The Markets
Stock markets swelled and dropped like waves at the Olympic surfing competition in Tahiti.
It is often said that markets hate uncertainty. There was a lot of uncertainty last week, and it showed. “The technology-heavy Nasdaq 100 Index soared 3 [percent] on Wednesday and then retreated almost that much on Thursday, before paring the decline at the close, for its biggest up-to-down rotation since May 2022. The S&P 500 Index sank 1.4 [percent], just one day after rallying 1.6%. High levels of market volatility and levels of uncertainty. Here are three issues that have been top-of-mind for investors:
- Will the United States experience a soft landing or dip into a recession? On Friday, the U.S. unemployment rate rose to 4.3 percent as employers added fewer new jobs than economists had anticipated. There appears to be a 22 percent probability of a half-point cut in September and a 78 percent chance of a quarter-point drop. We shall be watching this over the next few weeks.
- Will geopolitical issues escalate?
A lot is happening around the world that could affect markets. One concern is ongoing tensions in relations between the United States and China. In addition to tariffs and trade issues, there are allegations that China is providing support for Russian war efforts in Ukraine, and concerns about a possible conflict over Taiwan. Energy security also is a risk as wars in Ukraine and the Middle East have disrupted energy supplies in some regions of the world. - Who will win the United States election?
There has been—and will continue to be—a lot of speculation about the outcome of the U.S. election and its potential effect on the economy and markets. Emotions accompanying elections can make it difficult to remember that financial markets are generally efficient and adjust to changing risks. While election sentiment may sway stock markets over the short term, other factors— earnings, and the business cycles usually impact the long term.
THE OLYMPIC BONUS.
Before 1972, only amateur athletes could compete in the Olympics. For example, in 1913, Jim Thorpe’s Olympic titles were stripped from him because Thorpe had been paid to play semi-pro baseball for two seasons. (Eventually, his gold medals were reinstated.)
Olympic amateurism rules became less stringent during the latter decades of the 20th century and, by the 1990s, the rules were mostly eliminated. Today, athletes from many countries receive a bonus if they earn a spot on the Olympic podium. For example, the United States awards bonuses of $38,000 for a gold medal, $23,000 for silver, and $15,000 for bronze. Many countries offer far larger bonuses, reported Lee Ying Shan of CNBC. Here are a few:
- Hong Kong, which has won 13 Olympic medals in total (when this was written), pays a bonus of 6 million Hong Kong dollars (~US $768,000) for a gold medal, HK$3 million for silver (~US $384,000), and HK$1.5 million for bronze (~US $192,000).
- Singapore, which has won five Olympic medals in total (when this was written), pays a bonus of 1 million Singaporean dollars for a gold medal (~US $745,000), SG$500,000 for silver (~US $373,000), and SG $250,000 for bronze (~US $186,000).
- Indonesia, which has won 37 Olympic medals in total (when this was written), pays a bonus of 5 billion Indonesian rupiah
for a gold medal (~US $300,000), Rp2.5 billion for silver (~US $150,000), and Rp1.2 billion for bronze (~US $75,000).
Other countries that offer a triple-digit U.S. dollar bonus for gold include Israel, Kazakhstan, Malaysia, and Spain.
Many, if not all of you, are Olympians in the training and discipline you have put into your savings and investing over the years. You deserve some medals as well!
Focus – Think About It
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