August Has Poor History, GDP Better Underneath & Bottom Coming

I hope everyone had a nice weekend. I had lots of fun playing mixed couples golf on Friday evening and Saturday afternoon. My wife’s the best. A beginner golfer who hates any competition, she hit some great shots through 8 eight holes. After teeing off number 9 of 9 holes, she said, “I’m done. I want a drink”. With that three of us finished the hole and she walked up to order drinks. And we still came in second. On Saturday, I played with a girl who is going to be scratch sooner than later. We tied for first and lost on the 20th hole in a playoff as my 11 foot putt rolled over the edge but didn’t want to fall. We had so much fun!

August begins today and it is historically the second worst month of the year behind September in the modern investing era. Recall that July was supposed to be a strong month. Seasonal trends of just light winds, either in the face or tail. I continue to believe that the stock market will find a bottom this month below the lows of July. Ideally, which we rarely get, 7200 on the S&P 500 and 27,000 on the NASDAQ 100 would make it easier.

Two important things from Friday. First, Q2 GDP came in at a sub-trend +1.5% growth. That is weaker on the surface. And while I hate to qualify any piece of data, I did learn that it was hampered by strong imports to feed the AI data center boom. Imports count against GDP growth in the calculations. This is hardly worrisome from a recessionary point of view as the data centers are going to be hugely supportive to our economy.

Second, very late in the day, Treasury Secretary, Scott Bessent, quietly announced supporting the Japanese Yen with a big intervention. Late Friday announcements are always curious when liquidity dries up. Anyone wanna bet on what happened to the Yen?

It soared. And I will speculate that lots of folks were off their desks for the weekend and got caught short. This was intentional. In the end, currency manipulation rarely works and water finds its own level.

Today is day three of the stock market bounce. I imagine it will be capped by 29,000 in the NASDAQ 100.

Finally, there is another possible opportunity developing in the precious metals market.

On Friday we bought EMB. We sold IBM, AGG, some NFLX, some SPCX, some PINK, some HACK, some XLRE and some XBI.