***NOTE: I thought this was sent out on Monday morning. It turns out that the blog’s platform crashed and I didn’t know until today.
Lots happened last week, especially to end the week. I am happy to have finished my Q2 report to clients and then enjoyed some golf time in Scotland with 7 friends playing the best the country has to offer. My travel mates and the wait staff thought I was unusual when I broke out my laptop over dinner as the markets close at 9pm there. That’s life traveling with me and my family is way used to it.
I need to spend some time taking stock of the markets as well as discuss the big events. I will start with the latter. Earnings releases from Meta, Microsoft, Amazon and Apple left a mixed picture. The first two companies well exceeded expectations while the other two didn’t paint a rosy picture ahead. Nvidia comes much later in the quarter.
President Trump raised tariffs on Canada and scored several trade deals to end the week which also leads to a mixed bag. Trade deals are good. Raising tariffs on our neighbors, not so much.
The government released the July employment report on Friday which showed a surprising loss of new jobs by 30% less than expected. The economy only created 73,000 new jobs. Equally as surprising or even more so were the revisions for June and May which saw a 258,000 loss from what was previously reported. The data all scream “weak”, which fits in with what I forecast to start the year.
I have a lot of comments here. First. monthly employment data is notoriously volatile and unpredictable. I don’t believe anyone is doing anything nefarious. The problem is that the collection tools are beyond antiquated and need billions to be updated. The President was clearly angry with the data and reminded people of past instances that went the other way for President Biden. This is as dangerous a path to go down as firing the Chairman of the Fed. It undermines independence and credibility. It’s also a bad look for the U.S. On the flip side, Trump has been calling for Powell to cut rates all year. It’s an interesting strategy to preemptively have a scapegoat in case the economy falters.
Friday’s employment data was weak. I sense there will be an upward revision. However, if there is not then the Fed is even more behind the curve. As you know I have been screaming about rate cuts all year. They should have cut in March and May. Inflation is dead. Tariffs are not inflationary in the traditional sense as they do not continue to raise prices higher and higher. The Fed is wrong. The Fed has been wrong. The Fed will continue to be wrong until they cut interest rates. Their big annual confab in Jackson Hole is coming up in a few weeks. That should be the medium to lay the groundwork for a series of rate cuts. They need to hurry.
On Monday we bought SSO, SIXF, AUGT, GDX, more BA and more COST. We sold SSO.
