WEEKLY WELL-TH NOTES

Data-driven insights on the markets and economy.

Second Week of June 2023

1. The Few and the Shroud

Last week marked the S&P 500’s fourth consecutive week of gains as markets remained relatively calm ahead of this week’s Fed meeting. The S&P 500 gained 0.41%, bringing its year-to-date (ytd) return to 12.82%. However, this return masks a less sanguine reality: The equal-weighted version of the S&P 500 (i.e., every company is weighted equally rather than according to size), is up only about 2% ytd.[i]

2. Fearless Bull Riding

The S&P 500 reached bull market territory last week — ending the week 21.6% above its October 2022 low — and volatility, as measured by the Cboe Volatility Index® (VIX), also known as the “fear gauge,” reached its lowest point since early 2020, before the pandemic. At this level, volatility is about -30% below the long-term average since 1990 when the data series begins.[ii]

3. Cut Co’s.

Companies have announced plans to cut 417,500 jobs this year, a 315% increase from the 100,694 cuts announced in the same period last year. With the exception of 2020, when 1,414,828 cuts were tracked, it is the highest total in the first five months of the year since 2009 (822,282 cuts).[iii]

4. Artificial Gets Official

In May, 3,900 people were laid off due to artificial intelligence. All the cuts were in the tech industry, which has had the highest number of layoffs ytd since the 2001 dotcom bubble burst.[iv] Goldman Sachs estimates that AI could replace the equivalent of 300 million full-time jobs worldwide.[v]

5. Playing Both Sides of the Coin

The share of people in the U.S. owning cryptocurrency rose sharply from about 3% to 11% between 2021 and 2022 when the price of Bitcoin was rising, and rose even further, to around 12%, by the end of 2022, even after Bitcoin prices fell dramatically. The price rose 133% in 2021 by November then fell about -77% by December 2022.[vi] Most individuals owning cryptocurrency report that it represents a small fraction of their financial wealth, but almost 20% report that it accounts for at least 50% of their financial holdings.[vii]

6. Buy Now, Pain Later

Between 2019 and 2021, the number of buy-now, pay-later (BNPL) loans increased by almost tenfold. Based on 2022 survey results, nearly 22% of consumers below the age of 35 had borrowed using BNPL compared to only 10% of those over the age of 65. Consumers who used BNPL were 26% more likely to have had an overdraft, 12% more likely to have used alternative financial services, such as payday and pawn, and 27% more likely to have revolved their credit card in the past billing cycle.[viii]

7. Smoke Gets in Your Eyes

At its peak last week, the air quality index (AQI) for New York City reached 405 out of 500 — the highest since records began.[ix] For comparison, it remained below 50, which the Environmental Protection Agency considers “good,” during the three years preceding the pandemic (2017–2019).[x] Unfortunately, high AQIs are commonplace in other parts of the world; each year, air pollution causes about 7 million people around the world to die prematurely and costs about $8.1 trillion in health-related damages.[xi]

8. Peachless

Three orchards in middle Georgia that grow 95% of the state’s peaches are currently bare, with no commercial trucks being packed; they typically ship more than 150 million peaches to grocery stores each summer. The last time farmers lost an entire crop was in 1955. However, peaches have a relatively small impact on Georgia’s economy; in 2022 they generated $34 million in revenue compared to the $1.4 billion generated by cotton.[xii]  

9. Mine the Gap

Under the International Energy Agency’s Net Zero Emissions by 2050 Scenario, demand for five key critical minerals (lithium, cobalt, nickel, copper and neodymium) used in clean energy would increase anywhere from 1.5 to 7 times by 2030.[xiii] More employees will likely be needed to keep up; the number of employees in mining and related industries has risen 21% since a 2021 low but remains nearly -50% below the peak in 1981.[xiv]

10. Fast Money

A wealthy driver was fined about $129,000 for speeding in Finland, which calculates penalties based on offenders’ income. The offender, Andres Wiklöf, already dropped $101,677 in 2013 and $67,427 in 2018 for speeding fines, meaning his need for speed has cost him nearly $300,000. A Swedish motorist wins the race though: He was fined $1,091,340 for driving 105 miles over the speed limit.[xv]

[i] Otani, Akane, “S&P 500 Treks Higher as Investors Prep for Fed Decision,” The Wall Street Journal, June 9, 2023.

