I am fortunate to have subscribers from all around the US. Friends, colleagues, random people. They are all suffering through some sort of weather-bomb. It’s either a heat dome or searing, unrelenting heat. Some areas are have been dealing with an incredible amount of rain in a short period of time.
I’m sorry, it’s the summer. It is supposed to be hot. We are supposed to have torrential rains now and then. Thunderstorms are all part of it. Just like in the winter and it’s 22 below with the wind chill factor. The seasons change, so does the weather.
It’s all because of climate change, most definitely. The NYTimes says so.
Well, let’s take a few steps back for a second. The record high in Phoenix was, up until yesterday, 116 degrees. In 2006. The longest streak of over 100 degree days in Phoenix is 76 days and that was set in the summer of ‘93. The earliest day of the year that the temperature hit 110 degrees? That would be in May of ‘89.
My point is this: It gets hot in phoenix, very hot. It has always gotten hot in Phoenix and it will always be hot in Phoenix. That’s it. Climate change has nothing to do with the heat in Phoenix. Sorry. I am no scientist funded by the US Government. Just a casual observer of the weather.
Worldwide, yes, it’s hot. It is always hot in Rome in July and August. There are droughts in Greece leading to large forest fires. There have always been droughts in Greece, along with torrential rains along with forest fires and so on.
The point is, the Northern Hemisphere gets hot and dry in the summer. Duh.
Oh wait. didn’t the climate genius predict an incredibly busy and damaging hurricane season? The gulf is 90+ degrees, the Atlantic is heating up. It’s gonna to be a doozy for sure. Yeah, uh, no. I haven’t heard of one Atlantic storm this year making landfall. I think they are stuck on the B storm or is it the C storm. Kidding, I know it’s Don and he was off the coast of Greenland somewhere.
There are several points I want to make.
Climate change is a thing because the New York Times pretty much says it is. For proof, just read any article in the Times on any day, and almost any event (other than the Russian invasion of Ukraine) is blamed on climate change. No seriously, look at any article on any natural event and somewhere in there is a mention of climate change. Enough already, we get it.
Climate change is real. It has been for millions of years and will continue to be real for millions of years to come. The scientists who promote this fear mongering ignore those facts and press on about the speed with which this climate change cycle is happening. The facts are the facts they say and we are to blame. Understandable logic but do these geniuses realize that humans because of their intelligence and adaptability will always impact the environment?
The bigger fact is no matter what we do as a race, we will impact our environment. With over 8 billion of us living on this blue marble in space there is no way around that fact. Humans success will always impact the planet negatively.
I am not saying that we just abandon all forms of Co2 reduction, I am just saying that what we reduce in one space, we inevitably will destroy in another.
One final word on all of this, I would like to challenge any climate change zealot to a series of questions and just like in my poll about Joe Biden, just give me a straight answer. The question would be simple, How do get to a place where the human race will not impact the planet negatively? Not one person will be able to answer that without 45 different caveats. They know the problem, they just have no idea of the solution.
Which leads me straight into investing with ESG. From the beginning, I have said it will be next to impossible to have a successful long term track record investing solely with ESG in mind. Find companies that can score high on any of the different charts and you will inevitably find a tech company. They manufacture nothing, they abide by some progressive mantra and earn big bucks doing it. However, it is a limited playing field and even these companies have trouble wit some aspects of ESG.
Let’s be honest about this though. Most companies try to meet the criteria without ever saying that they are. It might scare away investors who abhor the whole designation I guess. Companies are not looking to stomp on their environmental responsibilities or their social contracts with their employees and customers. The Governance part of this equation I think is pretty much met by every public company in this country. The bad guys are rooted out pretty quickly.
To this last point, there are maybe 16,000 publicly listed companies in the United States. You hear about malfeasance on a management scale about how often? once or twice a quarter? Maybe. So, I think for the most part, company’s management gets it. There will always be bad actors out there but they are the exception rather than the rule.
I don’t need Larry Fink telling me who to invest in. They are a trillion dollar investment shop but that doesn’t mean I have to listen. ESG has never been, nor will it ever be a thing with me.
Whew, I got that off my chest, now back to business.
The Fed will likely raise rates this Wednesday 25 basis points. No surprise there. The surprise will be what they say about doing it again this year and possibly how many more times. I am on the fence on the second rate hike. I again can see solid cases made for either move (no more raises or one more raise) and I guess the next few months will again be all about the data.
Sorry, no help there but be cause you are loyal readers and I always like to give everyone their money’s worth I will just ask you to take a look at the broader market.
If you look at what is happening now you will see that the rest of the S&P 500 is participating in this rally. The breadth is getting wider and wider and even small cap names are starting to get sucked into this rally. This is all a very good thing. I was not a big fan of the Magnificent Seven rising to astronomical heights while the rest of the market wallowed. That is not the case now and generally when the overall market plays a little catch up, it is a sight to behold. You are seeing that now.
I read somewhere that this is on the back of the greatest short squeeze in history. Eh, I don’t know about that. This seems too consistent and too solid. Short squeezes historically act haphazard because there is only so much money reacting to that squeeze. This has a much larger breadth than that. I could be wrong but we will see.
To conclude, I will admit for the last time that I was wrong about a mild recession happening in the second quarter (then I said the second half). I don’t think we will see one this year. The Fed has done a decent job navigating this potential and while I still think they deserve a strong D for the job so far, they may be able to raise that to a C on the final exam.
Thanks Rick. Montana will do that to you.
Thank You!!!