And for those that are curious.....do I care about the Biden DRAMA that is taking place right now? NOPE. Politics is not something I have any control over and I do not invest based on politics since I am not a trader or a market timer. Do I think Biden will survive......NOPE....I expect he will bow out of the race some time over the next 7 days at most. Does this impact my investing or market outlook.....NOPE.
As to my account mid morning.....eight of nine stocks UP. BUT....the one stock that is down is.....NVDA....down by $1.71 or 1.34% at this moment. The elephant in the room.....in my account. As a start to the day....I like it and will take it.....although it is not like I have a choice or and control over the short term.
Speaking of NVDA. Nvidia downgraded, Tesla upgraded: Wall Street's top analyst calls https://finance.yahoo.com/news/nvidia-downgraded-tesla-upgraded-wall-133602943.html New Street downgraded Nvidia (NVDA) moving to Neutral from Buy. they now have a one-year price target of $135. Their reasoning.... the shares are "getting fully valued for the base case." It is their opinion that share upside will only materialize in a bull case, in which the outlook beyond 2025 increases materially, and New Street does not have the conviction on this scenario playing out yet, according to the analyst in a research note to investors. They say.....however.... that the "quality of the franchise is nevertheless intact," and they would be buyers again of Nvidia, "on prolonged weakness." They are fans of AMD (AMD) and TSMC (TSM) as the most attractive AI firms. MY COMMENT NOPE....I dont invest according to analyst opinions or press releases. As a long term investor this opinion seems pretty short term oriented to me. AND....I certainly have no interest in AMD. TSMC is a great company.....but I dont want more exposure to the China invasion issue that comes with TSMC. I have enough exposure to that issue as it is. Needless to say......I dont agree with the above since NVDA is the largest single holding in all the portfolios that I manage.
rg7803. One of the things I will do when evaluating whether I am going to hold/sell a particular company is ask the question: "Would I go out and buy more of this company/stock today if I had funds available to do so....yes/no? If not, then I might drill down a bit further as to why I would not. The SP 500 gets my vote if you have nothing else currently planned or you could split the sale into some SP 500 and some to existing positions. Good luck in whatever choice you end up making.
@WXYZ I'm rolling over an old retirement account (401k) from a previous employer to an IRA. It'll clear in a few more days, so early next week I'll be looking to buy stocks. Earlier it looked like you said you are planning on picking up some more PLTR and then I saw another post where I think you mentioned WMT being on your watch list. Any caveats you would mention with WMT, or any other companies you think I should be looking at? Currently I'm thinking of mostly picking up Costco, MSFT, HD, Apple, maybe some NVDA, debating whether to pick up some CMG. I'm at least 30 years from retirement so this is very very long term (although of course I'll make changes if some of them don't perform in the future.) Appreciate any thoughts you have!
I had a good day...better than the numbers show. I had a small/medium gain in my stocks today. BUT...I got beat by the SP500 by 0.26%. NVDA pulled me down today....being my ONLY down stock.
The week that was. DOW year to date +4.40% DOW five days +0.73% SP500 year to date +17.38% SP500 five days +1.43% NASDAQ 100 year to date +23.24% NASDAQ 100 five days +2.87% NASDAQ year to date +24.29% NASDAQ five days +2.58% RUSSELL year to date +0.69% RUSSELL five days (-1.16%) All in all a great week. I am now at +48.16% year to date for my entire portfolio. Last Friday I was at +43.99%.
