T his Week from Jesse Hurst
Jesse W. Hurst, II
CFP® CERTIFIED FINANCIAL PLANNER™
AIF ® ACCREDITED INVESTMENT FIDUCIARY


The History of Man vs Machine


In the book "Progress and Poverty", Henry George, a political journalist and economist, writes about the paradox of increasing inequality amid economic and technological process. This is something we hear a lot about today, especially as more and more people are concerned about machines taking their jobs.
 
The most interesting fact about this book is that it was written in 1879. Yes, you read that correctly. The very thing that people are discussing and worried about today, was the same thing that caused concern 140 years ago. At that time, the country was dealing with nearly 10 years of a crippling economic crisis. In the book he mentions concerns about machines replacing people, and that we have an obligation to help those people whose jobs are being eliminated. Way before Elizabeth Warren floated the idea of a wealth tax, Henry George was advocating for something similar. He wanted landowners, who controlled most of the wealth, to subsidize people whose jobs were being eliminated. Today, the people who control capital and intellectual property who are being targeted to fund a "citizens dividend" for those jobs who are being disgorged.
 
In 19th century England, textile workers fought automation by smashing the equipment that was replacing them. More recently, trade agreements and globalization have also played a role. In the 1950s, most televisions were made in the United States by companies such as RCA, Zenith and Magnavox. Today, you would be hard-pressed to find a US made TV. While this is difficult for the people who lost their jobs due to new technology, it has benefited United States consumers by producing goods and services at much lower prices. These lower prices for consumers are much larger than the jobs and wages lost due to disruptive technology.
 
"There are decades where nothing happens; and there are weeks where decades happen" is a historical quote that certainly seems appropriate given everything that we have lived through over the last three months with the outbreak of the COVID-19 coronavirus. We have seen 40,000,000 jobs lost in the last 10 weeks alone. Robots are being deployed in warehouses and hospitals to reduce human interaction and the spread of the virus. Drones and driverless cars are delivering medicines and supplies to people in a touchless manner. On the plus side, machine learning and artificial intelligence are greatly speeding up the process of creating new vaccines and therapeutics which will ultimately give us more confidence to resume are normal daily activities.
 
Things have changed, and the pace of this change will only accelerate moving forward. Change can be hard, the future and the technology that comes with it is sometimes scary. We hear about virtual/augmented reality, blockchain, artificial intelligence, machine learning, wearable monitors, etc. However, advancing technologies have historically enhanced our quality of life, created new fields and job opportunities, and have created better outcomes and wealth for people around the world. 
 
We know these trends will continue. We want to help you understand how these will impact and benefit our lives and cast a vision of what the future holds for us. A better understanding will allow us to have more confidence, as we can see ourselves in this new and better tomorrow. We at Impel Wealth Management will continue to watch for and monitor these advances, and we are more than happy to talk with you about their impact on our lives and our finances as we keep "Moving Life Forward" together.
 
 
Jesse


Weekly Market Commentary
July 6, 2020
 

The Markets
 
 
What a quarter!
 
Who could have guessed a global pandemic would produce outsized stock market returns? Near the end of last quarter (March 23), the Standard & Poor's 500 Index was down 30.75 percent for the year, and it looked like 2020 was going to be a disappointing year for many investors.
 
Since then, the S&P 500 has gained 39 percent, reported The Economist. It rose 20 percent from March 31 to June 30. The Dow Jones Industrial Average also did well, delivering its second best quarterly showing since 1938. The Nasdaq Composite finished the quarter in positive territory.
 
A variety of factors contributed to the exceptional performance of U.S. stock markets during the quarter:
 
  • The Federal Reserve maintained a supportive monetary policy stance. It has been buying Treasuries and mortgage-backed securities and funding emergency loans.
  • The $2 trillion emergency spending package passed by Congress had impact. Stimulus checks, enhanced unemployment benefits, and emergency loans plumped personal income and supported businesses through second quarter closures.
  • Positive data suggested economic recovery might be underway. In the United States, unemployment numbers improved, although they remained at historically high levels. Factory activity in China hit a three-month high, and the June Purchasing Manager's Index in the United States came in above expectations.
 
