Friday, July 22, 2016

MAD Weekly Review

Another week and more highs were set in the stock markets. I guess sell in May and go away was a horrible investment strategy this summer.  I'm not a believer in such nonsense to guide my investment themes. My idols JB & WB don't believe in it either and they've both done pretty well for themselves. So let's keep enjoying the nice run in equities

We had the Republican Convention this week, and we finally get confirmation that Trump is the guy. In reality I think it's time we give someone with private sector experience a shot. To many career politicians just selling out to the highest bidder that only get their private sector credentials with cushy board seats at companies they helped out during their political career. It should be the opposite way but so is life.

You've probably been reading or hearing about the Presidential/Stock Cycle. Well I wouldn't worry about that correlation. No matter who is President quality companies will continue to find ways to make money and increase value for shareholders.  In the short term you can get hits to stock prices, but also pops.  Plus people think Presidents can control the economy. Absolutely not! Read up on Adam Smith's Invisible Hand. Just another piece of statistical nonsense in my opinion.  

Economic news continues to come in pretty good. We received another solid Initial Claims report with 253k people. Unbelievably (myself included) but this week marks the 72nd straight week claims came in below 300k. That's the longest such streak since 1973. Claims are also at their lowest level in the last 45 years, which is hard to believe but true. The headlines continue to be negative, but the economy keeps chugging along just enough to keep growing.  

If you don't have the skills, sorry but you are out of this economy. So if you have the courage buckle down and study Math, Computer Science, and Engineering. You'll have job offers coming out the Wazoo. Another benefit is you won't find yourself losing your voice as no one listens outside of McDonald's HQ protesting minimum wage during their annual shareholder meeting . Instead you'll be comfortable in your cubicle raking in the cash.

Existing home sales have continued a stronger showing. The median existing home price is up 4.8% from June 2015 to $247,700. The thing I find striking in this is the lack of institutional investor participation lately. I'll have my mid year real estate update out in the next couple weeks. 

The ECB had a meeting this week. I'm sorry who, what when!?!?!? Yeah that's right I almost forgot myself since it ended up being such a non-event from what I saw. Draghi did state he'd use all available instruments if necessary.  But of course the big elephant in the room was Italian Banks. I'm thinking a few meatballs will drop out there pretty soon, and I'm not talking about the ones at your local bar. 

Still Draghi has stated the course is going to be maintained. Until we see anything else unfold it should be business as usual with our friends in Europe.  That is of course business as usual with negative interest rates which have their own consequences. 

We have the Fed on tap next week.  Each meeting is getting increasingly more important as we await the inevitable rate decision. 

Have a fun summer weekend!

The MAD Consultant

No comments:

Post a Comment