Washington, DC -- (ReleaseWire) -- 07/18/2016 --Last week began with Independence Day, America's celebration of freedom and the shared values that bind us together as a nation and a people. By the end of the week, though, we bore witness to what I can best describe as a reality TV version of American Horror Story, watching senseless violence wash across our screens in increasing disbelief and shock. First, 37 year old father of five Alton Sterling was fatally shot by police outside a Baton Rouge convenience store. Then, Philando Castile was shot during a traffic stop in Minnesota, with his partner live-streaming the aftermath from the passenger seat as her four year old daughter looked on from the back. Protests took place all around the country, and the horror climaxed when military veteran Micah Xavier Johnson killed five police officers and injured seven more at what started as a peaceful protest in Dallas, the deadliest single incident for U.S. law enforcement since September 11, 2001.
Media "analyzed" and politicians speechified, and we as Americans were left with the terrible sinking feeling in the pits of our stomachs that our republic is slipping into a malaise, that things continue to change for the worse and not the better. As the Irish poet John Yeats famously wrote in a poem full of despair for post-WWI Europe, "Things fall apart; the centre cannot hold; mere anarchy is loosed upon the world..." Our weaknesses as a society were revealed yet again in grainy cell phone footage and paroxysms of violence last week, and it is so difficult in the midst of that to respond by finding our strengths and applying them. As Yeats concludes his poem, "The best lack all conviction, while the worst are full of passionate intensity."
I believe there is a connection between this societal volatility and our increasingly hollow economy. I don't often quote the Reverend Al Sharpton, but he has a point when he says, "When people wake up in the morning trying to figure out how they're going to pay their bills or how they're going to put food on the table for their family, it leads to an anxiety that then leads to bad judgment and bad choices." Wage stagnation, income inequality, economic insecurity... all of these play a part in creating the current combustible atmosphere.
Analysts, even those from major financial institutions that are traditionally bullish, are beginning to throw in the towel on the markets in greater and greater numbers. Statements from Bank of America and Deutsche Bank in the last week show pessimism about the earnings to be reported beginning this week and reach the conclusion that the S&P 500 has never been more disjointed from other asset classes than it is now. Even the Federal Reserve has recently admitted that the stock market is effectively in bubble territory, saying that forward price to earnings ratios for equities have increased to a level well above their median of the past three decades. Of course, the Fed is doing nothing about that fact, and likely won't until the bubble bursts.
By so many measures, the United States is already in a recession. Labor market conditions are recessionary, the corporate bond market is recessionary, inventory accumulation is recessionary, ISM and many other factors—everything is crying out that we're in recession. Corporations are more leveraged even than they were in 2007, and earnings have sunk back to 2011/2012 levels, but the stock market continues to hover around and all-time high, with the Dow and S&P 500 up 4% for the year, and the Russell 2000 up 3%. At the same time, "safe-haven" investments are also rising, indicating an essential division in the way markets are being viewed. Gold has gone from $1060 in January to more than $1360. Silver moved from $13.90 to $20. That's a 45.8% gain for silver and a 28.64% gain for gold through last Friday.
Zero or negative interest rates, combined with huge amounts of cash being pumped into the markets, led us into an extreme fantasy land, causing a speculative frenzy. However, the central bank tide that has raised all the boats of our markets feels not only like it's about to recede, but even completely dry up and leave the boats sitting on sand. The mismatch of economic cheerleading from the Fed and the White House with the reality of poor job security and prospects, underfunded pensions, and mandated health care that's simply not working can only contribute to social unrest. We have to wonder how President Obama feels about the statement from his final State of the Union address that "anyone claiming that the America's economy is in decline is peddling fiction" today.
It is only human nature for us to look for someone to blame for all of the bad things, to point a finger at some villain that either caused this fraught social and economic situation, or a sham hero that failed to prevent or remedy it. This explains some of the great appeal of Donald Trump's unimaginably successful insurgency: he is speaking directly to our economic, social and personal fears. He is agreeing with our darkest thoughts, raising his voice to say that "America is falling apart!"
In the end, though, who do we need to blame? Who are the real villains? The first people we should point fingers at is... us. We claim to be victims, saying that we had no part in landing ourselves in this quagmire, but we need to accept personal responsibility, analyze our own role. If we made better choices in life and the voting booth, if we paid better attention, were more rational and wise and prudent and thoughtful, we wouldn't be in this mess. We put the leaders there, and we allow them to do what they're doing.
In our lives—personal, social, financial—we can no longer afford to play the damsel in distress, waiting for a knight in shining armor to save us. As we consider our portfolios, our financial security, our futures and the core of our society, we need to stop hoping for a knight and become self-rescuing princesses. In the end, we cannot rely on Yellen, Obama, Clinton, Trump, or anyone else. Only we can make the changes in our lives and government that must be made if we are to once again look forward to a bright American future.
For over a quarter century, Dawn Bennett has been successfully guiding clients through the complexities of wealth management. Her unique vision and insight into market trends makes Bennett a much sought after expert resource with regular appearances on Fox News Channel, CNBC, Bloomberg TV, and MSNBC as well as being featured in Business Week, Fortune, The NY Times, The NY Sun, Washington Business Journal in addition to her highly regarded weekly talk radio program - Financial Mythbusting. Through prudent and thoughtful advice, Dawn Bennett has strived to consistently provide the highest quality of guidance.
About Dawn Bennett
Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program called Financial Myth Busting http://www.financialmythbusting.com.
She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included rock legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN a as well as take podcasts on the road and forums for interaction.
She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett.