News

Weekly Market Commentary March 9, 2020

Fast Facts

Crime Abuzz- The booming almond industry in California is inspiring a new organized crime, said Oliver Milman in TheGuardian.com: beehive heists. There were 1,048 reported hive thefts in California in 2017, compared with just 101 in 2015. Authorities know where the stolen bees tend to wind up—in California’s fertile Central Valley, where farmland filled with “lettuce, grapes, lemons, apricots, and more requires pollination from far more bees than naturally live in the area.” Almonds are the “main driver of the honeybee demand,” with 1.17 million acres of land requiring pollination “at a standard rate of two beehives an acre.” With demand rising and bee populations dropping, the price of a hive for pollination has grown to $200 and up. Reported thefts dropped recently after the arrest of two men who’d been hiding 2,500 hives in what authorities called “a chop shop for bees.”

Showering Kindness- Flying with a baby can be a nightmare, but for Dustin and Caren Moore, it led to an unexpected shower of kindness. The couple were flying home from Colorado to California with their newly adopted 8-day-old daughter when a curious flight attendant asked about their baby. He used the in-flight intercom to announce the “very special guest” and passed out napkins and pens; 60 passengers then wrote messages of encouragement and advice for the new parents. “For an entire crew of strangers to come together like that to show us that kind of love and kindness meant everything to us,” said Dustin.

Tailwinds Helping Beat Records!- A British Airways passenger jet made the trip from New York to London in slightly less than five hours, setting a new record for subsonic aircraft. Assisted by the transatlantic jet stream, the flight arrived 1 hour and 42 minutes early.

Weekly Focus – Think About It

“The whole of life itself expresses the blues. That’s why I always say the blues are the true facts of life expressed in words and song, inspiration, feeling, and understanding. The blues can be about anything pertaining to the facts of life. The blues call on God as much as a spiritual song do.”
–Willie Dixon, Blues musician

The Markets

Last week, market volatility reached levels that make many investors uncomfortable.

On Monday, the Dow Jones Industrial Average surged higher, delivering its biggest one-day point gain in history. The catalyst may have been reports that ‘Group of Seven’ (G7) finance ministers and central bank governors were meeting via conference call on Tuesday. French Finance Minister Bruno Le Maire indicated the discussion would lead to coordinated monetary efforts to address economic issues related to the coronavirus, reported Reuters.

The G7 includes seven countries: United States, United Kingdom, Germany, Canada, Japan, France, and Italy. The European Union is a ‘non-enumerated’ member. The nations represent about 50 percent of the global economy, according to the Council of Foreign Relations, and was formed to coordinate global policy.

On Tuesday, the U.S. Federal Reserve (Fed) implemented a surprise rate cut. The pre-emptive move surprised many because the Fed’s policy-setting meeting was just two weeks away. The policy change sparked anxiety among investors. The Standard & Poor’s 500 Index, which had gained about 4.6 percent on Monday, dropped 2.8 percent on Tuesday, reported Ben Levisohn of Barron’s.

U.S. Treasury yields moved lower, too. The yield on 10-year U.S. Treasuries closed below 1 percent for the first time ever last week, reported Alexandra Scaggs of Barron’s.

On Friday, a robust employment report was largely ignored, reported Randall Forsyth of Barron’s, as were increases in the Atlanta Federal Reserve’s GDPNow estimate indicating economic growth during the first quarter may have been stronger than anticipated. Despite a downward swing on Friday, major U.S. stock indices finished the week higher.

Forsyth also reported Kenneth Rogoff, Professor of Economics and Public Policy at Harvard, is concerned the economic consequences of the coronavirus could include inflation. Production slowdowns and supply chain disruptions caused by the coronavirus could result in a mismatch between the supply of goods available and demand for goods across the globe.

In a Project-Syndicate commentary, Rogoff explained, “…the challenge posed by a supply-side-driven downturn is it can result in sharp declines in production and widespread bottlenecks. In that case, generalized shortages – something some countries have not seen since the gas lines of 1970s – could ultimately push inflation up, not down,” he contends.”

