Nine Years Into a Bull Market Means Money for Innovation

in Market Commentary by

Stocks continued to rise in the face of a horrific mass-shooting and escalating geopolitical tension. The US economy shed 33,000 jobs in September, but it was largely due to the hurricanes and the overall market remains strong. Unemployment dropped to 4.2%. Earnings season got underway with investors seemingly optimistic about exceeding a 5% expected growth rate. Tensions in Spain rose over the issue of Catalan succession, which pressured the Euro.

Weekly Returns:
S&P 500: 2,549 (+1.2%)
FTSE All-World ex-US: (+0.4%)
US 10 Year Treasury Yield: 2.37% (+0.12%)
Gold: $1,275 (-0.4%)
EUR/USD: $1.173 (-0.7%)

Major Events:

  • Monday – Goldman Sachs was said to be preparing a trading operation dedicated to Bitcoin and other digital currencies.
  • Monday – Tesla said it built 260 Model 3s in the third quarter, missing its target of 1500.
  • Monday – A gauge US manufacturing activity reached a 13 year high in September.
  • Wednesday – Puerto Rican bonds fell after President Trump suggested bondholders may not be paid back.
  • Thursday – The CFPB passed rules limiting payday lenders, but it will face challenges.
  • Thursday – Boeing acquired Aurora Flight Sciences, in a possible move toward flying cars or taxis.
  • Friday – The September jobs report was strong in light of the hurricanes and unemployment dropped to 4.2%.
  • Friday – The White House launched a program to explore reducing the use of Social Security numbers in the wake of the Equifax scandal.

Our Takeaway

With all the troubling events of the past two months, sometimes it is nice to focus on something aspirational and fun. This week, Boeing bought Aurora Flight Sciences. Developments may end up being military in nature, but many believe the intent is trying to accelerate more widespread aviation for consumers.

People have been talking about flying cars for decades and in reality, the image of the Jetsons is still decades away. But Uber and others are seriously working on solving this and there are already videos of one-man flying machines that are quite exciting (though for now, they are riding over water just in case).

We are nine years deep into a bull market. A nice thing about long bull markets is they give companies money to spend on innovation and things that won’t be profitable for some time to come. Driverless cars are also still years away but those with younger kids can be hopeful they will greatly improve safety.

The huge market capitalization numbers of companies like Uber, Google and Boeing will allow for more and faster innovation. If the bull market lasts at least few more years we could get more interesting stuff faster than we imagined on the consumer and health care front. And that would be worth celebrating.

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Craig Birk, CFP®

Craig Birk, CFP®

Craig Birk leads the Personal Capital Advisors Investment Committee and serves as the Chief Investment Officer. His focus is translating improvements in technology into better financial lives. Craig has been widely quoted in the Wall Street Journal, Bloomberg, CNN Money, the Washington Post and elsewhere. Prior to Personal Capital Advisors, he was a leader within the portfolio management team at Fisher Investments, helping assets under management grow from $1.5 billion to over $40 billion. Craig graduated from the University of California at San Diego and has earned the Certified Financial Planner® designation.

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