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August 2017 Market Update

August 2017 Market Update - Chicago leads major U.S. cities in population loss, sees drop for 3rd year in a row | Steve Cain, RPBG Director - Writer / Editor

The economic recovery is a little like the Energizer Bunny – it just keeps going. Signs of the good times are all around us. The Dow Jones hit another high, breaking through 22,000 for the first time on August 2. The jobs report for July showed 209,000 new jobs for the month and unemployment declined to 4.3%, the lowest rate since March 2001. Corporate profits have generally exceeded expectations. By any measure, this seems to be an economy hitting on all cylinders.

Hidden in all this good news is the somewhat surprising slump in the dollar relative to other currencies. Normally, the red-hot US economy would translate to a stronger dollar as more investors rush to invest money in the US. But just the opposite is happening with a declining dollar against pretty much all the major world currencies including the Euro, the Chinese Renminbi, the Japanese Yen, the Swiss Franc and even the British Pound which has been pummeled in the wake of Britain’s decision to pull out of the European Union.

The decline in the dollar is also surprising, given that the US generally – and the US dollar in particular – are considered safe-havens in a turbulent world. But this time, it looks like the world is laying at least some of the responsibility for global turbulence at the doorstep of the United States. This has much to do with recent antics in Washington and, more recently, the saber-rattling between Donald Trump and the North Koreans. Whatever the reasons, our currency is not doing as well as our economy.

Perhaps the best measure of the nervousness in the equities markets is the performance of the VIX, also known as the Volatility or “Fear” Index that was created by the Chicago Board Options Exchange. As recently as July 26, this index dropped below 9, it’s lowest reading ever. But over the past few days, the index has risen again, partly due to escalating tensions between the US and North Korea but possibly also due to growing concerns about American leadership (or the lack thereof) on the world stage.

So, here we are once again wondering if we should pop the champagne or run for the hills? If you’re looking at the stock market, unemployment rate or corporate profits, this is indeed the best of times. But if you’re wondering how far those North Korean intercontinental ballistic missiles can really travel, then perhaps buying more stocks is not your primary concern.

My best advice – assuming North Korea hasn’t launched a nuclear missile at Guam, or the US hasn’t launched a pre-emptive attack on Pyongyang by the time you are reading this article – is to take a deep breath and relax. It’s still August, a generally a slow month for the markets while many Wall-Streeters are out on vacation. So, do like the magnates. Take a break. Go to the beach (it doesn’t have to be The Hamptons) or escape to your cabin. We only have a few weeks left to enjoy the summer before school starts up again (well, maybe not in Illinois – but I digress). Enjoy the last weeks of our all-too-short summer season. Fall is just around the corner and summer hours will be a thing of the past very soon. We’ll be back at work worrying about the next crisis before you know it. They’ve been coming fast and furious lately. No sign that that is going to change anytime soon.

September 2017 Market Update

September 2017 Market Update | Steve Cain, RPBG Director - Writer / Editor
September 4, 2017
 
The long Labor Day weekend is always just a little bittersweet. As much as we love the extra day off, we know it also marks the end of summer, the return of cooler weather and, for many of us, a renewed focus on making those end-of-year numbers before the holidays hit.
 
This year, like the last several, we can get back into work mode without worrying too much about the state of the economy. According to the Bureau of Labor Statistics (BLS), the economy has not seen a net decline in the number of jobs since September 2010. That makes the 156,000 net new jobs in August the 83rd consecutive month of job gains, one month shy of seven years! 
 
But, about those 156,000 jobs... expectations were higher with predictions at about 200,000. The BLS also revised job numbers downward for June and July by 41,000, reflecting an economy that is expanding, but at a sluggish pace. Finally, unemployment ticked up to 4.4% from 4.3%. Not a big change, and nothing that anyone seems to think is worth losing sleep over. But it is not the robust growth than many have been hoping for, and that the stock markets still seem to believe is coming. Despite the mildly disappointing news, the equities markets continue to perform well with the Dow Jones just under 22,000 as I write this market review.  
 
Perhaps the biggest surprise of the latest round of economic news is the surprising weakness is wage growth. This is especially puzzling, given that the unemployment rate has been at or below 5% since September 2015. Generally, when unemployment falls to “full employment” levels (somewhere in the 5% range), pressure on wages increases. But that does not seem to be happening, at least not right now. The good news is that this may cause the Federal Reserve to hold off on further increases in interest rates. But the bad news is that, for a lot of Americans, wages are still barely keeping up with expenses.  
 
One big concern not reflected in any of these numbers is the impact of Hurricane Harvey which devastated Houston and other parts of the Texas and Louisiana Gulf Coast at the end of August. Houston alone accounts for approximately 3% of the US economy, and the state of Texas accounts for almost 10%. The flooding in the region was widespread, impacting residences and businesses alike. Even worse, there is at least a possibility that these horrors could be compounded by Hurricane Irma which is now a Category 4, and could potentially blow into the Gulf of Mexico later this week.
 
Putting aside the possibility of a second hurricane, the recovery from Hurricane Harvey is likely to take many months and cost tens of billions of dollars. Although fewer people died in Harvey than Katrina, the devastation could be more impactful on the national scene for the simple reason that Houston is a much larger and more economically important city than New Orleans.
 
