As we write this, the Dow, the S&P 500, and the NASDAQ remain at or near all-time highs. Of note is that the S&P 500 and NASDAQ are up less than 3%, and the Dow up just 1.4%, since their 2015 highs.
Dividend paying or value oriented stocks, as well as intermediate/long bonds, have been all the rage, in what appears to be a search for yield. Outside of those investment sectors, the market has not rewarded investors for the volatility they have experienced since last summer.
In business news, Liberty Media, owner of the Atlanta Braves, is purchasing part of the Formula One auto racing league, according to The Guardian. The Atlanta Journal Constitution says that Delta and its pilots are currently negotiating pay, with Delta offering a 27.3% increase over four years, and the pilots asking for 37.25% over three years.
Software testing firm Mindspark employs autistic adults, paying them between $16 and $30 per hour to work as analysts and senior analysts. Founder Evan Rochte found that their skills integrated well with those needed in the tech sector. This according to CNBC.
Legalist, partially funded by Peter Thiel, is a startup based on the model of financing litigation in exchange for a portion of the winnings. While we haven’t thought through this idea at length, it doesn’t, at first blush, impress us as an especially good idea.
President Obama is calling on U.S. allies to join forces against corporate tax avoidance. It remains to be seen what cooperation he will get, though most countries are hungry for tax revenue. Apparently it just won’t do for the sovereign entities of the world to get their financial houses in order. It’s probably just too much like work. Seems to be easier to print money, and tax everything that moves, (as well as most of what doesn’t) rather than make the tough decisions to balance budgets, and communicate those decisions to those who keep you in power. You can read the story regarding Obama’s remarks at http://www.reuters.com/article/us-g20-china-usa-tax-idUSKCN11B1LR.
In economic news, the Congressional Budget Office is revising the FY 2016 budget deficit to $590 Billion. This is $56 Billion higher than the CBO’s March forecast and represents the first increase relative to economic output since 2009. This $590 Billion is 3.2% of GDP, and is $152 Billion higher than FY 2015. GDP in the U.S. is $17.95 Trillion, and U.S. debt stands at $19.47 Trillion.
If current tax law remains unchanged, a substantial assumption going into an election, deficits are projected to increase. If tax law changes, we predict that deficits are projected to increase.
According to the Labor Department, the U.S. economy added 151,000 jobs in August, down from the 275,000 recorded in July. This was less than the 175,000 predicted by economists. The official unemployment rate remained unchanged, at 4.9%.
As you know from reading this commentary, we enjoy keeping up with business and the markets, and taking a skeptical view of government doings and promises. We don’t view life skeptically though. In fact, we are grateful for the life we have been given, the relationships that have come our way, and the opportunities in front of us. I was reminded of this recently, as I was going through some old files. In one file, I found an article written by David Brooks in April 2010.
In the article, published as an op-ed in the New York Times, Brooks encourages optimism. At the time, recent polls showed that 60% of Americans felt the country was headed in the wrong direction, that its best days were behind it, a fiscal crisis was unavoidable, and that the political system was dysfunctional. Our guess is that those percentages haven’t changed much in the last six years.
Brooks goes on to make a case for great optimism, concerning our country and its future. Friends, I happen to agree. Sure, the country has its problems. Think back though, over the conveniences you now enjoy, that weren’t available even fifteen years ago. And, to the quality of life we enjoy, and the gifts we have each been given. It is difficult, as we reflect, to be anything but grateful.
We firmly believe that the number and type of opportunities in front of us will continue to increase, and that the best is yet to come. We trust you feel the same way. You can read Brooks’ article at http://www.nytimes.com/2010/04/06/opinion/06brooks.html?_r=0.
And now, a few of our favorite quotes.
“Giving money to Congress is like giving whisky and car keys to teenage boys.”
“Anyone may so arrange his affairs so that his taxes shall be as low as possible. He is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase ones taxes.”
Judge Learned Hand
“I’ve read so much about the bad effects of drinking and smoking that I’ve decided to give up reading.”
Monday, September 5, 2016
Heartbreaks that begets Labor Day
Written by: Randy Brunson
After the Civil War ended, expansion began. This building out of the west required oil, coal, steel, wood, the products that were made from these materials, and a way to get these products to where they were needed, which was rail. During this time, some of the great fortunes of the 19th and early 20th century were made, with names such as Vanderbilt in rail, Carnegie in steel, Rockefeller in coal, and JP financing the operations. Other notable names: Yerkes, Stanford, Gould, Mellon, Harriman, Pullman, Frick, Field, Duke, McCormick and Astor. These names owned the enterprises that built the country, and provided its goods and services.
During this time in history, a typical workweek was a twelve-hour day, seven days a week. There were few laws prohibiting child labor, so child labor was common, and in too many cases, there was a disregard for the physical safety of employees. Immigration from Ireland, Italy, China, and many other countries provided a ready supply of cheap labor, downgrading work conditions even further. The inhumane factors and danger at the work place made unions attractive to employees, which made them very popular and eventually, the power of the unions became dangerous to big businesses.
Fights broke out, ranging from social retaliation through protests and boycotts, to legal retaliations with legislation and lawsuits. Politicians, irritated journalists, lawyers, and influencers began taking sides and confrontation became more and more violent, sometimes even fatal. As the recognition of employees as individuals grew, cities and states began setting aside the first Monday of September as a holiday for the “workingman.” Congress formalized it as a national holiday in 1894.
Most of us see Labor Day as the end of summer and an opportunity for some R&R. However, do we truly understand the concept of work? We firmly believe that each of us has been created to be productive, to be fruitful, and to multiply. This means using all we have been given in a way that makes a positive difference. The questions we study are “How do we utilize our time, treasure and talent in a manner that maximizes the return to ourselves and others?” And, “Since we are built and designed to work, how to pursue work with excellence, without having work become our identity?” We continue to learn, and will let you know what we find.
There is nothing in history, outside the last 150 or so years, that suggests retirement as we have come to understand it in America. Seems to us that retirement as its presented in America is more the creation of Wall Street and Del Webb, than it is anything else. Our call as individuals is to continually engage. While our roles may change, the opportunity of our lives is to continue to be productive, and to utilize our time, talent, and treasure, in ways that matter.