MIZUGORI. I can not give investment advice to others on here. BUT.....I have owned PLTR since February 6 of 2024. I did a little momentum trade back than and ended up with 104 free shares when it was done. I have added shares in March, April, May, and June of 2024 as I had extra money to add shares. I like how the stock is performing........but this is a TINY MICRO-HOLDING in my account. As to WMT.....I looked at it about 4-6 months ago. I have also followed it a bit since than. I am always looking for non-tech companies for my portfolio since I have so much money in tech. I will definately look at WMT again when or if I am going to add funds to my account. I am sure you can find a lot of good commentary on this stock online since it is such a mainstream big cap company. BUT.....PLEASE......I can not say that anyone else should buy PLTR or WMT. As to your post and the stocks you are planing to buy.....COST, HD, MSFT, AAPL, and perhaps NVDA, and CMG. I currently own them all and will continue to do so. Again I can not give investment advice to others since I have no idea of the particulars of your situation and I am not an investment advisor. Let us know what you end up buying. You are so lucky to be 30 years from retirement....except for having to work for 30 more years....LOL. That means that you have an eternity to let your money continue to grow and compound. CONGRATULATIONS for being an investor at such an early age........time is the most valuable commodity for any investor.
I'm not sure you will find anyone who will tell you what to buy here, but if you read this thread enough, you can get a good idea what we feel comfortable investing in. I'm also not sure that many people can do better than WXYZ's frequent posting of his investments, so that is definitely a good place to start. And since you have a good amount of time to let your money grow, save yourself the hassle and heartache of listening to short term market nonsense and selling when crap hits the fan every decade or so. Just look at the 100 year charts of the S&P500 for reassurances and take a walk when the market looks ugly. It always recovers. Choose wisely, don't follow traders, and enjoy the ride.
The UPDATED Portfolio Model.......NOT as investment advice.....just as a disclosure of my personal BIAS and my thinking on how to structure a long term portfolio. "I am once again posting my PORTFOLIO MODEL. My initial criteria to start the process to consider a business are.......BIG CAP, AMERICAN, DIVIDEND PAYING, GREAT MANAGEMENT, ICONIC PRODUCT, WORLD WIDE LEADER IN THEIR FIELD, LONG TERM HORIZON, etc, etc, etc. PORTFOLIO MODEL "Here is my "PORTFOLIO MODEL" for all accounts managed which is the basis for MUCH of my discussion in this thread. I am re-posting this since I often talk in this thread about my portfolio model. My custom in the past on this sort of thread was to re-post my portfolio model every once in a while since I will tend to talk about it once in a while. I "manage" six portfolios for various family including a trust. ALL are set up in this fashion. If I was starting this portfolio today, lets say with $200,000. I would put half the money into the stock side of the portfolio, with an equal amount going into each stock. The other half of the money would go into the fund side of the portfolio, with an equal amount going into each fund. As is my long time custom, I would than let the portfolio run as it wished with NO re-balancing, in other words, I would let the winners run. Over the LONG TERM of investing in this style (at least in my actual portfolios), the stock side seems to reach and settle in at about 62% of the total portfolio and the fund side at about 38% of the total portfolio over time. That is a GOOD THING since it tells me that my stock picks are generally beating the funds over the longer term. AND....since the funds in the account generally meet or beat the SP500, that is a VERY good thing. As mentioned in a post in this thread, I include the funds in the portfolio as a counter-balance to my investing BIAS and stock picking BIAS and to add a top active management fund that often beats the SP500 (Fidelity Contra Fund) and a SP500 Index Fund to get broad exposure to the best 500 companies in AMERICAN business and economy. The funds also give me broad diversification as a counter-balance to my very concentrated 9 stock portfolio.At the same time the funds double and triple up on my individual stock holdings............that I consider the BEST individual businesses in the WORLD. STOCKS: Alphabet Inc Amazon Apple Costco Home Depot Microsoft Nvidia Palantir (Junior micro-position) Chipotle Mexican Grill (Junior position) MUTUAL FUNDS: SP500 Index Fund Fidelity Contra Fund CAUTION: This is a moderate aggressive to aggressive portfolio on the stock side with the small concentration of stocks and the mix of stocks that I hold and with the concentration of big name tech stocks. Especially for my age group. (74). So for anyone considering this sort of portfolio, be careful and consider your risk tolerance and where you are in your life and financial needs. I am able to do this sort of portfolio since my stock market account is NOT needed for my retirement income AND I have a fairly HIGH RISK TOLERANCE. In addition I am a fully invested, all the time, LONG TERM investor. (LONG TERM meaning many years, 5, 10, 20, years or more)" MY COMMENT This portfolio is HIGHLY CONCENTRATED on the big cap side of things. OBVIOUSLY between the funds and my nine stock holdings there is MUCH doubling and tripling up on the stocks. THAT is INTENTIONAL. I strongly subscribe to the view of Buffett and some others that TOO MUCH diversification kills returns. I do NOT believe in the current diversification FAD that most people seem to now follow.......or think they are following. I DO NOT do bonds and think the current level of bonds held by younger investors.....those under age 50.....is extremely foolish.I DO NOT do market timing or Technical Analysis."
