Nick Hodge,
Publisher
July 2, 2024
We’ve seen a few macro gyrations over the past two months but most indicators and prices are spinning in place.
The US Dollar Index and short-duration yields (2-year) are at the same levels they were two months ago.
Same goes for gold.
Volatility is flat.
What we’ve seen and what we can expect is largely more of the same. And we expect that with full understanding of ‘recency bias’. That sameness was defined in the May issue of Foundational Profits thusly:
We continue through a regime of higher inflation. It is now manifesting in the form of higher commodity prices.
Outside of inflation, growth is the other major US economic indicator to watch. It is slowing but still positive, with Q1 2024 GDP coming out last month at 1.6%.
You can expect that to level off at 2-4% in the coming quarters.
It’s not quite stagflation because the growth hasn’t slowed enough.
Indeed, Q2 just ended. The current Atlanta Fed estimate is for 1.7% growth. Consensus is somewhere near 2%.
Long & Strong
We are long utilities. We are long consumer staples.
We are long energy. We are long copper.
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On the labor front, the economy continues to add more jobs than expected — over a quarter million of them in May versus expectations of 180,000, well higher than the 165,000 jobs added in April.
Stock market fundamentals remain sound as well. Q2 earnings growth for the S&P came in at 5.9%, the highest level in two years. The index remains at all-time record highs.
As such, those hoping for or needing a rate cut this year are seeing their chances slip away. There is virtually zero chance of a cut in July, and odds for a cut at the September meeting have slipped below 60%.
A little is not nothing, so let’s check in on my current positioning. Here is how much I currently own of each stock in the portfolio…
Click here to continue reading the latest issue of Foundational Profits.
Call it like you see it,
Nick Hodge
Publisher, Daily Profit Cycle