August 13, 2024

The Markets

Markets were gripped by August jitters.

Last week, financial markets were volatile. The CBOE Volatility Index (VIX), which is known as Wall Street’s fear gauge, rose to the highest level in four years before cooling down. “While spikes in the VIX often coincide with deep market sell-offs, they can also be short-lived and precede a rebound for stocks,” reported Jesse Pound of CNBC.

Investor uncertainty contributed to market fluctuations last week. There were many reasons for the uncertainty. For example, some investors:

• Were unsettled by economic data. Markets stuttered after a weaker-than-expected jobs report. Some investors panicked, believing the United States might be headed for a recession rather than a soft landing.
  
  “A slowing economy could create challenges for equities to achieve the kind of earnings growth that analysts were penciling in for the quarters ahead,” noted a source cited by Connor Smith of Barron’s.
  
  On Thursday, investors regained some confidence after data showed the number of people filing for unemployment claims was lower than expected. The information suggested the labor market remained solid. The subsequent rally was unexpected because jobless claims don’t normally move the market, reported Barron’s.


• Were concerned about geopolitical risks. Recently, the United States, the United Kingdom, Australia, France, Canada, South Korea, Saudi Arabia, Japan, Turkey and Jordan all warned their citizens to leave Lebanon as quickly as possible on fears that hostilities in the Middle East may escalate, reported Tom Bennett and Hugo Bachega of the BBC.
  
  “Iran, Israel and Hezbollah all have the capabilities to continue to attack each other without triggering physical supply cuts in energy or blocking global shipping. Those are the kinds of effects that would trigger a major market reaction. Though a persistent danger is that, in the fog of war, one party or other goes too far or misreads its adversaries’ intent. Events can quickly spiral out of control,” reported Matt Peterson in Barron’s.


• May have been less experienced. It’s summertime, and people—including money managers and traders—are vacationing. The Economist explained:

  “Spare a thought, then, for the 20-somethings left to run the northern hemisphere’s trading desks over the next few weeks, while their bosses doze on a beach. Possibly for this reason, markets are often more jittery than usual during the summer months. Last year, for example, it was in August that American share prices began their final protracted fall before a storming bull run that took them to new all-time highs. That may be down to liquidity, which… tends to be slightly thinner during the holiday season than in the rest of the year. It may also be that the lack of veterans on banks’ trading floors allows panic to set in more easily. Prices can swing a lot further before someone musters the courage to push back.”

Despite sharp swings higher and lower, major U.S. stock indices finished the week close to where they started it. The yield on the benchmark 10-year U.S. Treasury finished the week higher.

Data as of 8/9/24	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	0.0%	12.0%	19.6%	6.4%	12.9%	10.7%
Dow Jones Global ex-U.S. Index	-0.2	2.5	6.6	-2.7	3.8	1.7
10-year Treasury Note (yield only)	3.9	N/A	4.0	1.3	1.7	2.4
Gold (per ounce)	-2.4	16.0	25.4	11.5	10.0	6.3
Bloomberg Commodity Index	0.8	-3.2	-10.4	0.9	4.3	-2.9

And the World’s Most Liveable Cities Are…

The Economist Intelligence Unit (EIU)’s Global Liveability Index improved marginally in 2024. The EIU’s annual survey evaluates the stability, healthcare, culture and environment, education, and infrastructure of 173 cities around the world to determine which are the most—and least—livable.

In 2024, “Declines in stability and infrastructure across a number of cities in advanced economies were offset by structural improvements in healthcare and education in several cities in developing markets… An acute housing crisis has pulled down infrastructure scores of some of the top-ranked cities,” reported the EIU. The war with Hamas caused Tel Aviv, Israel, to slide down the list this year. The cities that were most livable included:

• Vienna, Austria
• Copenhagen, Denmark
• Zurich, Switzerland
• Melbourne, Australia
• Calgary, Canada

Vienna took top marks although it was held back from a perfect score by a lack of major sporting events. “Copenhagen, Zurich and Geneva… are notable for their modest population size, which tends to lead to lower crime rates and less crowded roads and public-transport systems.”

Many of the cities at the bottom of the livability list have seen little improvement year to year. The stability category, overall, saw the biggest decline in 2024. Some lower-ranked countries have seen their economies destroyed by civil war. The cities that were least livable included:

• Damascus, Syria
• Tripoli, Libya
• Algiers, Algeria
• Lagos, Nigeria
• Karachi, Pakistan

Cities in the U.S. were not in the top or bottom five. If we focus only on the U.S., the top cities (as ranked by the EIU and reported Celia Fernandez of CNBC) were:

• Honolulu, Hawaii
• Atlanta, Georgia
• Pittsburgh, Pennsylvania
• Seattle, Washington
• Washington D.C.
• Chicago, Illinois
• Boston, Massachusetts
• Miami, Florida
• San Francisco, California, and
• Minneapolis, Minnesota

Weekly Focus – Think About It

“It’s not always about being the best; it’s about being my personal best and having fun and trying to always stay in a positive place.”

—Jamie Anderson, professional snowboarder

Wishing you and your families well,
Sean M. Dowling, CFP, EA
President, The Dowling Group Wealth Management

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