Good point as usual by RTN. The "price of admission" is the volatility and risk that comes with investing in the market. There is really no way around it. It is normal. Yet, all of the noise will suggest to an investor that somehow it isn't.
NIKE has sucked for years now. They got a pass due to the pandemic excuse....but...it is now obvious with the pandemic excuse no longer available.....that this company has clear and significant management and culture issues. They totally screwed themselves by dumping their retail partners and with their arrogant adoption of social issues as a company mantra......pissed off half their potential customer base. In addition they tied themselves to China. I am so happy that I dumped this long time holding a few years back.....due to the handwriting on the wall and my dislike of the non-business..........."stuff".........the company was pushing. I like my companies......as much as possible......to stick to and focus on BUSINESS.....keep your personal politics and social thinking to yourself. Nike trimmed from the top in recent layoffs, new disclosure shows https://www.oregonlive.com/business...p-in-recent-layoffs-new-disclosure-shows.html (BOLD is my opinion OR what I consider important content) "Nike cut heavily from the top in its recent mass layoff, according to a new filing with Oregon workforce officials. The sportswear giant in April said it would eliminate 740 Oregon jobs, part of a 2% reduction in its global workforce and an ongoing $2 billion cost-cutting effort. Nike has been losing ground against smaller, nimbler rivals and focusing on developing new products. The company recently provided a list of 732 jobs it eliminated this year to the state’s Higher Education Coordinating Commission, as required when mass layoffs occur. The list shows Nike laid off 32 vice presidents, 112 senior directors and 174 directors, accounting for more than 40% of the jobs the company eliminated. Nike employed 423 vice presidents and above in its 2023 fiscal year, according to the company’s last corporate responsibility report. Senior directors sit beneath vice presidents in Nike’s corporate hierarchy. Directors sit below them. Workers who supported Nike’s executives also got laid off in bulk. Twenty-two senior administrative assistants lost jobs, more than any other job title. Four executive assistants also lost jobs. The list shows it was a broad reduction, with finance, brand, footwear and apparel among the functions that took double-digit hits. The filing does not cover positions Nike eliminated last year. In December, The Oregonian/OregonLive reported on rolling layoffs at the company that touched human resources, recruitment, sourcing, brand, engineering, digital products and innovation. The loss of seasoned employees is increasingly a talking point with stock analysts. The company laid off 700 Oregon workers in 2020. Like this round of layoffs, many had decades of experience. “The Nike talent today does not, in our view, hold a candle to the talent at Nike 7 years ago,” Williams Trading analyst Sam Poser wrote in a note to investors last week. Nike employed 83,700, including 11,400 at its roughly 400-acre corporate headquarters campus near Beaverton, in May 2023, according to its last annual report. Last week, Nike’s stock had its biggest one-day tumble since going public in 1980, falling nearly 20% after the company said it expects sales will decrease this fiscal year. On an earnings call with stock analysts last week, CEO John Donahoe said the layoffs are behind the company and Nike is focused on getting new products on store shelves, part of what he said in December would be a “multi-year product innovation cycle.” “Teams are focused on driving for the consumer innovation and execution,” Donahoe said last week, adding the company is “100% focused on driving the growth and innovation we’ve been talking about.”" MY COMMENT NO....they are NOT...cutting from the top. The vast majority of these cuts are Directors and Senior Directors with some VP's thrown in (32 of them). NO....senior executives were included. These MORONS are in the process of cutting the future of the company. They are no doubt top heavy in some of these jobs....but....they are gutting their middle and upper middle management. It is not these people that are setting policy and company direction. It is the TOP MANAGEMENT team. What they are doing is cutting the ranks of employees that are supposed to be the management future of the company. BUT....like many companies today....they probably dont care about growing management from within. They are content to hire outsiders.....for high level management..... that have little to no understanding of their business. GREAT COMPANIES.....grow top level management within.....or at least they used to. This is yet another DELUSIONAL move by top management in this company and is NOT going to solve any of the issues facing this company.
