Denali Wealth Management

2018-Q2 Market Commentary

General Market Commentary as of June 30, 2018

The volatility introduced into the stock market earlier this year by trade tiffs and tantrums has naggingly persisted into summer. All this has played out against the background of a surging U.S. economy. While domestic growth estimates for the second quarter have risen to an annualized rate of 5 percent, double the pace set in the last quarter, the European, Chinese and Japanese economies are decelerating.

Then there’s the headwind of rising interest rates envisioned by the Fed. Add to that the potential inflationary impact of an all-out trade war, and it’s no wonder the markets are rocky.

September Considerations

By the time Labor Day hits in early September, we will have critical clarity regarding the following:

1. Whether there is a full-blown U.S./China trade war or not?

2. How many Fed rate hikes this year (Three or Four)?

3. Does North Korea continue to cooperate with the U.S.?

4. Will the “Goldilocks” economic dynamic of strong growth and tame inflation reappear?

5. Can the rise in the 10-year yield and U.S. Dollar remain “orderly” or does it cause a pullback in stocks?

Market Recap

Tot Return3-MO*12-MO*3-Year*5-Year*Closing Value
S&P 5002.88%12.17%9.63%11.10%2,718.37
Dow Jones Industrial Average0.70%13.69%10.24%10.58%24,271.41
NASDAQ Composite6.31%22.31%14.62%17.15%7,510.30

Source: Morningstar. The S&P 500, Dow Jones Industrial Average, and NASDAQ Composite are unmanaged indexes. It is not possible to invest in an index. Past performance is no guarantee of future results. * Price only. Does not include dividends.

All overviews and commentary are intended to be general in nature and for current interest, educational purposes and factual reference only and are subject to change based on market and other conditions.

Denali Wealth Management

2018-Q1 Market Commentary

General Market Commentary as of March 31, 2018

Global equity markets declined in Q1 with investors unnerved first by concerns about the path of US interest rates and then worries over trade. Global bond markets reflected higher inflation, with most major government bond yields climbing.

Equities

US equities began the year strongly, boosted by tax reforms, but ended the quarter lower amid concerns over inflation and the impact of US-China trade sanctions. Indeed, macroeconomic indicators remained broadly positive throughout Q1. US business confidence reached an unexpected, multi-decade high in March. GDP for Q4 2017 was revised upwards to show growth of 2.9%, and while industrial activity slowed, as measured by the ISM manufacturing index, it continued to indicate expansion.

Treasury

US Treasury yields rose markedly across the curve over the quarter. Corporate bonds made negative total returns and underperformed government bonds.

Market Recap

Tot Return3-MO*12-MO*3-Year*5-Year*Closing Value
S&P 500-1.17%11.83%8.51%10.98%2,640.87
Dow Jones Industrial Average-2.49%16.65%10.68%10.58%24,103.11
NASDAQ Composite2.33%19.50%12.96%16.67%7,063.45

Source: Morningstar. The S&P 500, Dow Jones Industrial Average, and NASDAQ Composite are unmanaged indexes. It is not possible to invest in an index. Past performance is no guarantee of future results. * Price only. Does not include dividends.

All overviews and commentary are intended to be general in nature and for current interest, educational purposes and factual reference only and are subject to change based on market and other conditions.

Denali Wealth Management

2017-Q4 Market Commentary

General Market Commentary as of December 31, 2017

U.S. Stocks continued their climb in the fourth quarter as the tax bill became reality and as generally upbeat economic data gave the green light to the Fed to raise rates again causing a pull back in bonds.

Outlook

The outlook for stocks remains positive although muted versus last year. Almost all the impact of the fiscal package is hitting the demand side of the economy, which will be a temporary jolt to growth. Concerns over midterm elections, a slow down in Chinese growth and the ever-present political risk posed by the Middle East and North Korea could cause problems we don’t foresee at this time.

Current Shift

The global economy is experiencing a relatively steady, synchronized expansion amid low inflation, with low risk of recession. The current shift toward tighter global monetary policy may boost market volatility, which underscores the importance of diversification.

Bonds on the other hand look to be flat to negative for the year, unless a “Black Swan” appears and causes a flight to safety.

Tot Return3-MO*12-MO*3-Year*5-Year*Closing Value
S&P 5006.12%19.42%9.10%13.39%2,673.61
Dow Jones Industrial Average10.33%25.08%11.52%13.53%24,719.22
NASDAQ Composite6.27%28.24%13.38%17.98%6,903.39

Source: Morningstar. The S&P 500, Dow Jones Industrial Average, and NASDAQ Composite are unmanaged indexes. It is not possible to invest in an index. Past performance is no guarantee of future results. * Price only. Does not include dividends.

All overviews and commentary are intended to be general in nature and for current interest, educational purposes and factual reference only and are subject to change based on market and other conditions.