Weekly Market Commentary

July 27, 2018

 

The Markets

Last week, there was some good news and some notable news.

Here’s the good news: Corporate earnings have been strong. As of July 20, 17 percent of the companies in the Standard & Poor’s 500 Index had reported second quarter results. More than 85 percent of those companies reported positive earnings surprises, according to FactSet, which means they earned more than expected.

Here’s the notable news: U.S. stock markets largely ignored a slew of domestic and global issues to finish up a basis point or two last week.

The U.S. bond market has been less sanguine than the U.S. stock market. Normally, investors expect to earn higher yields when they lend their money for longer periods of time (e.g. invest in longer-term bonds).The problem has been that there has not been that much of a difference between the 2 options.

At the end of last week, two-year U.S. Treasuries yielded 2.6 percent and 30-year Treasuries yielded 3.0 percent.

Forward Looking Career: Air Broker. By 2050, about 70 percent of the world’s population is expected to live in cities, reports UNICEF.

The United States is ahead of the curve. Since the 1990s, 75 percent or more of Americans have lived in metropolitan areas. The same was true in Spain, the United Kingdom, Australia, and Canada. In 2000, citizens of Mexico, Korea, and Brazil were largely urban dwelling. By 2050, China and India are expected to have almost two billion people living in cities – and neither will have crossed the 75 percent level.

If the thought of densely packed cities inspires a bit of claustrophobia, you’re not alone. Anyone who has ever watched ‘Green Acres’ knows city living isn’t for everyone. However, cities are innovation engines, reports Fast Company. “The more people there are in an area, and the more densely they’re networked, the more startups get created and the more patents get filed.”

Consider the entrepreneurial example set by a New York City (NYC) deli owner who was trying to figure out how to stay in business on the Lower East Side of Manhattan. The answer was selling air, reports The Indicator From Planet Money:

“So when you buy a plot of land in New York, it comes with what are called ‘air rights.’ That essentially says how much you are allowed to build on that plot of land. Let’s say you buy a plot of land and it comes with 10 stories worth of air rights, you could build a 10-story building on it.”

The deli owned five stories worth of air rights, or 27,960.66 square feet of air. How much was all that air worth? Reportedly, a developer in New York paid about $17 million for it.

Guess who negotiates air deals in NYC.

That’s right: Air brokers.

Positive Focus

“Growth is inevitable and desirable, but destruction of community character is not. The question is not whether your part of the world is going to change. The question is how.”

–Edward T. McMahon, Author