Stocks are down this morning as the possibility exists that the 10-year bond yield jump above 3% woke up a few investors who had been happily unfocused on bonds (and the effect they can have on equities) for quite some time.
Why does this bring worry?
An interesting comment from Goldman Sachs, reported via CNBC, not only gives the view that rates could rise to 3.6% next year … but “the deficit growing at a time when the unemployment rate is falling … hasn’t happened in peacetime since World War II.” The morning article (same sources) points out that more bonds will need to be issued … and with the U.S. “no longer a player in the market” … will introduce us to the scenario of greater supply and few buyers. The result of course? Higher interest rates!
So those who look at our growing national debt and shrug their shoulders, feeling there will be little effect … might soon think otherwise … as a pop in rates would be expected to have an effect on so many things.
Borrowers of the future, beware!
Wow, I didn’t mean the above to sound so negative. Mornings when the Dow is down over 200 points does tend to put me in a bad mood, but I’ll get over it. We still have the rest of the day … and the days ahead …for optimists to focus on positive aspects of the economy … of which there are many … and hopefully turn this boat around.
There is one more thing that is quite interesting to point out this morning.
Mark Zuckerberg turned 34 yesterday. Why am I mentioning this? His net worth is listed at $74 billion.
Let’s think about this a moment … and get ready to impress those gathered around the water cooler today.
… for every day Mark Zuckerberg has been alive … he has made:
$6 million dollars!
Now I am more depressed than before.
Have a great day,
Joseph G. Witthohn, CFA
Emerald Asset Management
610 Freedom Business Center Drive
King of Prussia, PA 19406
Direct: (610) 285-9905
… as of 10:20 AM …
Quick Look at the News
Morgan Stanley announced that the easy days of investing are over ... though I have to figure out when they told us the easy days were actually here (CNBC)https://www.cnbc.com/2018/05/14/morgan-stanley-says-the-easy-investing-days-are-over-lowers-stock-weighting-and-raises-cash-allocation.html
... and I am left to wonder who will tell me about investment opportunities in the future. Will it be a stock broker ... or a group of people on social media? (USNews)https://money.usnews.com/investing/investing-101/articles/2018-05-14/how-investors-use-twitter-to-beef-up-returns
One thing about Elon Musk ... he certainly has visions of the future ... and is not shy about sharing them with others (CNBC)https://www.cnbc.com/2018/05/15/what-elon-musk-thinks-the-future-of-cars-and-mars-will-be.html
... though some wonder if these are things that will actually come to pass ... or if they are shared hallucinations ... speaking of which ... some cannabis farmers are growing too much (BoingBoing)https://boingboing.net/2018/05/10/oregon-farmers-are-growing-far.html
Sports gambling is now up to individual states ... and some have already taken steps in anticipation of yesterday's positive Supreme Court decision. Where does your state stand? (USAToday)https://www.usatoday.com/story/sports/2018/05/14/sports-gambling-status-every-state-after-supreme-court-ruling/607334002/
We know that government makes rulings that affect many companies ... so you wonder if the World Health Organization's call for elimination of trans fats over the next 5 years will gain acceptance (CNN)https://www.cnn.com/2018/05/14/health/trans-fats-who-2023-intl-bn/index.html
... but some feel we should focus on other things ... like education ... for there is a sad claim that our teachers are forced to spend their own money for needed supplies (Time)http://time.com/5277745/teachers-spend-money-on-school-supplies/