Which Shoe Will Drop First?

I think in last weeks column I made the point that this summer will be different. We typically deal with earnings and a slowing of things as America and the Northern Hemisphere takes time off.

Not this year. It seems we have multiple story lines running concurrently and any one of them could be a catalyst.

Catalyst for what? No clue. Something may just break and all Hell will break loose.

I wasn’t so much worried about some sort of geopolitical situation having a long term, lasting impact on markets. They never do.

I was worried about this Big Horribly named bill and it’s short term impact on markets. It was passed and signed on July Fourth so I suppose we will see it’s impact. Short term I think markets already swallowed it and I guess it tasted ok because the markets have bounced around all time highs for three days now. Longer term, that may be a much different story.

Next up on the agenda I guess will be the Fed and the rate decision that should come next week. Betting money has a 25 basis point cut this time around but I don’t think, at least at this juncture, all that many people are betting either way. The Fed, I think, will cut interest rates by that minimal number and not because the data supports it, I think it will be more about the Fed painting themselves into a corner. They still believe two rate cuts are justified but the data is so mixed it’s really hard to tell.

That, I think, has also been priced into the market.

More importantly this time around will be earnings. The consensus I believe is for 5 1/2% increase year over year. Which, on the face of it, is not really very good considering the earnings for the last few years have been strong, stronger and the strongest in recent memory. A 5 1/2 % rise is nothing to sneeze at but expectations have always been high and this seems a little bit of a let down.

Don’t you fear. I am pretty sure that this earnings season will be better than that. Companies have this incredible ability to talk a bad game and always come out looking great. This will be no exception.

There was supposed to be a caveat this quarter and it barely materialized. The tariff boogie man was lurking but I don’t see him showing his face anywhere significantly and that is the main reason this earnings season will be good to very good.

Speaking of tariffs. My story of the year seems to have taken a back seat for a while. Not anymore. This will once again be front page news and and it will continue to lack any sense or any reasoning.

Figure it out?

Anyone that says they can figure out what is going happen and not happen should be fired. This is negotiating with countries on mushrooms. It’s there until it’s not.

I do think this week there will be some additional clarity and even though we are only going from 5% clarity to 11%, it’s an improvement.

Would I bet on anything at this point? No. Not even with your money.

I have bitched about tariffs enough and I do get the reasoning behind a lot of the different scenarios but those scenarios change almost daily and that is what I don’t like at this point.

Do it. Get it over with and shut the Hell up!