Like everyone else after a nice vacation period, I am relearning how to work again. This week’s post is light on economic & business news but heavy on complaining about Man United. Enjoy!
This newsletter is 1,632 words a 8-minute read
Welcome back to the Rambling Mind Newsletter. This is your Market Update.
Summary of Topics:
No more DEI training
Stats of the Week
$3/gallon: gas is cheap again!!
$140 Million fine hit Southwest for 2022’s holiday mess up
25 States increased the minimum wage if you live in the South, Sorry
$541 Million the largest donation made in 2023, guess who?
Looking Ahead
Election Year: Yeah, I’m crying too
Fantastic Sports Year
Sports I Love
🤬 Man U
College Football National Title Game
Markets
2023 was a year for the record books. The S&P 500 recovered all losses from 2022 and is 2% from a new all-time high. The Nasdaq had one of its 5 best years ever. The DOW aka the grandpa index, had a nice 10% bump. 2023 was a year in which you made money in basically anything you invested. It was another proof of Nick Maggiulli's saying "Just Keep Buying". We never know what might happen in the market from one year to another. The best way to beat the odds is to stay invested and continue investing.
However; a warning as we begin this new investing year from the Greatest of All Time, Warren Buffett. "Be Fearful when others are Greedy and Greedy when others are Fearful."
Total Returns of 2023
Tale of the Tape
Economy
Over the last year, there has been a constant onslaught against DEI programs by companies.
🔍Details: In the summer of last year, the Supreme Court overturned the use of affirmative action by colleges in their admissions process. Although this was not a ruling against companies who had various diversity efforts using quotas; it was enough to scare businesses. It also empowered conservatives to push back on all DEI efforts that had taken root since the murder of George Floyd in 2020.
Florida and Texas over the last few months have passed laws limiting DEI practices in schools or organizations that receive state funding
Companies have massively slowed down their hiring for DEI positions. Indeed estimated job postings for those roles are down 44% from last year.
😀Good News: Many business leaders are committed to DEI efforts because they know it is important for their workers. However, they are straying away from calling it DEI to avoid the eye of Sauron upon them aka Conservative lawmakers.
💬In Their Words: Cinnamon Clark cofounder of Goodwork Sustainability said, "Companies are really starting to look at other ways to do the work without saying that they're doing the work."
Kevin Delaney of Charter, a research company on the future of work, said, "It's hard to imagine with the amped up rhetoric of an election year that people really want to stick out their neck more."
Kedra Newsom Reeves, a managing director and partner at Boston Consulting Group, “It is not simply DEI for DEI's sake. It's really about how do we drive impact as companies."
😒Takeaway: Expect a lot of discussion about DEI during the elections. Some will blame DEI for everything wrong with the world today. It will be an easy way for politicians to distract from the important issues of:
AI's effect on the labor market
Loneliness Epidemic
Homeownership issues
Climate Change disruptions
Income stalling and wealth being centered in the hands of a limited number of people
Bad infrastructure (how many bridges have to fall apart for us to take this seriously)
Education issues (stop saying "children are the future" but then cut education budget in favor of lower taxes on businesses)
Post Covid too many children are behind in math, reading, etc.
Workforce development and mismatches (need to be creating programs to help upskill people into a new world)
National debt ($34 Trillion) getting out of hand because we do not collect owed taxes
The inability of our elected officials to do their jobs and create policies
No societal safety net.
There are so many more issues but why focus on any of those when we can just spend our time arguing about culture wars?
Stats of the Week
YAY for cheap gas
Southwest was hit with the largest fine faced by an airline for the chaos during last year's holiday travel. Which left 17,000-holiday flights canceled and over 2 million passengers stranded. The FAA wanted to use them as an example for all other airlines. The fine is 30x larger than similar fines levied on airlines.
Part of the fine is a requirement for Southwest to annually set aside $90 million in vouchers for passengers affected by future delays and cancellations.
