Hazy Days Of The Economy

Be Careful What You Wish For

“Time, time, time, see what’s become of me”. Just a lyric from Simon & Garfunkel’s hit song or a reality we all succumb to? It’s both. We’re mortal and “look around”, “leaves turn brown” whether we want them to or not.

Payroll numbers did not reach estimated levels today. Prior reports were revised to the downside. Post Apple besting its ‘grossly’ reduced estimates, bolstering its stock price with a ‘buyback’ program they’ll never complete, we get a euphoria ‘sweeping’ across all markets. “Happy Days Are Here Again”, as released by Ben Selvin & The Crooners in 1930, and sung by everyone you know, hit the “street” but are they really happy?

Gather ‘round “kiddies” and you shall hear, not about Paul Revere’s ride to warn all of the Minutemen, no. You’re going to hear about “reality”. What happens when ‘signals’ hit the economy and trigger interest rates to decline. Why bad times aren’t really good and good times are often more difficult to define. In other words, to those of you who think you “know everything” given the meager amount of time you’ve dedicated to the securities industry, experience is about to become your best teacher. Take it all in and learn. Fifty years from now you can be like me and teach people the ‘right way’ but for now, chances are you’re on the wrong side of the fence and history. Open your ears.

Interest Rate Decreases Are Not Good

“This ain’t my first rodeo” is a colloquial expression used to assert that someone has a ton of experience in a particular situation or activity. It indicates the speaker is not a novice and has been through similar scenarios before. That’s right “Pilgrim”, as John Wayne would say. I’ve been there and done that but most who follow me have not.

Everybody has been wishing and hoping for lower interest rates. Too much of what I read and hear predicts a ‘market rally’ when rates are finally reduced. With respect to a few sectors, fixed interest instruments and solid dividend paying stocks, they are on the right path. What I hear from most, including misguided so called ‘street advisors’ they expect the indices to hit all time highs. I hope they are right and I am wrong but history has taught mme differently, when rates go down stock prices usually follow.

I’m not one to follow the “herd”. As a matter of fact however, the herd’s one of my best indicators as they are usually wrong. I do not care is ‘someone’ is right or wrong. I just want them, or anyone, to be consistent, consistently right or wrong. That works, eh?

What Creates Bottoms

Recessionary influences create bottoms. In this last cycle, the powers that be searched endlessly for that ‘elusive’ recession that was predicted for years. It just didn’t happen, yet. Guess what, it’s here and Jerome Powell was smart enough to wait for recession to raise its ugly head and appear.

Face it, we as a fiscal country and consumer base simply spend too much money. QT’s more emblematic of a ‘QuikTrip’ convenience store than ‘quantitative tightening’. ‘QE Forever’ seems to be the rally cry of this and every administration I can remember. It’s this reckless spending that’s created our inflationary problem but ask yourself, but for this spending where would we be? That’s right, in a deep recession if not depression.

So Powell’s done pretty well, eh? I think he has but the “jury is still out”. It’s inevitable and economic cycles repeat themselves, whether manmade or not. When COVID hit in 2020 the world shuttered. In 2008 when the financial markets crumbled, the powers blinked. The amount of money in circulation remained at higher levels than necessary. Removing that excess supply has created the problems we endure today. Speaking on this topic is redundant but the question remains, how will we know when stocks are at their bottom?

First, rates need to come down. Secondarily unemployment has to increase with fewer people not just laid off but less looking for jobs. Thirdly, money circulating within the economy needs to be trimmed. This is where the problem of inflation lives and thrives as too many dollars chasing too few goods creates higher prices where demand exists. If and when this happens, since fewer people use their credit and the administration’s overall spending decreases we’ll see a bottom. Until then tread carefully in the market you follow. Be happy earning a secure return like others will soon be bragging about.

It’s A Weekend

Cinco de Mayo will be celebrated this Sunday as well. For us at The Ticker, we’re just happy to make it through the last week. It was crazy wasn’t it? The overall commodity trading ranges experienced expanded more rapidly than expected for this time of year. The information derived from analyzing standard economic reports revealed the best and worst of times, you pick which one you like best. If you didn’t like the direction of the trends you followed, step back and wait a short while, they’ll change.

“These are the times that try men's souls . . . yet we have this consolation with us, that the harder the conflict, the more glorious the triumph. What we obtain too cheap, we esteem too lightly; it is dearness only that gives every thing value. Heaven knows how to put a proper price upon its goods.” Thomas Paine was right when he said this years ago and his words ring true today. Give me liberty or give me death, more so give me the inherent knowledge and intelligence to think for myself. I’ll do the rest.

That’s why we’re taking tomorrow off to recharge our ‘batteries’. This coming Sunday is important, Mahdi Nikpour will begin sending invitations to those who follow us on Substack inviting them to join us for “free” on The Ticker Free Community. There are tens of thousands of you that follow us on Substack and LinkedIn. We are not going to hit every member on day one let alone week or month one. If you want an invitation in advance of your receiving an email contact Mahdi directly or send me an email. “Free” is good and it is our intention to help you become the “best damn investor or trader” you can possibly be. Remember Rome was not built in a day. Thanks for helping us to help you and enjoy your weekend. See you Sunday.

Hard to imagine these guys released this song when I was just eleven years old. Here I am playing it for you fifty-eight years later. Simon & Garfunkel reflect the times we’ve experienced as have Crosby, Stills, Nash and sometimes Young. It’s certainly hazy out there economically. It’s not going to clear up anytime soon and if it does, chances it’s not going to be pretty prevail. Interest rates, for economic or political reasons, will be on the downside. Stocks will follow. When that trend ends, when things look better no one knows. Face it, we all thought recession was coming sooner than not so picking a “bottom” is even less clear. Stay tuned and keep reading what’s posted. Experience is what’s offered and it’s priceless.