Happy Birthday America
It’s that long anticipated Independence Day Holiday weekend. BBQ’s, Beer, Fireworks and just plain enjoying what this country allows us to enjoy.
Sure there are warts and open sores that we need to deal with. Sure we are divided and can’t seem to get our act together and work as one.
Sure we are dealing with nonsense the forefathers never even dreamed of but I will say this: America is still the greatest country the World has ever known. We have some of the most beautiful landscapes on Earth. We have millions of acres of parkland that anyone and everyone can enjoy. We were blessed with abundant resources and yes, we were blessed with millions of immigrants that wanted a better life.
We have freedoms that almost everyone else on this planet dreams of. Anyone can make it here. Anyone can become successful and happy.
All it takes is work. Hard work.
This country did not become what it is by being lazy. You work hard, you learn as much as you can learn and you can be successful.
Yes, luck is part of it. Yes, timing is also part of it. However, neither thing will make you successful unless you work hard.
As for the markets and the economy, the first half of the year was a fairly big surprise. Markets are all up and the economy has not drifted or fallen into recession. The employment situation is much better than expected. The housing market is rebalancing more towards a buyers market, even with unusually high mortgage rates.
Things are pretty damn good I would say and I believe, as far as the market is concerned we will remain in positive territory for the rest of the year.
The Fed has indicated two more rate rises, at least, and they have also indicated that any potential reductions may not come at all in 2024. Yet, the markets remain strong.
Earnings season is starting this week and while analysts are looking for a possible decline of around 8% year over year. I don’t think so. Judging from the fact that inflation is still around 4% and most producers have not felt any pullback from consumers, you won’t see a decline anywhere near that.
Consumers are still spending. Travelers are still traveling. Hotels are not offering any deals anywhere. Car rental companies are bending people over the check-in desks and Philadelphia cream cheese is now $3.75. So, I think corporate profits will still be pretty strong.
No, earnings will not be dropping off for most industries.
One sector that is going through a major, long term upheaval is entertainment and communications. Streaming services are going to be taking hits left and right because simply put, they are giving us more and more garbage and less and less quality shows.
Why pay 160 bucks a year for Netflix and watch maybe 3 good shows? Netflix upended the World of entertainment and now it will be their turn to get upended. Charging for extra users is a smart move but when someone does a cost/benefit analysis on the Netflix subscription, Netflix may come up a loser.
Given that the Fed will be raising rates at least two more times in this cycle some people have asked me when. Looking at the betting line I would say the next rate increase will be next week. I won’t argue with that but that second announced rate rise is much trickier. It will be this year, for sure but when? I will go with the Fed party line, “Let’s see the data first”.