Alchanati Campbell & Associates
Your mindset. Such a key component in the human structure. Not the skeletal structure or the “epithelial tissues that line our internal organs” structure, but the structure of our well-being, success, and happiness. The most important things in life are internal, not external. “The clearer my mind is, the clearer I see, the clearer I respond.” Our whole experience of existence is really what’s going on in our mind. All of our emotions are created by our thoughts. Suffering is our mind not dealing with feelings in a positive way. People distract themselves because they cannot live with their minds. Our whole life is our attitude towards it. To change your emotions, change your thoughts. Be 100% present in body and mind in everything you do. Even if you lived in the skin of your idol, you would still feel uncomfortable. Why? Because even though your outer appearance changed, you still have the same mindset.
The Market. United Technologies acquires Raytheon for $74 billion. Morgan Stanley says oil demand will continue slowing. Crude oil fell to a 5-month low due to oil inventories surging to their highest levels in 2 years. There is a very strong probability that the Feds will cut rates before the end of 2019. If rates are cut, it creates a marketplace where it is cheaper to borrow money. When it is easier to borrow more, you start accumulating more debt, with the riskiness of not being able to pay it back. But if the Fed starts cutting rates now, what tools will they have when a downturn occurs? Americans sleep, on average, less than seven hours a night. It is proven that missing one night of sleep impairs memory. The “flipping” of homes dropped 39% in the last 12 months. The Smiley Company, the global empire licensing empire of the smiley face, makes more than $500 million per year. Endurance: the ultimate limit of long-term human endurance is 2.5 times our resting metabolic rate (the rate at which your body burns energy when it is at complete rest). Central American Migrants are starting to travel to Europe instead of the US. Economies are largely driven by consumer spending. In the US, consumer spending is 70% of GDP. Global sustainable investment reached $30.7 trillion at the start of 2018, an increase of 34% over the past 2 years. Europe has the highest proportion (82%) of asset owners already active in the ESG space. In Asia, it's 76%. The most direct approaches to identifying a recession: wait for the National Bureau of Economic Research to announce a recession or wait for GDP to decline over two consecutive quarters. There has been 2,108 cases of Ebola in Africa since August 2018.
Tax Advantages and Tax Deductions. SALT stands for state and local taxes. The federal government allows taxpayers to deduct real and personal property taxes, income taxes, and general sales taxes. This avoids taxpayers from being taxed twice on the same income. Other deductions can come from charitable giving and mortgage interest.
2019 Internet Trends. The current number of internet users is 3,800,000,000. China is the largest market of internet users. E-commerce sales growth is slowing. Google makes the most money from online advertising, at close to $30 billion in Q1 2019. In 2018, the daily hours spent with digital media per adult user in the USA was 6.3 hours (2008 was 2.7 hours). There is a steady decrease in watching television and an increase in watching digital videos.
The Labor Market in 2050. Current estimates suggest that over the coming decades, slower population growth and lower labor force participation will constrain the supply of labor in the US. The standard economic model for the labor markets says that levels of employment and earnings for different demographic and education groups reflect the interaction of supply (number of workers) and demand (jobs created by employers) forces in the market. Automation and globalization affect these heavily. Any new technology can replace some groups of workers while creating new demand or complementing others. For older less-educated workers, these replacements can be damaging. In the last 40 years, the labor market has changed due to a stagnation in earnings, rising inequality, and declining labor force participation of less-skilled workers. The population growth will continue to slow, people will age longer, and diversity will increase with Asian and Hispanic races being a larger majority of the total. Two policies that would need to innovate to these changes are reforms in social security and Medicare that encourage longer working lives and later retirements, and immigration reforms that raise current levels of immigration.
Can’t Stop, Won’t Stop Working. Almost 40% of Americans lack confidence they will ever save enough money to retire. Millions worry whether they are saving enough to live on once they stop working. People are living longer. Healthcare and medical care are becoming more expensive. The Employee Benefits Research Institute is telling millennials to save 10% of each paycheck. If you are older and haven’t started saving for retirement, the percentage will be 15-20%. The more income you make + the more you contribute to savings = the lower the probability you run out of money in retirement. If you make less money, you have to contribute a bigger percentage.
The First Housing Bubble. Amsterdam, 1713-1750. This bubble was caused by a shift toward investing in real estate which increased housing prices, and the higher prices triggered more purchases of houses (the momentum effect: higher prices can cause additional higher prices). But there were no mortgages available (or housing loans)… so where did the money come from? During the 1600s and 1700s, the Dutch government was issuing huge amounts of government bonds (to pay for wars) to Dutch investors. When the interest payments became too much to pay, the Dutch government reduced the number of bonds sold and investors started buying real estate instead.
Millennials. They have less trust in employers. They have less trust in the stock market. Millennials and Generation Z are expressing uneasiness and pessimism towards their careers, their lives in general, and the world around them. They express a strong lack of faith in traditional societal institutions including mass media and social progress. They aspire to travel and help their communities more than starting families or their own businesses. They want to travel, earn high salaries, be wealthy, buy homes of their own… Millennials who entered the labor market around the recession, or during the years of slow growth that followed, experienced less economic growth in their first decade of work than any other generation. They have lower real incomes and fewer assets than previous generations. They worry about climate change, natural disasters, income inequality, distribution of wealth, unemployment, crime, corruption, terrorism, political instability… Only half believe that leaders of their current governments are committed to helping improve society or behave in an ethical manner. Their behaviors are profoundly disrupting business and society alike. They start and stop relationships with companies for very personal reasons. Nearly 64% of millennials said they would be physically healthier if they reduced the time spent on social media, and that it would make them happier.
Book Summary. “Open” by Andre Agassi. Take it more than one point at a time. Work for everything. No matter what happens, hold your head up. And for God’s sake enjoy it, or at least try to enjoy moments of it. Control what you can control. What you feel doesn’t matter in the end; it’s what you do that makes you brave. The tennis bag is a lot like your heart- you have to know what’s in it at all times. To be inspired- that is the secret. Hard work is the answer, the only answer. Only the strong survive. A win doesn’t feel as good as a loss feels bad, and the good feeling doesn’t last as long as the bad. I marvel at how unexciting it is to be famous, how mundane famous people are. They’re confused, uncertain, insecure, and often hate what they do. Money can’t buy happiness- but we never believe it until we see it for ourselves. Dangerous to surrender to fear. Fears are like gateway drugs. You give in to a small one, and soon you’re giving in to bigger ones. Don’t worry about whether she likes you. Worry about whether you like her. Love is how we grow up. We must care for ourselves, which means we must be careful in our decisions, careful in our relationships, careful in our statements.
The Alchanati Campbell and Associates Team
WHAT'S UP FRIDAY? is a weekly newsletter that will give you a summary of "What's up?" on Wall Street, in the US and around the World written by The Alchanati Campbell and Associates Team. What makes us unique is we focus on long-term knowledge; knowledge that will still be useful to you 10 years from now.