Are increasing minimum wage this year. While the Federal minimum wage ($7.25) hasn't increased since I was a sophomore in high school (2009). Some states have been taking matters into their own hands to ensure an adjustment is being made to help wages keep up with inflation.
According to the Economic Policy Institute, if the minimum wage kept up with inflation it would be about $22.19. If there is one thing America is good at, it is the ability to ensure we pay as little for labor as possible.
Warren Buffett donated $541 million worth of Berkshire Hathaway stock to his Buffett Foundation. This was the largest charitable donation of the year 2023. Over his lifetime, Buffett has donated about $52 Billion. He is likely the biggest philanthropist ever. Other top donors were:
Phil and Penny Knight (founder of Nike) pledging $400 million to revive a Historical Black neighborhood in Portland
James and Marilyn Simons (one of the greatest quant investors) donated $500 million to the Simons Foundation.
Ross Brown (you have never heard of him but he rich-rich) donated $400 million to the California Institute of Technology
Dan and Jennifer Gilbert (owner of the Cavs) donated $375 million to their Gilbert Foundation
The skeptic in me sees these donations of stock to their personal foundations as nothing but a way to avoid paying taxes. But the believer in me loves seeing any kind of generous deed being done regardless of how it may be helping the individual.
I still believe we must get them taxes though. Cannot rely on the better angels of billionaires to solve governmental and societal issues.
Looking Ahead
Economy
Kick off the new year with some leftovers from last year. On Thursday, the Labor Department will release December’s inflation numbers. It is expected that inflation will be close to 3%,
👀What to Watch: A higher number would increase worries that the Fed has not brought inflation under control. However, a lower number would be great news for investors because it would mean the Fed will have confidence to follow through on interest rate cuts.
Earnings
As with every earnings season, the Big Banks kick things off. they provide a snapshot of consumer spending trends that can be used to understand how the economy is doing.
👀What to Watch: Are they seeing signs of economic struggles for consumers? Are consumers going far heavier into debt to finance their lifestyles?
Election Year
I pity all our spam folders, mailboxes, and TV boxes everywhere. The sludge known as election ads is gonna be greater than any other year in the history of politics. ‘Tis gonna suck especially for those of us who live in so-called Purple States i.e. Georgia, Arizona, Nevada, and Michigan.
Sports I Love
Man U
What's the point of me complaining about how the team is a bunch of solo artists trying to play as a band but no one wants to step away from the spotlight for there to be a coherent sound?
What's the point of me complaining about the coach removing players who have shown an aptitude for controlling the ball for the team (Mainoo) with players that have no idea how to receive the ball under pressure (McTominay) and then playing him in the most dangerous part of the field (Defensive Mid)?
What is the point of complaining about how we get world-class players (Varane, Casemiro, Sancho, Mount) and they turn to garbage because we ensure every single weakness of theirs is exposed and exploited every week?
What is the point of me complaining about how players look lost on the field every single week like they never practice during the week?
What is the point of me complaining about how we are wasting the potential of a great striker because we refuse to get the ball to his feet (Hojlund) or his head?
Just what is the point?
College Football National Title Game
For the first time in the history of the College Football Playoffs, there will be no SEC teams in the Finals.
Alabama, who squeaked into the playoffs after Florida State (and the entire ACC) got snubbed by the Football Selection Committee, lost to Michigan last Monday in an overtime thriller.
As a Bama somewhat fan, this game was kinda frustrating to watch. Bama did not take risks by throwing the ball deep. It was a lot of checkdowns and short throws
Side Note: After watching Florida State get dismantled by the B-Squad of Georgia 63-3. I can see why the Committee did not put them in the playoffs
Washington beat Texas in a fun high-scoring game.
Washington will be taking on Michigan tonight. I got my money on Michigan (24-17) because of the cliche “Defense wins Championships.” Michigan can rush the passer much better than Washington can stop the run.