Financial markets were burning up Friday, as the Dow Industrials closed off some 394 points (-2.1%) to end the holiday-shortened trading week.
The selling in stocks was accompanied by a sell-off in the bond market. Treasury yields spiked to 1.67% in the 10-year note, the highest level since before the June Brexit vote by the UK.
We’ll have to see whether today’s pullback in both stocks and bonds is a harbinger of things to come. If it is, then investors will likely need to play defense, as it means neither major asset class is going to deliver you any alpha.
Meanwhile, while stocks and bonds were burning down today, there’s another kind of burn being felt in society that deserves a deeper look.
That burn was seen last week at what has become a social gathering of the hip, eccentric and "free spirits" of the day … the annual Burning Man festival.
In case you don’t know, the Burning Man festival actually started some 30 years ago in San Francisco. There, a group of like-minded revelers got together to unplug, and to celebrate alternative cultures, artistic expression, free thinking and other sorts of Woodstock-like expression.
In the late 1980s and early 1990s, the festival moved to the Nevada desert. And in recent years, the event has become a worldwide phenomenon — attracting thousands of people from all around the globe, and from all sorts of socio-economic backgrounds.
I even have a colleague who told me he was invited to the Burning Man festival a few years ago, but he decided not to attend. He also told me that he regretted his decision, as the invitation included a ride with Tesla (TSLA) CEO Elon Musk on his private jet!
In fact, it’s the likes of billionaires such as Elon Musk, as well as many other wealthy patrons, who have embraced the weeklong bohemian/communal culture of art and self-expression that now has given rise to instances of class warfare.
Yes, jealously and envy of the "top 1%" isn’t just restricted to the biggest fans of Democratic Socialism. It also was alive and well this year at Burning Man.
According to a report in Business Insider, one of Burning Man’s so-called "luxury camps" was ransacked by vandals:
The White Ocean camp hosts dozens of free techno-music concerts at its stage on the outskirts of the playa, while also providing lodging and food for its star-studded lineup of DJs.
Sometime during or after another camp’s famous "white party," where ravers dress in all white, vandals entered the camp. They allegedly pulled and cut electric lines, causing food to spoil, stole personal belongings, glued trailer doors shut, and flooded the camp with 200 gallons of potable water …
To give you a bit of background here, White Ocean is the co-creation of Timur Sardarov, son of Russian billionaire and oil magnate Rashid Sardarov.
In the past, this luxury camp has been criticized for being too haughty, and for not being in the "spirit" of the Burning Man festival.
In other words, White Ocean is just too elitist for the Burning Man purists.
And when some people perceive your group as too elitist, they think that gives them the right to vandalize your property and/or take some of that property away in the name of the collective.
Even White Ocean said as much, as they wrote on their Facebook (FB) page that after notifying Burning Man organizers of the incident, they were actually told,
"It makes sense that you have been sabotaged, as you are a closed camp and not welcoming."
Now, while you or I probably won’t be interested in attending a Burning Man festival anytime soon, the big issue here is that the pernicious and downright dangerous consequences of class warfare and a hatred of those perceived to be "better off" do represent a threat to everyone.
The reason why is that when those who have less than you feel as though they have a claim on your life … and/or that they can vandalize and otherwise harass you in the name of "elitism" … we are all under threat of vandalism and harassment.
So, if you ever wondered what the result of the spiraling hatred in our society of "millionaires and billionaires" results in, you can see it alive and well in cut electric lines, stolen personal belongings and glued-shut trailer doors.
If we want to keep ourselves safe, and free from the class-warfare mob, then it starts by rejecting the concepts at the root of the issue — concepts such as group claims on individual success, and a duty to sacrifice in the name of collective.
I want to hear from you. If you’d like to weigh in on this issue, or on any of the issues we cover here in the Afternoon Edition, just let me know by leaving me a comment on our website or by sending me an e-mail.
Markets dropped like a stone at the opening bell after Boston Fed President Eric Rosengren outlined the risks of "lower for longer" interest rates. He zeroed in on how they could be shortening the U.S. economic recovery, and noted that we could see the economy "overheat" without a "gradual tightening."
This sparked the third day of losses for both the Industrials and the S&P 500, and culminated not only in a down week, but also the third-worst week for the S&P this year. The major U.S. indexes lost upward of 2% apiece today. Elsewhere in the news …
- Millions of dollars is nice, but not everything. A new Ameriprise Financial survey of 432 millionaire retirees reveals that they cherish five things more than their millionaire status: retiring, paying off their mortgage, being able to afford a big purchase like a car, paying for a child’s education, and notching a certain level of annual income.
- The British are coming for MasterCard (MA). A $19 billion lawsuit alleges that the company charged exorbitant fees to retailers, creating in turn an "invisible tax" of higher prices for consumers to pay for goods at these stores. The case is targeting the 16-year period between 1992 and 2008. MA shares slid 1.8% today, less than the broader U.S. markets.
- Rising rig counts weighed on WTI crude today. Black gold slid 3.6% as the number of active oil and gas rigs continued to not decline for the 11th-straight week.
Good luck and happy investing,
Uncommon Wisdom Daily