Tuesday, September 1, 2015

The Month That Was - August 2015

                       Sydney M. Williams
                                                                                                                                   September 1, 2015
The Month That Was
August 2015

“Down the lanes of August – and the bees upon the wing,
All the world’s in color now, and all the song birds sing.
Never reds will redder be, more golden be the gold,
Down the lanes of August, and the summer getting old.”
“Down the Lanes of August” – 1923
Edgar Albert Guest (1881-1951)

Financial markets dominated the month. Puerto Rico defaulted on a bond payment, marking the first time a U.S. commonwealth had done so. In seven business days the Shanghai Index lost 27% of its value, or about $1.5 trillion. In six days, U.S. stocks fell 11%, costing investors around $2.8 trillion. Markets in other parts of the world shared similar fates. The VIX, a measurement of volatility that had spent much of the year in the mid to high teens, spiked to 40.74 on the 24th, the day the DJIA was down 3.6%. Another measure of volatility looks at the closing price of the DJIA versus the previous day. On only three occasions in the preceding four months did the index close up or down more than 1.5%. In August, that happened five times. Volatility is disquieting, but provides opportunities for traders. Investors should ride out churning seas.

The media made much of the point moves in the Dow Jones, while paying less attention to the less dramatic percent changes. Certainly, those few days were enough to wake a complacent investor from his August slumber, but they didn’t come close to setting records. Yes, the 588 points in the DJIA lost on August 24th exceeded the 508 points lost on October 19th, 1987, but to be equivalent the Dow Jones would have had to have lost 3,700 points!

Before the stock market hit speed bumps, the price of oil began to fall. By the 24th crude futures had lost 19.6%, before rebounding in the final week to close 3.5% higher. The Bloomberg Commodity Index, which is down 13% year-to-date, ended August about flat. China concerns regarding commodities abated during the last couple of days of the month. Early in the month, China devalued its currency by 2%, reversing a trend that had been in place for several years. The Shanghai Index, which was already down 29% from its mid-June high, lost another 12% in August. However, it is still up 46% from a year ago. China remains speculative – politically, economically and financially. The Shanghai Index, at its recent May high, was 13% below where it had been in October 2007, a reminder that the news from China is not really new.

The Fed meeting next month will be interesting. Volatility in financial markets prompted Lawrence Summers to write an op-ed in the Financial Times warning against a rate increase. On the other hand, second quarter U.S. GDP numbers were revised from plus 2.3% to plus 3.7%. At some point, the Fed will have to raise rates. Doing so should help put the nation and financial markets on paths to normalcy. It is my guess that doing so will be less painful than feared.

Republicans fielded seventeen candidates in the first debate of the season. They represented a broad range of ideas, experience, character and age. Fox News, which hosted the event, divided the assortment into two groups, based on showings in the latest polls. Donald Trump, who was leading going in, came out even stronger. The polls also boosted the prospects for two other non-politicians, Ben Carson and Carly Fiorina. Polls, however, have lost much of their predictive powers. The reasons may have something to do with the way questions are posed but, more likely, lie in technology. Caller ID has provided those receiving calls the option of not answering. Only the most adamant respond to polls. On the Democrat side, Hillary is muscling through her self-created slough of scandals. Her principal claim on the Presidency is that she is a woman and it is her due. Mr. Obama, in looking for someone to continue his agenda, finds himself caught between Hillary’s calumnies, a charismatic Socialist and a prone-to-gaffe Vice President. They’re all old and they are all white; and it’s all they have.

The EPA, which never misses a chance to condemn the private sector for despoiling nature, managed to create one of the largest environmentally damaging spills in recent memory. Working in an abandoned mine in Colorado, they released over two million gallons of toxic waste into the Animas River In doing so, the EPA changed the clear waters of the river into a bright orange. Durango and Platte County were forced to declare states of emergency. It took six days before the inappropriately named Environmental Protection Agency took responsibility.

Immigration is an issue in the United States, but our problems pale when compared to Europe’s. Wars and terrorists in the Middle East and Africa have caused tens of thousands of refugees to seek asylum in Europe. Men, women and children come across the Mediterranean on small, crowded boats, and overland through Turkey and the Balkans in the backs of trucks. An article in The New York Times reports that thus far in 2015 twenty-five hundred have died in the attempt. In August, in three separate instances, 771 died. Included were 71 whose bodies were discovered in Austria, in the back of an abandoned truck. The latter were escaping ISIS forces in Syria and Iraq and had paid smugglers between €3,000 and €5,000 each.