The week to come.....more POWELL talk of course and the obligatory economic data....that no one will care much about. The other BIG EVENT....is the kick off of the big bank earnings reports and the start of quarterly earnings reports. Yes....it never ends. Inflation data, Powell speaks, and big banks report earnings: What to know this week https://finance.yahoo.com/news/infl...arnings-what-to-know-this-week-141737717.html (BOLD is my opinion OR what I consider important content) "A reading on inflation and the start of second quarter earnings reports will greet investors after a holiday-shortened week that saw stocks close near record highs. With job growth slowing, investors will be closely watching the release of June's Consumer Price Index (CPI) on Thursday as the case builds that the Federal Reserve could be set to cut interest rates in September. Semiannual testimony from Federal Reserve Chair Jerome Powell before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday will also be a key focus for investors. On the corporate side, Friday morning will see some of America's largest financial institutions, including JPMorgan (JPM), Wells Fargo (WFC), and Citi (C), kick off second quarter earnings season. Results from PepsiCo (PEP) and Delta Air Lines (DAL) will also be in focus earlier in the week. Last week, the S&P 500 (^GSPC) rose nearly 2% while the Nasdaq Composite (^IXIC) rallied over 3%. Both finished the week at record highs. The Dow Jones Industrial Average (^DJI), which has been a notable laggard all year, gained a more modest 0.5%. Case for a September rate cut builds On Friday, the June jobs report showed the US economy added more jobs than expected last month. But economists found several signs of a slowing labor market in the details of the report. The unemployment rate rose to 4.1%, its highest level since November 2021. Meanwhile, job gains for April and May were revised lower by 111,000, showing the labor market's robust gains over the past several months weren't as solid as initially thought. Several economists believe this print will lead the Federal Reserve to cut interest rates in September. "The June jobs report showed more signs of cooling in the labor market, with job growth including revisions weaker than expected, the unemployment rate rising and earnings growth slowing," Oxford Economics lead US economist Nancy Vanden Houten wrote in a note to clients. "Federal Reserve officials have become increasingly focused on the downside risks to the labor market and the June data bolster our forecast for the Fed to cut rates in September and at every other meeting thereafter." Renaissance Macro's head of economics Neil Dutta wrote in a note to clients on Friday that the report should "firm up expectations of a September rate cut." "Economic conditions are cooling and that makes the trade-offs different for the Fed," Dutta added, "Powell should use July to set up a September cut." As of Friday, investors were pricing in a roughly 75% the Fed cuts rates by its September meeting, up from a 64% chance seen the week prior, per the CME's FedWatch Tool. With Powell set to give his semiannual testimony on Capitol Hill this week, investors will be closely listening for any hints at policy moves ahead of its July 30-31 meeting. Price check While the labor market's slowing has added to the case for Fed rate cuts, inflation remains a key factor. In May, inflation readings showed prices increased at their slowest pace of 2024. Powell remarked last week that those readings "suggest that we are getting back on a disinflationary path." The first test for whether that path will continue is set for release on Thursday morning with the June CPI report. Wall Street economists expect headline inflation rose just 3.1% annually in June, a slowdown from the 3.3% rise seen in May. May's data was the slowest year-over-year inflation reading since July 2022. Prices are set to rise 0.1% on a month-over-month basis, a slight increase from the flat reading seen in May. On a "core" basis, which strips out food and energy prices, CPI is forecast to rise 3.4% over last year in June, unchanged from May. Monthly core price increases are expected to