Last Train to Crazy Town
Anytime you stand back and take stock of what's going on in the world, you can end with a list that's pretty weird. And these days, with Twitter and Facebook elevating truly mundane and irrelevant stuff to front-page news, well, it's a wonder the economy and the stock market aren't more volatile than they already are...
Maybe it's just me. But I was scrolling through my Twitter feed while I was waiting for the leaders to hit the links for the U.S. Open this weekend, and it seems like we've entered a truly special time for the weird.
For instance, I think it was Bloomberg reporting that the U.S. is running a hacking campaign against Russia's electric grid. Of course, it only makes sense that if other countries are hacking into our systems, we are returning the favor...
Except that Bloomberg says military leaders don't want to tell the president about certain sensitive operations because they're afraid he'll spill the beans on Twitter. Which, if we're honest, we have to admit is probably accurate. But if this particular item is so sensitive, why did I just read about it from Bloomberg on Twitter?
Over the last few days, the president said that if he doesn't get reelected in 2020, the stock market will crash, and that if Norway (Norway!) has sensitive info about his opposition, he'll listen and won't tell the FBI. Meanwhile, the Democrats have 30 socialists that want to be the next U.S. president.
The Fed is about to cut interest rates while the S&P 500 is at all-time highs, unemployment is at 60-year lows, and wage inflation is actually starting to pick up. Normally, you see data like this and you think the Fed will hike rates, not cut them. Apparently it's Opposite Day at the Fed. I'm sure everything will be just fine.
Oil demand is falling just as the country with the most oil in the world — Saudi Arabia — is trying to sell its oil company, Aramco, to international investors (remember: it's buy low, SELL HIGH). So suddenly Iran is accused of bombing a Japanese oil tanker at the same time Prime Minister Abe is there for talks? Am I the only who thinks this is fishy?
And speaking of the Saudis, I see rumors are flying that in 2017, the Saudi crown prince Mohammed bin Salman paid $450 million for a Leonardo da Vinci painting that may have actually been painted by one of the people working in his workshop. And that the painting is hanging on bin Salman's yacht.
The thawing Arctic Sea is going to be a viable shipping route in a few years. Maersk has already sent container ships through. Estimates are that 15% of all shipping will eventually cross the Arctic Sea. Suez Canal volumes could fall by a third. The Arctic Council (Canada, Finland, Denmark, Greenland, Iceland, Norway, Russia, Sweden, and the United States) is trying to hammer out some rules, but the U.S. just bailed because we don't like the climate change language in the treaty. Great. Let's just let Russia dominate this group. I'm sure we'll be fine...
Finally, government spending and the deficit are surging. Year to date, the U.S. deficit is up 39% to $739 billion. And spending in May was up 20% over last year. What is going on? 10 years into an economic expansion, and debt is racking up faster than ever...
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It'll Be Fine...
I have to stop. If I keep riding this train to crazytown, I'm gonna start getting bearish. And while the news might tell you that being bearish is the right thing to do, the stock market does not agree.
In fact, stocks may be about to cruise higher...
The stock market likes one thing above all: liquidity. If there is plenty of money around, stocks will go higher. Because money wants to get put to use making more money.
You're reading this Wealth Daily because you're thinking about making some money from stocks. Venture capital is investing record amounts in new companies, and these companies are coming to market in big numbers this year.
Hedge funds are buying, Buffett is buying — it's like one big party.
And the Fed is about to bring in reinforcements. Yeah, the futures market says the chance of a rate cut is better than 80%. Sure, much of the recent rally has been fueled by this. But mark my words: If the Fed delivers, the Dow, Nasdaq, and S&P 500 surge into record territory. And this morning's Empire State Manufacturing Index looks terrible, all but assuring us that the cut is coming, maybe this week.
Time to get ready...
Until next time,
A 21-year veteran of the newsletter business, Briton Ryle is the editor of The Wealth Advisory income stock newsletter, with a focus on top-quality dividend growth stocks and REITs. Briton also manages the Real Income Trader advisory service, where his readers take regular cash payouts using a low-risk covered call option strategy. He also contributes a weekly column to the Wealth Daily e-letter. To learn more about Briton, click here.
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