February 13, 2019
Show me the money: dispatches from the stock market Senior Reporter
December 2018 marked the stock market’s worst December performance in U.S. history since the Great Depression, according to CNBC. “What happened in December is what they call a market adjustment,” economics teacher Peter Medine said. “The stock market had been going up for an extended period of time, and it was probably overvalued, so people started to feel that it was not going to be sustainable, and they started to sell some of their stock.” The Dow Jones, NASDAQ and S&P 500 all lost over two percent, as each index dropped 10 percent from their highest points. These American stock market indexes are based on market capitalizations and trading histories of significant, publicly owned companies and reveal the success or decline of the market as a whole. These increases and declines can be caused by a number of factors from politics to trade wars. “The U.S. and China are having a trade war and are going back
and forth placing tariffs on each other. That causes a lot of investors to get scared and want to sell their stocks immediately and pull out of the market. A lot of selling and less buying causes a drop in the market just due to laws of supply and demand,” sophomore Vedika Bhaumik, an active investor in the stock market, said. One year after President Trump’s inauguration, the Dow Jones had risen 32.1 percent. A historically high increase, this market boost led to an overvaluation of stocks, which brought the economy to where it was in December. “It’s like an athlete that’s hitting 400 in baseball,” Medine said. “They’re really tearing the cover off the ball, but we know that the athlete is not a 400 hitter, he’s just having a hot streak, and he’s going to come back down to hitting 300, let’s say, or 250. The market is saying it’s overvalued … These stocks are not worth this much and then there was a natural market correction. Then the economy takes a huge hit because it’s been going up for too long.” The December correction is over, and the market has returned
to normal. While some lost money in stocks, others took advantage of low prices and bought while cheap. However, buying stocks during a period of economic lows can be risky, as trends could continue to downturn. Such movements to sell can cause further panic, as seen in the Great Depression. “Right now the market is very volatile so it’s kind of hard to observe a trend, but I would probably say that you’d have to look at a lot of political events in order to figure out if the market’s going to go up or down,” Bhaumik said. The future of the economy is still in question. A survey of professional financial managers and analysts done by the Boston Consulting Group revealed that 73 percent of investors expect a recession within the next two years. “I think we’re headed for another massive ‘08. The problems that caused ‘08 have not been addressed enough, not even close,” Medine said. “Banks aren’t as regulated as they used to be. So some of the same problems that happened in ‘08, I foresee happening again.”
PHOTO COURTESY OF PIXLES
BY CLAIRE HUNT
Business charts documenting the highs and lows of stock market
Government shutdown has negli- High speed rail faces uncertain development gible effect on SFO airport in light of low budget PHOTO COURTESY OF CREATIVE COMMONS
BY ALEC ABRAMSON
In November 2018, there were over 4.5 million total airport passengers that went in and out of SFO. model” after 9/11, when the TSA was created. Although there are several other airports nationwide that use SPP, SFO is the largest. That being said, air traffic control officials at SFO were not being paid during the shutdown. While Yakel cited no significant staffing shortages, controller Frederick Naujoks told KQED on Jan. 11 that some of his colleagues were seeking other jobs after-hours. “I’ve even had a couple of people come to me and say that they want to work for Lyft or Uber in addition to coming to work and working air traffic,” Naujoks said. Rick Maldonado, a junior, traveled in and out of SFO during the shutdown on his trip to Mexico. “Everything seemed exactly the same,” Maldonado said, “but I was a bit tired.” Airports were not the only places affected by the shutdown, even though they may have received the most coverage. National parks suffered from staffing shortages and some closed facilities; a recent Smithsonian article indicated that
Joshua Tree National Park “could take 200 to 300 years to recover” after several emblematic trees were destroyed. After running out of reserve funding on Jan. 2, the Smithsonian closed all of its museums, including those on the National Mall in Washington D.C. President Trump temporarily reopened the government for three weeks on Jan. 25, warning that if no deal was reached in Congress, he would consider declaring a national emergency. Such an action could theoretically allow Trump to unilaterally redirect funding for the border wall. Sen. Kamala Harris (D-Calif.), an outspoken critic of Trump and a 2020 presidential contender, said he was holding the American people “hostage.” “They don’t need a wall. They need a paycheck,” Harris said in a floor speech on the 26th day of the shutdown. For now, workers who missed their paychecks are relying on Washington politicians to make a deal before the government shuts down once more.
BY AIDAN O’SULLIVAN
The San Francisco to Los Angeles high-speed railroad, a railroad going from Silicon Valley to San Joaquin Valley, was funded by a $9 billion bond approved by voters in November 2008. The project, introduced by former Gov. Arnold Schwarzenegger, has faced scrutiny due to higher-than-anticipated costs and longer-than-anticipated construction time. Construction originally began in 2015 and was scheduled to be completed by 2022. However, the expected completion was pushed back to 2029 because costs have exceeded the $9 billion raised by the bond, and the legislature was unable to gain additional funding for the project. The cost exceeded the initial projections due to unforeseen strict construction requirements. Such regulations include noise levels not exceeding 96 decibels, the majority of train sets must be made in America, and each train must have earthquake safety systems in place. The high-speed railroad could impact students and local residents by improving the transportation between the two major cities in California. “I feel that there is currently
a lot of transportation between Los Angeles and San Francisco to begin with, and to go to and from either city is done mainly by plane or by driving, with neither one being very desirable,” junior Julian Dobson said. “It would just be a good alternative, and I have lots of family in Los Angeles, so it is very practical.” The high-speed rail road is designed to operate at 200 miles per hour, and perhaps even faster. Consequently, some residents are concerned that the high-speed rail road will be noisy to the extent that it is disruptive. Dobson, however, disagreed with this concern. “I don’t think it would be a problem because people in this area are used to the sounds from SFO, and the same with LAX, so I feel that they’ve been exposed to it for a long time.” The debate over the viability of the high speed railroad will continue into the near future, as proponents cite its benefits as a means of travel while detractors criticize its high costs, possible disruption and noise pollution. Currently, Newsom is still focused on completing the project but plans to prolong construction between San Francisco and San Joaquin Valley until he can ensure a financially reasonable way to fund the remaining portion of the railroad.
PHOTO COURTESY OF CREATIVE COMMONS
PHOTO COURTESY OF CREATIVE COMMONS
Contrary to stories of airport nightmares during the 35day government shutdown, San Francisco International Airport (SFO) was relatively unaffected. While U.S. airports across the nation, including Atlanta-Hartsfield and Houston, reported significant airport security (TSA) callouts and even closed some checkpoints, the Global Entry Enrollment Center was the only department closed during the impasse at SFO. The office employs Customs and Border Protection officials. Over the course of the shutdown, caused by a stalemate between Democrats and Republicans over President Trump’s proposed southern border wall, 800,000 federal workers went without pay. One of the most closely covered departments by the news media was the TSA, which saw up to 10 percent of their workers call out sick due to “financial limitations,” compared to 3 to 4 percent at the same time last year. SFO, however, employs a private contractor, Covenant Aviation Security, to oversee its safety operations, so officials were still being compensated. “The shutdown did not affect flight operations or wait times in security checkpoints or international arrivals facilities,” Doug Yakel, SFO’s airport information officer, said. According to Yakel, SFO opted into the Screening Partnership Program (SPP) in 2005 with the expectation that “airports would eventually return to a privatized
According to an airport official, SFO did not experience significant effects as a result of the shutdown.
An artist rendering of the high-speed railroad from SF to LA