[ii] Cboe, “Historical Data for Cboe VIX® Index and Other Volatility Indices,” June 9, 2023, https://www.cboe.com/tradable_products/vix/vix_historical_data/. Accessed June 12, 2023.

[iii] Challenger, Gray & Christmas, Inc., “May 2023 Layoffs Jump on Tech, Retail, Auto; YTD Hiring Lowest Since 2016,” The Challenger Report, June 1, 2023, https://www.challengergray.com/blog/may-2023-layoffs-jump-on-tech-retail-auto-ytd-hiring-lowest-since-2016/. Accessed June 12, 2023.

[iv] Challenger, Gray & Christmas, Inc., “The A.I. job culling has already begun and 4,000 people lost work last month to the technology, according to a new report,” June 2, 2023, https://www.challengergray.com/blog/may-2023-layoffs-jump-on-tech-retail-auto-ytd-hiring-lowest-since-2016/. Accessed June 12, 2023.

[v] Vallance, Chris, “AI Could Replace Equivalent of 300 Million Jobs – Report,” BBC News, March 28, 2023, https://www.bbc.com/news/technology-65102150. Accessed June 12, 2023.

[vi] Yahoo Finance, https://finance.yahoo.com/quote/BTC-USD?p=BTC-USD. Accessed June 12, 2023.

[vii] Weber, Michael, Bernardo Candia, Olivier Coibion and Yuriy Gorodnichenko, “Do You Even Crypto, Bro? Cryptocurrencies in Household Finance,” May 19, 2023. Chicago Booth Research Paper No. 23-10, https://ssrn.com/abstract=4453714. Accessed June 12, 2023.

[viii] Fulford, Scott, Greta Li  and Cortnie Shupe, “Consumer Use of Buy Now, Pay Later,” Consumer Financial Protection Bureau, Office of Research Publication No. 2023-1, March 2023.

[ix] Brown, Lee, “New York City Recorded Worst-Ever Air Quality Wednesday, Which Was National Clean Air Day in Canada,” New York Post, June 8, 2023, https://nypost.com/2023/06/08/new-york-city-recorded-worst-ever-air-quality/. Accessed June 12, 2023.

[x] IQAir, Air Quality in New York City, June 8, 2023, https://www.iqair.com/us/usa/new-york/new-york-city. Accessed June 12, 2023.

[xi] Hickey, Valerie, “Tackling the Pollution Crisis to Support Healthier People and Planet,” World Bank, February 2, 2023, https://blogs.worldbank.org/voices/tackling-pollution-crisis-support-healthier-people-and-planet. Accessed June 12, 2023.

[xii] The Economist, “Georgia, the Peach State, Has No Peach Crop This Year,” June 8, 2023.

[xiii] International Energy Agency, Mining and materials production, https://www.iea.org/reports/energy-technology-perspectives-2023/mining-and-materials-production. Accessed June 12, 2023. 

[xiv] U.S. Bureau of Labor Statistics, All Employees, Mining, Quarrying, And Oil And Gas Extraction [CES1021000001], retrieved from FRED, Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/CES1021000001. Accessed June 12, 2023.

[xv] Ray, Justin, “One of Finland’s Richest Men Was Slapped With a Nearly $130,000 Speeding Ticket,” Robb Report, June 7, 2023, https://robbreport.com/lifestyle/news/finnish-multi-millionaire-nearly-130k-speeding-ticket-1234852538/. Accessed June 12, 2023.