We won’t know for another month what impact Hurricane Harvey had on the national economy, but it is hard to imagine that it will not be felt, at least in the short term. The statistics are staggering. One million cars unusable; 40,000 homes destroyed and many more damaged; oil refineries shut down. Just east of Houston, the entire city of Beaumont is still without running water. For tens of thousands of Texans, getting back to work will be difficult if not impossible. Even those with dry houses and working cars may find that their employers are shut down or inaccessible. For those whose cars were destroyed by the floods, just getting to work in car-dependent Houston will be a major challenge. 
 
Kind of makes crying over the end of summer seem a bit silly. There are worse problems in the world – just ask anyone who lived through Harvey.
 

July 2017 Market Update

July 2017 Market Update - Chicago leads major U.S. cities in population loss, sees drop for 3rd year in a row | Steve Cain, RPBG Director - Writer / Editor
These are strange times. Our political world has rarely felt more divided, acrimonious, unsettled and unpredictable. Such conditions generally spread outward, affecting people’s confidence in the future and, ultimately, the direction of our economy. But in today’s world, all the anguish about our body politic seems to have little impact on the economy which continues to hum along as it has done for years and shows every sign of continuing to do.
 
On the national level, the past few weeks have seen considerable hand-wringing about the future of health care. On the left, there is a palpable fear that the Republican proposals from the House and Senate will take away the “essential benefits” that the ACA made law, force millions back into the ranks of the uninsured, and transfer billions of dollars from the poor to the rich. On the right, there is enormous anger at Washington which is thoroughly and completely in Republican hands, yet seems unable to deliver on the promise that has held the party together for eight long years and four election cycles – to replace, if not completely repeal, the Affordable Care Act – better known as Obamacare.
 
On the state level, if anything, things are even worse. There is a dark cloud hanging over Illinois, and it seems to grow blacker and more ominous with every passing day. The state’s calamitous stalemate over the non-existent state budget is about to enter year three. Only this time, there appear to be some real-world consequences that just might start to get the attention of everyday Illinoisans who seem to have brushed off our civic dysfunction up until now. 
 
Specifically, the three major ratings agencies are all threatening to cut Illinois’ bond ratings to junk, an ignominious first in the illustrious history of our great country. With junk status bestowed upon our bonds, other impacts begin to unfold, some of which seem likely to draw the ire of our fellow citizens. Among these is the impending shut-down of all construction work on area highway improvement projects. That would include the rebuilding of the Circle Interchange and I-55/Lake Shore Drive, a development that might just catch the notice of commuters heading into and out of the Loop. Five state universities could be forced into bankruptcy. And oh, by the way, no more Powerball ticket sales in Illinois. Now if THAT doesn’t get people riled up, nothing ever will.
 
The conflict over health care in Washington, or the budget in Springfield, are just the latest skirmishes between the Democrats and the Republicans in an endless stream of conflicts that have been raging between the two parties and, more fundamentally, between Blue and Red America. Yet the stock markets – always a good barometer for how the country is feeling about the economy – are once again near historic highs. The Dow Jones closed Friday, June 30 at 21,349, not far from the all-time high of just over 21,500 earlier in June. 
 
Am I the only one who feels like the disconnect between our political and economic realities is getting hard to reconcile? Has anyone else felt a little schizophrenic when contemplating the permanent state of crisis that defines our politics, and the blue skies and roses that describes our economy?  I will admit to being delighted with the performance of my investment portfolio; but I’m still afraid to turn on the radio in the morning to listen to the news. And I have a feeling I’m not the only one. I just can’t seem to shake this feeling that something has to give. I just hope it’s something good. The way things are going, it is getting harder to be an optimist these days.
 

Evening of Theater and More at Sullivan High - June 13th

An Evening of Live Theater & More at Sullivan High School

Tuesday, June 13 / Doors open 6:15pm / Program begins 7pm

6631 N. Bosworth / Park in lot off Greenview



An Evening of Theater and More at Sullivan High promises to be a genuine "feel good RPBG appreciation night" - and one that might cause you to feel immensely proud to be associated with our organization.

The performance - produced and directed by Lifeline Theater - based on stories from the student actors - reflects the diversity of their lives - and 11 of the 20 actors are immigrants and refugees.

(By the way, the amazing story in Chicago Magazine about Sullivan's refugee program (Welcome to Refugee High) is now available ON LINE.)

The evening's festivities will also allow us to see the fruits of our other contributions: the football team, which went 10-0 after we helped purchase them shoulder pads; the music program which we have assisted by restoring instruments and paying for private lessons; and, of course, the Life Skills classroom which we built, serving students in the Low Incidence program (students with autism and Down Syndrom), where the students will host a dessert reception with cookies they made.

What can  you do? If you plan on attending, please REGISTER - no charge for paid RPBG Members. We will even feed you! (Doors open at 6:15; Program at 7:00. Guests: $10 pre-register; $15 at the door.)

What else? To give students and Sullivan staff a feeling of support, let alone the thrill of performing in front of a packed  house, it would be great if we could draw 80 - 150 people to this event.

Later today we will send out a flyer - please forward it on - or, go ahead and forward this email. Consider bringing your high school age kids - as they might benefit by seeing that high school activities like drama, sports and music are not necessarily opportunities that Chicago high school kids, like those at Sullivan, can take for granted - and 'but for' the generosity of organizations like ours, they might not have them!

There will be a fundraising component to the evening - to fund a theater program next Fall, and to support the newly established non profit Friends of Sullivan, but no expectations, as this event recognizes your past generosity.

Remember - please register, so we can plan accordingly. (Sullivan is at 6631 N. Bosworth; parking lot on Greenview.)

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