clock in at 0.2%. "We expect the June CPI report to be another confidence builder following the undeniably good May report," Bank of America US economist Stephen Juneau wrote in a research note previewing the release. Big banks set the stage Earnings season is upon us again, and Financials (XLF) will be in particular focus over the next few weeks; 40% of the S&P 500 companies set to report over that period will be from the sector, according FactSet. The sector isn't expected to be a leader in earnings growth this quarter, with analysts forecasting 4.3% year-over-year earnings growth in Q2. This places Financials seventh among the eleven sectors in the S&P 500 for earnings growth. As Yahoo Finance's David Hollerith recently reported, regional banks remain a key concern for the industry. Regional banks are expected to report a 26% year-over-year decline in earnings growth. A 'high bar' for Q2 earnings After climbing out of an earnings recession in 2023, corporates are finally facing a new challenge this reporting season: a high bar to beat. Consensus forecasts are for the S&P 500's earnings to grow 8.8% against the year prior in the second quarter, according to FactSet. This would mark the highest year-over-year earnings growth for the index since the first quarter of 2022. "We expect the magnitude of EPS beats to diminish as consensus forecasts set a higher bar than in previous quarters," Goldman Sachs chief US equity strategist David Kostin wrote in a client note previewing earnings season. With the market trading near record levels ahead of this reporting period, Kostin and other strategists are cautious about how much upside investors can expect if results top Wall Street expectations. Kostin noted that last quarter, companies that beat expectations saw their shares outperform the S&P 500 by 3 basis points in the following day of trading, well below the historical average of 100 basis points. Given that investor sentiment is still elevated entering this round of earnings, Kostin reasoned, "the reward for beats should be smaller than average this quarter, although not as extreme as during the 1Q season." Citi US equity strategist Scott Chronert struck a similar tone, warning that given "lofty implied growth expectations," the prospect of large stock pops this quarter is limited. "Markets likely need to see raises coupled with solid execution driven beats to sustain recent gains or push higher from here," Chronert wrote in a weekly research note on Friday. "The concern is while fundamental trends are positive and consensus estimates are attainable, valuations suggest the buy-side will demand more." Broadly, this has Wall Street tampering expectations about how much higher second quarter earnings reports could send a stock market. Research from Deutsche Bank chief equity strategist Binky Chadha showed that the S&P 500 rises 80% of the time during earnings season, with an average return of 2%. "On the other hand," Chadha noted, "the market run up into earnings season and overweight equity positioning argue for a muted rally."" MY COMMENT I do believe that a rate cut in September would be a good strategy for the FED. They have a long and significant history of waiting.....too long....to begin rate cuts. It would not hurt anything to do a small first cut in September and than pause for a month or two to see how things are progressing before doing additional cuts perhaps in November and December, etc, etc. As to earnings......blah, blah, blah....what is going to matter for any company reporting is good current numbers........ PLUS......good guidance. Good numbers alone will not do much without the guidance to back them up. Same as we have seen for many quarters now. AND......in the end it will ALL come down to the same companies that have driven the markets all year long.....AMZN, APPL, MSFT, NVDA, META, GOOGL, and TSLA. These companies are the GUTS of our economy, the SP500, and world business. They are the drivers of the bull market and of the AI TRADE which is the HUGE factor that will impact the markets and business for at least the next ten years. EXCITING TIMES.......LETS GO OUT THERE,......DO NOTHING,......AND MAKE SOME MONEY THIS WEEK.
