Weekly Market Commentary October 8, 2018

Fast Facts

NYC Sewers Paved With Gold- An employee in the city’s Department of Environmental Protection walked off with an astonishing $539,098 paycheck las year according to records released by the Empire Center think tank. Bhavesh Patel, a stationary engineer, clocked 1,992 overtime hours on top of his 2,086 regular hours. That means he worked average of 78 hours a week for 52 weeks, assuming he never called out sick or took a day of vacation. A city official said the department’s overtime needs were driven by a staff shortage, which it has worked to address this year. The official added that the positions require a state operator license and proficiency with high-voltage equipment – “an extraordinarily high skill set.

Abundance of Bears- About 700 grizzly bears currently live in the vicinity of Yellowstone National Park. When the animal was first placed on the Endangered Species Act list- 42 years ago, only about 125 were known to be living in the area. Ryan Zinke, the secretary of the interior, remarked on the long-term efforts that have allowed the bear to thrive: “This achievement stands as one of America’s great conservation successes; the culmination of decades of hard work and dedication on the part of state, tribal, federal and private partners,” Mr. Zinke said in a statement. “As a Montanan, I’m proud of what we’ve achieved together.”

Worth It’s Weight In Gold- The exotic arowana, aka the dragon fish, has become a status symbol in Asia, where it is thought to bring good luck. Tales abound of arowana sacrificing their lives to jump out of tanks and warn owners against bad business ventures and other dangers. Nearly gone from the wild, they are bred for sale; an albino adult—which can grow up to 3 feet long—may go for $70,000, and some specimens are rumored to fetch up to $300,000.

Weekly Focus – Think About It

“Jealousy is all the fun you think they had.”  –Erica Jong, quoted in the San Francisco Chronicle

The Markets

The stock market tends to be a leading economic indicator.

Last week offered some insight to economics and stock market behavior. The U.S. unemployment rate reached its lowest level since 1969 and wages moved higher, yet major U.S. stock indices lost value.

Why didn’t stock markets move higher?

The answer is stock prices tend to be leading indicators. They reflect investors’ expectations for the future. Last week, investors may have been thinking like this:

When unemployment is low, companies cannot always hire enough workers…
To hire more workers, companies raise wages…
Higher wages give workers more spendable income…
More spendable income produces higher demand for goods and services…
Higher demand for goods and services leads to higher prices…
Higher prices (inflation) cause the Federal Reserve to increase the Fed funds rate…
An increase in the Fed funds rate pushes interest rates higher…
Higher interest rates make borrowing more expensive…
Higher borrowing costs may slow business spending…
Slower business spending may cause profits to fall…
Falling profits may cause investors to sell shares…
When investors sell shares, stock prices may drop.

In general, “…while it usually takes at least 12 months for any increase or decrease in interest rates to be felt in a widespread economic way, the market’s response to a change (or news of a potential change) is often more immediate,” explained Mary Hall on Investopedia.com.

At the end of last week, 10-year Treasuries yielded 3.2 percent. Daniel Kruger of The Wall Street Journal reported, “U.S. government bond yields rose to their highest level in years Friday as investors reconsidered the strength of the U.S. economy while selling off stocks that could be hurt by higher borrowing costs.”

One way to manage stock market volatility is to have a well-allocated and diversified portfolio.

What do you think? Athletes who grew up playing pick-up games of baseball, kickball, basketball, street hockey, and other sports with neighborhood kids may have had some advantages they didn’t recognize.

A Brazilian research study, cited by Freakonomics Radio’s show Here’s Why You’re Not An Elite Athlete (Ep. 351), found children who played sports in unstructured environments showed more tactical creativity and tactical intelligence than children who played in structured environments.

In addition, playing multiple sports may be more beneficial than specializing in a single sport, at least when it comes to soccer.

A study by Manuel Hornig, Friedhelm Aust, and Arne Güllich reviewed the training of soccer players in Germany. Practice and play in the development of German top-level professional football players, which was published in the European Journal Of Sports Science, reported athletes who went on to play for the German national team played more pick-up sports as children, and played more types of sports in adolescence, than players who did not make the German team.

“The trick is not just to get lots of children playing, but also to let them develop creatively. In many countries they do so by teaching themselves…Such opportunities are disappearing in rich countries,” reported The Economist.

Maybe we should rethink our tactics.


Best regards,


John Klevens, CFP



Sources: The Week Magazine, New York Times, nypost.com
Portions of this newsletter has been prepared by Peak Advisor