Supportive central bank policies helped global economies during the second quarter, too. Stock markets in many regions, including Europe, China, and Japan, finished the second quarter higher. Positive economic data, optimism about coronavirus treatments, and hopes for a vaccine helped push markets higher, reported T. Rowe Price.
 
Consumer confidence also contributed. Callum Keown, Nicholas Jasinski, and Carleton English of Barron's reported:
 
"On Tuesday, the Conference Board reported an 11-point rise in the June consumer confidence index, to 98.1 points. Economists' consensus estimate had been for a 90.6 reading. American households remain more optimistic about the future than their current circumstances: the present situation index component of the survey rose 15.1 points, to 86.2, while the expectations index rose 9.1 points, to 106."
 
It is possible consumer confidence in the United States will be dented by the recent upsurge in coronavirus cases. Last week, the spread of COVID-19 was gaining momentum again. Every day, from Wednesday through Saturday, more than more than 50,000 new cases were confirmed.
 
Many states and cities implemented new measures to slow the spread. One of the most important may be mask wearing. Researchers at Goldman Sachs reported:
 
"Thus, the upshot of our analysis is that a national face mask mandate could potentially substitute for renewed lockdowns that would otherwise subtract nearly 5 percent from GDP. It is important to recognize that this estimate is quite uncertain because it is based on a number of statistical relationships that are all measured with error. Despite the numerical uncertainty, however, our analysis suggests that the economic benefit from a face mask mandate and increased face mask usage could be sizable."


Data as of 7/3/20
1-Week
Y-T-D
1-Year
3-Year
5-Year
10-Year
Standard & Poor's 500 (Domestic Stocks)
4.0%
-3.1%
5.3%
8.8%
8.6%
11.8%
Dow Jones Global ex-U.S.
1.8
-10.3
-5.4
-0.7
-0.3
2.9
10-year Treasury Note (Yield Only)
0.7
NA
2.0
2.3
2.4
3.0
Gold (per ounce)
1.5
16.4
25.4
11.5
8.7
3.9
Bloomberg Commodity Index
3.8
-18.9
-15.9
-7.6
-8.4
-6.3
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, MarketWatch, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.


Let's all go to the drive-in! 
Americans' search for socially-distanced entertainment is leading them to drive-in theaters. Demand has been strong enough that pop up drive-ins are opening in sports venues, arenas, and fairgrounds across the United States, reports Sara Fischer of Axios News.
 
In the 1950s, there were more than 4,000 drive-in theaters in the United States. By October 2019, the number had dwindled to 305. More than one-third were concentrated in Pennsylvania, New York, Ohio, Indiana, and California, according to the United Drive-In Theater Owners Association.
 
Outdoor movie theaters tend to operate on razor-thin margins, reported The Washington Post. "...Drive-ins in the 21st century have flourished in more working-class and rural areas where land is cheaper and the venue appeals to families seeking to pile in the car for a night of inexpensive entertainment."
 
Now, we're seeing a resurgence of interest in outdoor movie venues. The sponsor of the Tribeca Film Festival has partnered with big box stores. They'll be bringing "...the big screen to America's backyard this summer...," by offering movies in store parking lots.
 
So, set up the lawn chairs or deck out your cargo space with pillows and blankets, and settle in to watch some movies from a safe social distance in the great outdoors.
 

Weekly Focus - Think About It

"Outside of a dog, a book is a man's best friend. Inside of a dog it's too dark to read."
--Groucho Marx, Comedian


Best regards, 
 
Jesse Hurst CFP ®, AIF®
Invesmtent Advisor Representative
 
Impel Wealth Management 
 
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* These views are those of Carson Coaching, and not the presenting Representative, the Representative's Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
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* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
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