Learn to Ignore the Headlines
“If you point to paradise, all the short-sighted will see is your finger.” - Matshona Dhliwayo
The toughest part of long-term wealth management is the waiting.
It’s very tough indeed, especially when you throw in the type of emotional events we’re dealing with now - on multiple fronts.
Earnings season is almost through its peak and the numbers have been vastly better than most expected.
Here are a couple of snapshots to show you visually how big the beats compare to other times in history:
The current beat rate - and the margin by which beats are being registered - has not been seen in decades.
While overlooked by most, it’s the footprint in the sand that helps us understand how the internals of business are adapting and recovering in far more productive ways than first assumed.
Sadly, fear will continue to blind many to this process.
US Housing Is Running Out…
For the 12th week in a row, US housing data blew the lights out.
In a world that was already under-building for the coming generational wave of "moving out and moving up," you can’t have year-on-year increases of over 20% for much of a span before you run out of houses to sell.
This is the warm-up guys!
The pitchers are stretching, the fans are still rolling into the parking lot, tail-gating is cleaning up and popcorn machines are heating up. The game is in its early stages. Take your seats and enjoy the extra-inning slugfest ahead.
I deliberately provided you with the bullet points from the latest housing data first.
And then I’m going to snapshot-in the headline below.
See if you can find the mis-direction to keep the reader afraid:
If you focused on "but rates are suddenly rising now..." then you win the prize.
And by suddenly rising, they meant by 4 basis points, which is back to Wednesday's average rate.
That's sort of like saying "In the last 6 minutes, the market has suffered its worst price action since about 45 minutes ago."
Good News Comes in Waves
Sadly, you have to dig it out from all the mess, dust it off and let the light shine down on it.
If you listen to the droning on of the headlines, then you’ll reckon that small business is dead.
And yes, some of it is. But most is not.
They’re adapting. They’re fighting.
There will always be a small fraction that is unhappy. We all get our turn in that barrel.
But like I suggested, good news is brewing:
Once again, the key points of the data are provided first above - with the "surprise" obvious in the headline instruction below – “Oh, ye of little faith..."
Describing it as "stunning" may be overkill, but we all know the media rarely exaggerates so we will let them pass on this one.
And it’s not just small business.
Beneath all the negative chatter, ISM Manufacturing data is already back in solid expansion mode.
As we covered in our review call above, we should expand a steady stream of a return of manufacturing to our shores - for years ahead.
It’s a very positive step for the US for sure. And don't let anyone scare you into believing something else:
But It's Not All Shiny and Clean
To be fair, we all must remember that opportunity doesn't come gift wrapped in the world of long-term wealth management.
The path is often interrupted by left-field events. And it takes work, patience, discipline and flexibility to withstand the storms each and every time.
The summer churn is evident internally over the last few days.
The front-runners of the Barbell Economy™ are taking a breather, which is a good thing as hinted at for a few weeks now.
You don't want things to go straight up...and we should all know by now, the guys in the front get the arrows first.
Here is the internal sector chop of the last week or so:
The Latest Jobs Data...
For the first time in the last 21 weeks, jobless claims dropped below a million (963K), which was solidly below consensus forecasts for 1.1 million.
Continuing claims also came in lower than expected but by a narrower margin.
Let's not sugar-coat it at all: 963K is still high by all historical comparisons outside of the last several months, but it indicates a continuation of a move in the right direction. Remember...better or worse and "next", not "now."
On the political front, this data likely only causes more vitriol to flow.
If "more stimulus" talk was going to demand a sense of urgency to get Democrats and Republicans to come to an agreement, the stock market closing back in on record highs - and now jobless claims easing back below a million - aren't providing supportive ammunition.
The fight is sure to rage on...please work hard to ignore it.