January 14, 2020

Hang On to Your Optimism!

In 2019, a Pew Research Center survey reported many Americans were pessimistic about the future. Their worries included the national debt, the gap between the rich and the poor, and automation.

Martin Luther King was sometimes discouraged, too. In a 1967 interview on NBC News, he acknowledged his disappointment with the state of our country and then said, “Now, I’m not one to lose hope. I keep on hoping. I still have faith in the future…”

Dr. King was a steadfast patriot and he saw a nation that lived up to its principles, kept its word to its people, and offered the world an example of justice and equality for all. King was not a simple dreamer, and he believed in an America that was better than the one in which he lived. He was optimistic. The civil rights movement he led brought the United States a long way down the road toward a widespread justice.

Building the future is never easy and it’s never finished. Optimism and courage are valuable tools that can help make the future what you want it to be – for yourself and for others. We salute Dr. Martin Luther King, Jr. and hope his vision for a more peaceful world will be realized one day.

The Markets

It was a nerve-wracking week.

Iran fired 22 ballistic missiles at the Ain Al Asad air base near western Iraq and a second base in northern Iraq following last week’s U.S. drone strike that killed a top Iranian military commander. Newsweek reported the bases suffered minimal damage and there were no casualties from the attack. However, Iran mistakenly downed a commercial airliner, killing all on board, reported CBS News.

U.S. stock prices faltered after the initial attack, but recovered quickly when both sides, “…step[ped] back from further violent escalation…,” reported Barron’s.

U.S. Treasury bond yields dropped sharply last week before rebounding. Financial Times reported the possibility of war caused global investors to seek out investments perceived to be safe havens. Record amounts of cash moved into bond investments, particularly U.S. Treasuries, during the week ended last Wednesday.

Australia was ravaged by wildfires. Citing the Insurance Council of Australia, NPR reported, “The wildfires have killed more than two dozen people, more than a billion animals. They've destroyed more than 1,800 houses, an untold number of commercial buildings and thousands of acres of prime farmland…” At the end of last week, 130 fires were burning and 50 were uncontained, according to the BBC. The damage could mark the end Australia’s nearly 30-year economic expansion.

Puerto Rico was shaken by a 5.9 magnitude earthquake. The quake followed a magnitude 6.4 quake that hit the same region four days earlier, reported the Associated Press. Since December 28, the region has been hit by, “…more than 1,280 earthquakes, of which more than 100 were felt and more than 70 were of magnitude 3.5 or greater.”

On Friday, a tepid U.S. employment report cooled U.S. stock returns. However, Barron’s reported all three major U.S. indices closed, “within a half-percentage point of their highest-ever closes.”

Stock market data table

More Milestones of the Past Decade

As we mentioned last week, the period from 2010 through 2020 was filled with memorable events. We covered a few in last week’s commentary. Here are some more:

  • Gangnam Style. In 2012, Korean pop music went viral with Gangnam Style. Its online video became the first to be viewed one billion times.
  • Total solar eclipse. For the first time since June 1918, a solar eclipse was visible across the entire United States in August 2017. We won’t have to wait so long for the next one. Good Housekeeping reported it will happen in 2024.
  • Economic confidence increased. In January 2010, Gallup reported just 9 percent of Americans said it was a good time to find a quality job. By the end of 2019, the number had increased to 66 percent.
  • Bionic men, women, and children. Bionic people are no longer limited to the realm of science fiction. Prosthetics “…are morphing into mind-controlled extensions of the human body that let their wearers feel what they're touching,” reported CNET.
  • Trillion-dollar stock valuations. Late in the decade, three companies in the technology sector saw their stock valuations reach thirteen digits. Not all have remained at that level.
  • Global middle class expansion. At the end of last year, about one-half of the world belonged to the middle class, according to the World Data Lab. Middle class means different things in different countries. Middle class income ranged from $3,872 a year to $38,720 a year.
  • The U.S. wealth gap. The St. Louis Federal Reserve explained the gap like this: The ‘income pie’ in the United States grew from $7 trillion in 1989 to almost $12.9 trillion in 2016. The share of pie going to the top 10 percent of earners increased from 42 percent to 50 percent. Lower earners’ shares shrank.

Weekly Focus – Think About It

“After many months of reflection and internal discussions, we have chosen to make a transition this year in starting to carve out a progressive new role within this institution. We intend to step back as ‘senior’ members of the Royal Family and work to become financially independent, while continuing to fully support Her Majesty The Queen. It is with your encouragement, particularly over the last few years, that we feel prepared to make this adjustment. We now plan to balance our time between the United Kingdom and North America, continuing to honor our duty to The Queen, the Commonwealth, and our patronages. This geographic balance will enable us to raise our son with an appreciation for the royal tradition into which he was born, while also providing our family with the space to focus on the next chapter, including the launch of our new charitable entity. We look forward to sharing the full details of this exciting next step in due course, as we continue to collaborate with Her Majesty The Queen, The Prince of Wales, The Duke of Cambridge, and all relevant parties. Until then, please accept our deepest thanks for your continued support.”

—The Duke and Duchess of Sussex

Best regards,
Sean M. Dowling, CFP, EA
President, The Dowling Group Wealth Management

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https://www.barrons.com/articles/the-dow-jones-industrial-average-rises-189-points-for-the-week-despite-mideast-tensions-51578705947?mod=hp_DAY_4 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/01-13-20_Barrons-The_Dow_Rises_189_Points_for_the_Week_Despite_Mideast_Tensions-Footnote_3.pdf)

https://www.barrons.com/market-data?mod=BOL_TOPNAV (Overview chart) (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/01-13-20_Barrons-Overview_Market_Data-Footnote_4.pdf)

https://www.barrons.com/market-data?mod=BOL_TOPNAV (Bonds chart) (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/01-13-20_Barrons-Bonds_Market_Data-Footnote_5.pdf)

https://www.ft.com/content/3eaf8fe8-3334-11ea-9703-eea0cae3f0de (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/01-13-20_FinancialTimes-Bond_Funds_had_Record_Inflow_as_Iran_Crisis_Spiralled-Footnote_6.pdf)











https://www.instagram.com/p/B7EaGS_Jpb9/?hl=en (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/01-13-20_Instagram_Post-Duke_and_Duchess_of_Sussex_Announcement-Footnote_17.pdf)

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