THE WEEK ON WALL STREET
Stocks retreated last week as bond yields increased following the Treasury's announcement indicating “a larger-than-expected funding need” and a downgrade in the federal government’s debt rating. The Dow Jones Industrial Average dropped 1.11%, while the S&P 500 shed 2.27%. The Nasdaq Composite index lost 2.85% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, tumbled 3.27%.
FACT OF THE WEEK
High above the early-morning traffic in Lower Manhattan, a French street performer steps off the roof of the south tower of the World Trade Center on August 7, 1974. Clad in black and carrying a long pole for balance, Philippe Petit begins the most famous high-wire walk in history, calmly traversing the space between the Twin Towers at a height of 1,350 feet.
He began his high-wire career with walks between the towers of Notre Dame in 1971 and the pylons of the Sydney Harbour Bridge in 1973. Although he trained with a circus performer and thought of himself as a “poet, conquering beautiful stages,” his preparations to walk between the Twin Towers most closely resembled scenes from a heist film. He disguised himself as everything from a construction worker to a journalist to an architect in order to gain access and study the site, even casing it from above via helicopter and identifying Barry Greenhouse, a man who worked on the 82nd floor of the south tower, as his inside man.
On the night of August 6, 1974, with Greenhouse’s help, Petit and some accomplices made their way into the towers, split into two teams. One of them shot an arrow across the gap between the buildings, spanning it with a length of fishing line that was then used to string stronger support wires. Around 7 a.m. the next morning, Petit stepped out onto the wire. Over the next 50 minutes, he completed eight trips across the divide, bowing to the onlookers below and even stopping to sit and lie down on the inch-thick wire. Finally, he dismounted and surrendered to the police, who arrested him and took him in for psychological evaluation.
Petit was charged with criminal trespassing and disorderly conduct, but the charges were dropped on the condition that he perform for the public in Central Park, which he happily did. Petit went on to perform a similar walk at the Lincoln Center and become the artist-in-residence at the Cathedral of St. John the Divine on the Upper West Side. He insisted that his famous walk, which was documented in the film Man on Wire and dramatized in another film, The Walk, was not an artistic statement so much as a natural outgrowth of his attitude toward life: “I see three oranges, and I have to juggle. I see two towers, and I have to walk.”
MARKET MINUTE
Stocks Struggle
Stocks struggled as investor sentiment turned cautious amid rising bond yields. Markets were rattled initially by news that the Treasury raised its borrowing requirement for the third quarter by more than a quarter of a trillion dollars and on news that the Bank of Japan announced it would allow bond yields to rise after years of capping them.
Rising yields continued to pressure stocks in the wake of a surprise rating downgrade of U.S. government debt by a major credit rating agency due to its belief in expected fiscal deterioration over the next three years. Stocks rebounded Friday morning, rising on modest employment data only to reverse and add to the week’s losses.
Mixed Signals From The Labor Market
Fresh employment data last week gave some conflicting signals about the labor market. A new JOLTS (Job Openings and Turnover Survey) report showed a small decline in job openings and layoffs in June, leaving 1.6 job openings for each available worker.
Automated Data Processing’s (ADP) employment report reflected strong private sector hiring with a 324,000 increase in jobs, exceeding the consensus forecast of a 175,000 gain. The government’s monthly employment report saw a cooling in hiring as employers added 187,000 jobs in July. This was slower than seen in the first six months but enough to shave the unemployment rate from 3.6% to 3.5%.
FINANCIAL STRATEGY OF THE WEEK
Will Power
Only one-third of adults have an estate strategy document such as a will in place, which may not be entirely surprising. No one wants to be reminded of their own mortality or spend too much time thinking about what might happen once they’re gone.1
But a will is an instrument of power. Creating one gives you control over the distribution of your assets. If you die without one, the state decides what becomes of your property without regard to your priorities.
A will is a legal document by which an individual or a couple (known as “testator”) identifies their wishes regarding the distribution of their assets after death. A will can typically be broken down into four main parts.
1. Executors - Most wills begin by naming an executor. Executors are responsible for carrying out the wishes outlined in a will. This involves assessing the value of the estate, gathering the assets, paying inheritance tax and other debts (if necessary), and distributing assets among beneficiaries. It is recommended that you name at least two executors in case your first choice is unable to fulfill the obligation.
2. Guardians - A will allows you to designate a guardian for your minor children. Whomever you appoint, you will want to make sure beforehand that the individual is able and willing to assume the responsibility. For many people, this is the most important part of a will since if you die without naming a guardian; the court will decide who takes care of your children.
3. Gifts - This section enables you to identify people or organizations to whom you wish to give gifts of money or specific possessions, such as jewelry or a car. You can also specify conditional gifts, such as a sum of money to a young daughter, but only when she reaches a certain age.
4. Estate - Your estate encompasses everything you own, including real property, financial investments, cash, and personal possessions. Once you have identified specific gifts you would like to distribute, you can apportion the rest of your estate in equal shares among your heirs, or you can split it into percentages. For example, you may decide to give 45 percent each to two children and the remaining 10 percent to a sibling.
The law does not require that a will be drawn up by a professional, and some people choose to create their own will at home. But where wills are concerned, there is little room for error. You will not be around when the will is read to correct technical errors or clear up confusion.
Preparing for the eventual distribution of your assets may not sound enticing. But remember, a will puts the power in your hands. You have worked hard to create a legacy for your loved ones. You deserve to decide what becomes of it.