Weekly Market Commentary

November 21, 2022

The Markets

Thanksgiving and football go together like turkey and stuffing.

For some families, though, this year may be more like a turducken, stuffed with American football and the sport the rest of the world knows as football (soccer). The men’s World Cup, which is played every four years for national glory, the Jules Rimet trophy, and millions of dollars in prize money, began on Sunday and will end on December 18.

During the tournament, researchers may track the influence of sentiment on markets. According to Mark Hulbert of MarketWatch, previous research has found that a team’s performance – especially a loss – can have a short but powerful effect on the national mood.

“You would be excused for being skeptical that a soccer tournament has anything to do with the stock market. But you need to understand how disheartened a country’s investors can become after their team loses in the World Cup. A significant body of academic research has found that their dejection has a pronounced impact on the stock market,” reported Hulbert. “…our moods play a powerful role on our investment decisions. We tell ourselves that we base our portfolio decisions solely on sober and rational analysis. As the academic research into the World Cup Effect reminds us, this isn’t always so.”

Investors in the United States were a bit dejected last week. Stronger-than-expected retail sales in October indicated consumer demand remained strong, despite the Federal Reserve’s efforts to slow spending by raising rates. Hawkish commentary from multiple members of the Federal Reserve also affected markets as it suggested the Fed is not ready to pause its inflation fight any time soon, reported Ben Levisohn of Barron’s.

Last week, major U.S. stock indices moved lower, and yields on shorter-term Treasuries moved higher. The yield on a 2-month Treasury bill finished the week at 4.2 percent, while the yield on the benchmark 10-year Treasury ended the week at 3.8 percent.

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; U.S. Treasury; 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.

IT’S THAT TIME OF THE YEAR. In mid-November, people begin to prognosticate and predict, offering their thoughts about what the future may hold. While everyone else is future-gazing, we thought it might be interesting to look at some past predictions and see how they panned out.

·        A shorter alphabet and taller Americans. In 1900, John Elfreth Watkins, Jr. published an article in the Ladies Home Journal titled, “What May Happen in the Next Hundred Years”. He forecasted that the population of the United States would reach 350 to 500 million people, Americans would be one to two inches taller, and life expectancy would increase to age 50 from age 35. He also thought the letters ‘C’, ‘X’ and ‘Q’ would be eliminated from the alphabet because people would begin to spell words the way they sound.

·        Remote work and uploading brains. At the 1964 New York World’s Fair, science-fiction writer and futurist Arthur C. Clarke said, “Trying to predict the future is a discouraging and hazardous occupation.” That didn’t stop him, though. Clark predicted that advancements in communication, especially satellites, would make it possible for people to be in instant contact with each other. They would be able to get in touch, no matter where they were, allowing everyone to work remotely. He also suggested that a machine might be developed to transfer information directly to the human brain, making it possible to become an instant expert on any topic.

·        ESG and economic indicators that reflect values. In a 1968 edition of Harvard Business Review, environmentalist and futurist Hazel Henderson predicted that companies would be motivated to pollute less, build mass transit, recycle goods and pursue other actions through a combination of social pressure, media attention and the desire for financial gain. She also thought economic indicators would be adapted to reflect “a healthy bottom line in financial terms as well as an additional bottom line that addresses people's growth needs and their psychological, spiritual and cultural values.”

Through the end of 2022, we expect there will be predictions about the war in Ukraine, the likelihood of recession, changes in energy supplies, the future of social media, and much more. If you have any questions about how our changing world may affect your financial goals and investment portfolio, please let us know.

Weekly Focus – Think About It

“It's tough to make predictions, especially about the future.”

—Yogi Berra, baseball player, manager and coach