A chemical explosion in China’s third largest city, the port city of Tianjin, killed at least 150 people, with dozens still missing. Trigana Air, an Indonesian airline and which has lost ten planes since its founding in 1991, crashed in a remote mountainous area of Papua, Indonesia killing all 54 people on board. A bomb blast rocked downtown Bangkok, Thailand’s capital and largest city, killing at least twenty and injuring dozens. Alexis Tsipras, Greece’s President, in the wake of a bumbled bail-out called for new elections in September. And the United States re-opened its embassy in Cuba.

In an act of extraordinary braveness, three Americans and a Brit prevented what would have been a mass murder by an Islamic terrorist aboard a train in France. The three men – Spencer Stone, Alek Skarlatos and Anthony Sadler – charged and subdued the would-be killer who was carrying an AK-47, a hand gun, a box cutter and nine ammo clips. A British businessman, Chris Norman, lent support. French President François Hollande awarded the four the Legion of Honor.

This past August marked the 225th birthday of the United States Coast Guard. On August 26th, 1920 the 19th Amendment was certified, giving women the right to vote. It was the month of August, seventy years ago, that saw two Japanese cities – Hiroshima and Nagasaki – obliterated by two atomic bombs, bringing an end to a war in which perhaps 60 million people died. For perspective, the world’s population in 1940 was about a third of what it is today, and today’s nuclear weapons are twenty times more powerful. President Obama celebrated his fifty-fourth birthday on August 4th, the same day my younger sister turned 71. Fifty years ago this August the Voting Rights Act was signed into law by President Lyndon Johnson. It was also fifty years ago that this writer, straight out of Eastman Kodak’s training program, went to work at the New York’s World Fair. August 29th marked the 10th anniversary of Hurricane Katrina. That storm, 400 miles wide, hit New Orleans with sustained winds of 100 to 140 miles per hour. When it was over, it left nearly 2000 dead and $100 billion in damages.

August was the month when the anti-Kardashian movement finally took off…maybe? Good Day Orlando co-host John Brown walked off the set because the Kardashians were consuming too much of the conversation. It was the month when Democrat National Committee Chairwoman Deborah Wasserman Schultz didn’t seem to be able to explain the difference between Democrats and Socialists. Speaking of Democrats, political correctness caused the Democrat Party to sever ties with Thomas Jefferson and Andrew Jackson, at least as concerns the annual Jefferson-Jackson annual dinner. The sins of the two men, as slave holders, overcame their virtues, as visionaries and populists. Vester Lee Flanagan, a mentally disturbed former on-air anchor for WDBJ-TV in Roanoke, Virginia, shot and killed a reporter and camera man. Flanagan, who saw himself as a victim, had been fired. He deliberately shot Alison Parker and Adam Ward while they were on air. After posting on Facebook his filming of the incident, he took his own life.

In 1975, the Alaska Board of Geographic Names changed the name of Mt. McKinley to Mt. Denali, a name Athabaskans have always used. Mr. Obama, just prior to a visit and upsetting Ohioans, made it official. In a case where one hand doesn’t know what the other is doing, it was reported during the month that Drones could be purchased at a kiosk in Newark Airport. It was also reported that at least fifty pilots had seen Drones in their flight paths, while landing at New York area airports! A mother panda in Washington’s National Zoo gave birth to twins. Sadly, one died, but the other seems to be doing well. Speaking of the Kardashians, Caitlyn (AKA Bruce) Jenner may face man-slaughter charges for a woman killed in a chain-reaction crash in February. A Canadian-built hitchhiking robot was destroyed in Philadelphia after two weeks on the road. And, in a classy statement, former President Jimmy Carter, now 90 years old, announced that his liver cancer had metastasized to his brain. He spoke about his condition easily and memorably, saying “I’m perfectly at ease with whatever comes.”

The “Grim Reaper” appeared on August 9th and carried off former New York Giant and sports commentator Frank Gifford at age 84. Six days later he returned for Civil Rights legend Julian Bond at 78, an age that makes me consider mortality.

So ends the “Dog Days” of summer and heralds the arrival of September – a month, because of school, that we will always associate with the start of something new.

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