Facts You Never Know About: http://www.mirror.co.uk/news/uk-news/top-christmas-facts-52-2017-653613

Markets:
https://bankingjournal.aba.com/2017/12/house-senate-leaders-release-text-of-final-tax-reform-bill/
https://www.barrons.com/articles/outlook-2018-the-bull-markets-next-act-1512796307 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/12-18-17_Barrons-Outlook_2018-The_Bull_Markets_Next_Act-Footnote_2.pdf)
https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/will-value-catch-up-with-growth
https://www.cnbc.com/2017/12/13/bonds-and-fixed-income-data-fed-meeting-decision-tax-plan-on-the-agenda-for-investors.html 
https://finance.yahoo.com/quote/%5ETNX/history?p=%5ETNX
https://www.cnbc.com/2017/12/13/tax-reform-helping-boost-economic-growth-outlook-yellen-says.html
https://www.msci.com/end-of-day-data-search (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/12-18-17_MSCI-Emerging_Markets_as_of_12-15-17-Footnote_7.pdf)
https://www.gmo.com/docs/default-source/public-commentary/gmo-quarterly-letter.pdf?sfvrsn=48
https://www.fordlibrarymuseum.gov/museum/ArtifactCollectionSamples/WIN.html
https://www.federalreservehistory.org/essays/great_inflation
https://www.blackrock.com/ch/individual/en/literature/whitepaper/bii-navigating-markets-in-2017-broadening-reflation-en-whitepaper.pdf
http://www.goldmansachs.com/our-thinking/pages/macroeconomic-insights-folder/2018-global-economic-outlook-as-good-as-it-gets/report.pdf
https://www.brainyquote.com/quotes/sam_ewing_103896?src=t_inflation