Speaking of a September rate cut. A key part of America’s economy has shifted into reverse https://finance.yahoo.com/news/key-part-america-economy-shifted-114623074.html As a stock investor currently enjoying a nice old fashioned BULL MARKET........I am looking forward to the coming rate cuts. They will help to drive the markets up to new highs.....BUT.....I doubt that they will have as large of an impact as some people think on the markets. They are totally anticipated and priced in.....whenever they happen.
Being on Social Security...I am always interested in the annual cost of living increase. We are now in JULY....the first of three months.......JULY, AUGUST, SEPTEMBER....that will determine the cost of living increase for Social Security recipients for 2025. Current estimates......(guesses)......are for a 2.5% to 3% raise. https://www.fool.com/retirement/2024/07/07/social-security-2025-cola-is-a-lose-lose-scenario/
This economic data is a SCAM. How Did 250,000 Jobs Suddenly Vanish This Year? https://issuesinsights.com/2024/07/06/how-did-250000-jobs-suddenly-vanish-this-year/ (BOLD is my opinion OR what I consider important content) "Did the economy create 206,000 jobs last month? That’s what the Bureau of Labor Statistics reported on Friday. But don’t believe it. Under President Joe Biden, the BLS has been consistently inflating monthly job growth numbers. It makes great public relations, because the press reports only on the initial estimate, and rarely follows up on the subsequent downgrades. But it does help explain why nobody believes Biden’s – and the mainstream media’s – propaganda about how great the labor market is doing. Last month, for example, BLS said that the economy created 272,000 jobs, which the media branded as “whopping,” “robust,” “vigorous,” and a “blowout.” Economists had expected 190,000 new jobs in May. But on Friday, the Bureau of Labor Statistics admitted that it had overestimated job gains in May by 20%, with the new figure just barely above economists’ expectations. The change barely got a mention in the press. Likewise, April’s job gain, which the BLS initially claimed was 175,000, is now just 108,000. That’s a 38% downgrade. January’s 353,000 new jobs – which reportedly “blew economists’ expectations out of the water” – was almost 100,000 jobs too high. February’s initial estimate has since been cut by almost 40,000. (See the chart below.) Source: Bureau of Labor Statistics I&I Chart As a result, a quarter million “new” jobs have vanished into thin air so far this year. This isn’t a new phenomenon. Last year and the year before, the BLS repeatedly announced downward revisions in the number of jobs created. Why? One big reason is the statistical models the BLS uses to fill in gaps in its survey of businesses have been misfiring. Here’s how Bloomberg explains it: A chunk of the potential overestimation of payrolls stems from adjustments the agency makes to the monthly employment report to account for the net amount of businesses opening and going under, Wong and Knapp say. Because the BLS only surveys existing establishments, it uses a so-called birth-death model to estimate those flows. ‘The labor market saw a turning point sometime in the second half of 2023,’ Wong said. ‘Business closures surged, while new business formations slowed sharply.’ As a result, the BLS overestimated job growth by about 60,000 each month last year. As we pointed out in June (see “The Unvarnished Truth About That ‘Blockbuster’ Jobs Report”), even these numbers are too rosy, because most of the jobs “created” have been part-time work – many held by people taking on second or third jobs to make ends meet under Biden’s “rescued” economy. BLS data show that there are 319,000 more adults working multiple jobs today than there were a year ago. Multiple job-holders now account for 5.2% of those employed, up from 4.4% when Biden took office. All of which helps to explain why, when 1.3 million jobs were supposedly created this year, the number of unemployed climbed by almost 700,000 and the unemployment rate went from 3.7% to 4.1%. And this is to say nothing of the fact that most of the jobs created went to foreign-born, not native Americans, and real wages are lower today than they were when Biden took office. It makes us wonder if Biden’s mental deficiencies and his inability to handle numbers have spread to other parts of the federal government." MY COMMENT PLUS......the largest job category is.......GOVERNMENT....jobs. Data this flawed and inaccurate is WORTHLESS. AND....I find it defies probability that the constant huge errors.....are ALWAYS....in favor of way more jobs than reality. This is an economic SCAM.