Until more is known about the coronavirus, markets may remain volatile.

WHEN ARE PEOPLE THE GLOOMIEST? In 2005, a psychologist considered a variety of criteria – weather, debt levels, income, post-holiday mindset, New Year’s resolutions, motivation levels, and more – and decided the third Monday in January was the day people are gloomiest, reported the United Kingdom’s Medical News Today.

His efforts were part of a travel company marketing campaign encouraging people to book flights in order to combat the post-holiday blues.

Now, The Economist has carefully analyzed music consumption to “create a quantitative measure of seasonal misery.” The publication used data from a popular music streaming service that offers 50 million options to 270 million people in 70 plus countries to track the type of songs people around the world listened to each month from January 1, 2017 to January 29, 2020.

The Economist relied on the streaming company to determine the emotional scale of the songs played during any given month. It explained, “The firm has an algorithm that classifies a song’s “valence,” or how happy [a song] sounds, on a scale from 0 to 100. The algorithm is trained on ratings of positivity by musical experts and gives Aretha Franklin’s soaring “Respect” a score of 97; Radiohead’s gloomy “Creep” gets just 10.” The happier end of the valence spectrum also included:

• OutKast’s “Hey Ya!”
• Taylor Swift’s “Shake It Off”
• Luis Fonsi’s “Despacito”

The sadder end included:

• Adele’s “Make You Feel My Love”
• Simon & Garfunkel’s “Bridge Over Troubled Waters”
• Nina Simone’s “I Put A Spell On You”

When the results were tallied, the global top 200 songs for February were the gloomiest overall. If you were curious, people played the happiest songs during July, although there was a joyful spike in late December for Christmas.

Best regards,

John Klevens, CFP ®

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This material is intended to provide general financial education and is not written or intended as tax or legal advice and may not be relied upon for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. This material is for informational purposes only and is not an offer to sell or a solicitation to buy any securities.

Securities and Advisory Services offered by John Klevens through KMS Financial Services, Inc. Member FINRA/SIPC and an SEC Registered Investment Adviser. Klevens Capital Management and KMS are separate and unaffiliated.

Portions of this newsletter have been prepared by Peak Advisor

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Sources:
The Week Magazine
https://www.nbcnews.com/business/markets/wall-street-takes-deep-breath-after-worst-week-decade-n1146886
https://www.reuters.com/article/us-health-coronavirus-g7/us-mnuchin-powell-to-lead-g7-finance-call-on-coronavirus-response-idUSKBN20P2JT
https://www.cfr.org/backgrounder/g7-and-future-multilateralism
https://www.barrons.com/articles/dow-jones-industrial-average-finishes-week-higher-the-pain-isnt-over-51583548961?mod=hp_DAY_1 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/03-09-20_Barrons-The_Stock_Market_Finished_the_Week_Higher-The_Pain_Isnt_Over-Footonote_4.pdf)
https://www.barrons.com/articles/u-s-treasury-yields-plummet-past-0-8-for-the-first-time-51583501109 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/03-09-20_Barrons-US_Treasury_Yields_Keep_on_Plummeting-Footnote_5.pdf)
https://www.barrons.com/articles/the-rate-cut-drug-might-not-cure-ailing-market-51583545555?mod=hp_DAY_2 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/03-09-20_Barrons-The_Rate-Cut_Drug_Might_Not_Cure_Ailing_Market-Footnote_6.pdf)
https://www.project-syndicate.org/commentary/next-global-recession-hits-the-supply-side-by-kenneth-rogoff-2020-03
https://www.medicalnewstoday.com/articles/324236#A-self-fulfilling-prophecy
https://www.economist.com/graphic-detail/2020/02/08/data-from-spotify-suggest-that-listeners-are-gloomiest-in-february (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/03-09-20_TheEconomist-Data_from_Spotify_Suggest_that_Listeners_are_Gloomiest_in_February-Footnote_9.pdf)
https://www.azquotes.com/quote/709869?ref=blues-music