We have made it to summer and I wish all is well and you can relax and enjoy.
It has not been that way for me, but such is life.
I do hope to get time away to the mountains and the beach.
In the meantime, the world keeps spinning.
We will have the personal consumption expenditures announced Friday. It would seem that we will see little change and a possible slight tick down.
Far from enough evidence for the Fed to cut rates currently.
I sometimes feel that the talk about rate cuts is just low-hanging fruit rather than digging in the weeds to figure out exactly where there are companies that will make money.
You have to say that we are far from a recession.
That is not to say things are good. Even if current trends in rising costs slow, we still have to deal with almost a 25% rise in costs over the last 3 ½ years.
That is a huge burden for consumers, but they seem resilient.
The Federal Debt continues to grow and serious foreign policy concerns. So much for taking off and getting lost in summer reading.
I am only getting further behind on all my yard work, which at least is distracting.
Our market leader Nvidia had a minor hair cut after splitting the shares, but nothing really to worry about.
Of course it does give analysts something to talk about.
The runway is so long that this chip leader will not fail. Only a black swan event causing a recession can do that.
There is reason to worry about over-exuberance. As long as these market leaders continue to post ever greater earnings, we have further to go.
That is where we should focus.
What could cause this earnings stream to retreat.
I don’t see current foreign affairs being the vehicle.
Inflation is an old story and wages, though lagging, are improving. What may come is just that - earnings are improving, but at a much slower rate.
That could have an impact on the market leaders as they are priced for perfection.
All I am trying to point out is that we could have a market pullback due to profits not meeting expectations. These leading companies will not lose money, but a lesser-than-expected profit margin can be punished unnecessarily.
In the past this has been an opportunity for bargain hunters.
You noticed I didn’t use the term value. We haven’t really had a serious correction since 2008. The pullback in 2019 was brief and was V-shaped.
Most of these pullbacks have lured cash on the sidelines back into the market.
Interest rates are higher, but not to the degree that it seems to provide competition with equities.
Some point to gold or to Crypto.
I do see that as a means of diversification, but not as a major draw away from the markets.
Others point to real estate, which has slowed only due to lack of inventory.
As such, here we are in the middle of the summer with our retirement accounts at high levels. Does one sell or wait for ever greater gains?
Never forget that greed is your enemy. I have no problem taking profits in retirement accounts as you are tax protected. I do see little or no reason for this market to seriously correct.
Maybe that vacation, book reading or gardening is the best medicine for you summer activities.
If you get bored, there are sports or political debates to distract you from the tasks at hand.