Some interesting hindsight....as we move forward. A 2024 Mid-Year US Economic Snapshot America has a birthday this week—let’s celebrate with some May data! https://www.fisherinvestments.com/e...ommentary/a-2024-midyear-us-economic-snapshot (BOLD is my opinion OR what I consider important content) "2024’s first half is in the books, but Q2 data are still rolling in. A spate of widely watched datasets from last week indicate some longer-running trends extended into May. Nothing here is new to stocks, but the numbers confirm the US remains on solid ground economically—an overlooked fundamental underpinning the bull market. On Personal Consumption Expenditures (and Prices) June ended with some good news on the consumer spending and inflation front. Real (i.e., inflation-adjusted) personal consumption expenditures rose 0.3% m/m in May, quieting concerns of faltering household spending after a tepid retail sales report earlier in the month. Meanwhile, the PCE price index—the Fed’s preferred inflation gauge—rose 2.6% y/y, slowing from April’s 2.8% and furthering a longer-running cooldown. Many cheered the news, calling May’s numbers the “good data” that will convince the Fed things are headed back to normal. This reaction is typical, but don’t try to forecast Jerome Powell and co.’s decisions. Central bankers’ actions are unpredictable. There isn’t any way to know how they will interpret the data, let alone act on those interpretations. Instead, accept the data for what they show: May extended the longer-term trend of resilient consumer spending amid slowing inflation rates. (Exhibits 1 – 2) Exhibit 1: As Inflation’s Slowdown Continues … Source: FactSet, as of 7/1/2024. Exhibit 2: … So Does US Consumer Spending Source: FactSet, as of 7/1/2024. On Weaker-Than-Expected Durable Goods Orders May US durable goods orders were mixed. The headline number rose 0.1% m/m, thanks to a boost from military aircraft, but “core” capital goods orders (which exclude volatile defense and aircraft orders) fell -0.6% m/m, matching its biggest dip of the year. Some worry this bodes ill for business investment, but beware reading too much into a historically volatile, non-inflation-adjusted data series. Moreover, even though core capital goods have bounced around constantly (Exhibit 3), business investment has grown in every quarter since Q4 2021. Exhibit 3: Core Capital Goods Orders, May 2021 – May 2024 Source: FactSet, as of 7/1/2024. Equipment investment, which durable goods orders translate to, has stumbled, falling in four of the past six quarters. However, this category represents only about 38% of business investment—a smidge less than intellectual property products (42%), which have done most of the heavy lifting lately.[ii] Recovering equipment investment would be a sign of businesses’ going on offense, and we still see signs this is happening—companies are in prime shape to spend, given low default rates and rebounding earnings growth. In our view, it doesn’t really matter exactly when that equipment investment manifests in GDP. Stocks look 3 – 30 months out and appear already to be pricing it in, along with the economic activity and earnings it should generate. On Stronger-Than-Estimated Industrial Production Earlier in the month, the Fed reported industrial production rose 0.9% m/m, with the manufacturing subsector up by the same magnitude (expectations were for 0.3% and 0.2% monthly growth, respectively).[iii] Consumer goods output led the way (all components rose except home electronics), and business equipment production ticked up for the first time in three months.[iv] Motor vehicle and parts output—which has been a swing factor lately—also rebounded (0.6% m/m after April’s -1.9% fall).[v] We won’t pooh-pooh industrial production’s strongest monthly growth of the year. But don’t overstate the broader implications. The economy doesn’t hinge on factory production. If heavy industry were economically consequential, its soft patch would have likely tipped growth in a meaningfully negative way—it hasn’t, which isn’t surprising considering manufacturing comprises around 10% of US GDP.[vi] That said, though robust manufacturing output isn’t necessary for future growth, its resurgence would likely provide a modest tailwind—and perhaps help folks recognize the US economy is a fine environment for stocks." MY COMMENT All well and good.......but.....can we really trust any of this data? And do we even care?
