Summer’s here and “the livin’ is easy.”
That’s because the ice cream man’s promising to spoon-feed steroids to every man and market, whether they need pumping up or not.
So, go ahead and get back into the market, get all in, why not, because it’s all good until it isn’t.
It doesn’t matter that the Federal Reserve’s gone crazy, in the face of a strong economy, promising to “act as appropriate” and cut rates if pushed by the President, as well as appeasing presumably scared investors running to flight to quality trades that took the 10-Year Treasury yield below 2% last week.
What matters is catching the next leg up in the bull market, the one for stocks as well as bonds.
The Numbers Saying It’s All Too Good to Be True
The fluffing Fed doesn’t care about what’s really going on in the economy, they’re all about pumping up markets, even if they expand bubbles that pop and splatter capital to the four winds. They’ll just crank up their balance sheet again and keep on keeping on.
Meanwhile, back on the reality channel, the economy and consumers are humming along quite nicely, despite what the Fed thinks it thinks.
On Tuesday the June Consumer Confidence Index is rolled out. It’s expected to come in at 131, same as May. What’s 131 mean? It’s only an 18-year high. Guess that’s what’s worrying the Fed.
On Wednesday we get May durable goods numbers. Expectations are for a rise of .1%, on the heels of April’s drop of 2.1%. Not that durable goods orders are steady one way or another, they’re sometimes all over the place due to seasonality, weather, etc. But that April drop must have scared the Fed.
Also, on Wednesday we get the Bureau of Economic Analysis’ third and final read of GDP. The second revision came in at a positive 3.1% annualized growth rate. The final revision is supposed to confirm that. So, that’s probably what scared the Fed, that the economy’s now growing north of 3%. I get it.
On Friday we get more numbers. We get the ISM’s Chicago purchasing managers tally foe May, which is expected to come in at a tidy 54.4, up slightly from April’s 54.2. We get the BEA’s personal income read. That’s supposed to be up .3%, on the heels of April’s gain of .5%. We see personal spending numbers. Spending, by confident consumers (who the Fed can’t see, even in their rearview mirror) is expected to rise by .4%, up from April’s positive read of plus .3%. A worrisome uptrend, for sure.
And we get the Fed’s favorite inflation gauge, the PCE Core Deflator. Scary sounding as that is, it’s only been running at 1.6% and expected to be there again as it was in April. Because it’s not 2%, the magic dust line in some imaginary Fed fantasy, that must be the worry, that deflation is around the corner.
Don’t worry, the numbers this week should be good, and with the Fed expected to cut rates even as market’s hit new highs, even though consumers are in good shape, even as the economy’s growing north of 3%, there’s nothing to worry about, unless you’re not fully invested in growth stocks, consumer discretionary stocks, and bonds.
Why bonds? Because the Fed’s going to cut rates. And that means more capital appreciation on bond positions you own.
Plus, there are about 4,000 stocks traded daily on the U.S. markets – but only about 100 of them may be worth your time.
Most people can’t tell the difference… and this opens the door to tremendous opportunities for folks who DO know the secret.
In fact, just by zeroing in on one tiny fraction of the market, you can pinpoint winners with 94% accuracy based on our testing.
Enjoy the capital flowing into bonds and stocks, until that is, the bubbles that are building pop.