This Week’s Quote:
"Is the rich world aware of how four billion of the six billion live? If we were aware, we would want to help out, we'd want to get involved.” --Bill Gates
Back in 2009, Bill Gates and Warren Buffet are rumored to have held a dinner meeting of billionaires in New York City. Even Oprah Winfrey was said to have been there. The subject of philanthropy was the purported purpose.
Within a year, the “Giving Pledge” had a Who’s Who of billionaires committed in writing to give away at least 50% of their wealth while alive, or at their death. Fast forward to today and we find some 92 billionaires have signed the pledge. Reading the letters they’ve written is incredibly instructive. They can be found at http://givingpledge.org.
And its not just the old money who is signing up. The newly rich are jumping on board too. Fortune reports that the 2012 class of the rich signing the Gifting Pledge includes the owner of 5-Hour Energy, Manoj Bhargava and Peter B. Lewis, Progressive Insurance’s founder, among many other notables. The trend looks to be firmly in place.
Sadly, in the current political environment, there are a handful of those who malign the wealthy among us for various reasons. Since we at J.L. Davis spend most of our professional time with those who are either wealthy or in the process of becoming so, we think we have a unique perspective. That perspective is that rather than being maligned, most wealthy folks deserve a hug. That’s right, a hug.
A hug for employing people, in many cases, since many wealthy people own businesses. The National Taxpayer’s Union reports that the “rich” top 10% of earners pay 70% of personal income taxes in the United States, the revenue from which goes to fund a host of government functions, including national defense and social programs. That deserves a hug. Certainly a hug is due for their funding of a massive number local, national, and international charitable causes which bring about so much good to so many. Finally, a hug because, well, everyone deserves a hug.
It’s hard to say how many billionaires might ultimately sign the Giving Pledge that Mr.’s Buffett and Gates have so wisely promoted. Just as it’s hard to say just how many of the rest of us will follow their example, as many now are. We’re thinking…plenty.
Hugs all around.**
Market Week: October 15, 2012
The Markets
Equities took a 2%-plus hit last week. Whether it was caused by profit-taking, a gloomy forecast from the International Monetary Fund, reaction to initial third-quarter earnings reports, or some combination, the decline cost equities their attempt at a new post-2007 high. Meanwhile, oil prices bounced back above $90 a barrel, while the stock market's troubles also meant a bit more appetite for U.S. Treasuries.
Last Week's Headlines
• The International Monetary Fund cut its forecast of global growth to 3.3% for this year (from 2011's 3.8%) and 3.6% next year (although its 2.2% forecast for the United States is slightly higher than previously estimated). However, the IMF's annual report warned that its growth estimates depend on the eurozone addressing members' debt problems and the United States avoiding the so-called "fiscal cliff." Otherwise, the IMF called the risk of a serious global slowdown "alarmingly high."
• There continued to be relatively encouraging news out of the housing market. Mortgage foreclosures nationally fell to a five-year low in September, according to RealtyTrac®. The 180,427 foreclosure filings were 7% lower than the previous month and down 16% from a year ago. The biggest declines were seen in California, Georgia, Texas, Arizona, and Michigan, while states where foreclosures must go through the judicial system, such as Florida, Illinois, Ohio, New Jersey, and New York, continued to have substantial year-over-year increases.
• Standard & Poor's downgraded Spain's sovereign debt to BBB- (one notch above junk status) and gave it a negative outlook for the future, indicating the likelihood of future downgrades. However, the yield on the Spanish benchmark 10-year bond remained under 6%.
• Once again, higher gas prices helped push inflation at the wholesale level up 1.1% in September. However, producer prices overall remained relatively stable, as the year-over-year inflation rate was a moderate 2.1%.
Eye on the Week Ahead
The bailout watch on Spain could intensify in advance of the European Union summit on Thursday and Friday. Domestically, a flood of earnings reports as well as housing and manufacturing data will suggest the state of the economy.
Key dates and data releases: retail sales, business inventories, Empire State manufacturing survey (10/15); consumer inflation, industrial production, international capital flows (10/16); housing starts (10/17); Philadelphia Fed manufacturing survey (10/18); home resales, options expiration (10/19).
Data sources: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.
Prepared by Lee Davis** and Broadridge Investor Communication Solutions, Inc. Copyright 2012
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