The broken record of record-setting closes continues.
While most focused on the the Ted cutting the Fed funds rate by a quarter point, the real mover was earnings.
The Mag 7 came in with better than expected earnings, which was all this market needed.
Of more interest to me, was that the broader market had positive earnings reports.
For example, Caterpillar’s report exceeded most, if not all, analysts’ expectations.
What that tells me is this whole economy is not just based on AI.
It also tells me that we are not on the verge of a recession.
Not enough focus is placed on the fact that this economy is growing and is not stagnant.
I am not sure you can even use the concept of stagflation.
I will say however that it does cost more to do almost anything.
I am not sure where all the money comes from, but consumers are making it happen.
One real concern is that far too many are digging themselves a hole in debt.
Maybe consumers want to emulate our government which seems to ignore the growing national debt.
There is some merit in the thought that a growing economy gives people a positive perspective.
There is the thought that people will take on risk when they feel that things are headed in the right direction.
I know personally that my savings is growing faster than my mandatory withdrawal can reduce the balance.
That is a phenomenal situation.
Each year I take out more rather than having it wind itself down.
These types of situations give people real confidence in the future.
We have yet to see the efforts by the administration and congress to stimulate the economy, which won’t be enacted until the first of the year.
Anyone that has read this column over the years knows that I am anything but a foolish optimist.
I am fully aware of the myriad problems facing this economy and all of us personally.
I do believe that in the long run we will find a way.
I only have 260 years to base that assumption on, realizing it is a small sample size.
I believe that innovation can overcome our many faults as long as we adhere to a free market economy.
I hate to say that I have made sure that my life does not depend on the government as I find it to be a barrier rather than a facilitator.
It has all the wrong incentives and is used more often to control people than to actually move them forward.
The government shutdown will damage the economy in the short run and impact millions of Americans all in the name of politics.
This is why I believe a strong economy overcomes political barriers.
The efficiency of a free market economy eliminates the unproductive endeavors.
Some would argue that this is the problem with a free market.
It does not reward the unproductive.
I have to agree but it does not eliminate the ability to overcome.
I never understood where it was written that all of this was supposed to be easy.
All philosophical musings aside, this market is moved by growth.
The real crux of the matter is that what is going on today means little and what will happen in six to nine months is the real question.
It seems to me that the road has been paved to continue to grow earnings.
This is where the Black Swan concept comes into play.
What could be out there that we cannot see that will derail this economy?
I am not about to say it can’t happen.
So here we are at record territory with our hopes tied to a technology that is unproven to date.
We are at multiples that are only sustainable if we have an economic boon.
Essentially we are betting on the next big thing.
Not exactly what I would call prudent, but that is the lot of this country.