Economy Overview, Stock Picks
307: Monkeypox, Energy & Defense, National Debt
Right into this afternoon folks.
Recent equity sell offs sparked by weaker job reports and a surprise interest rate hike in Japan have complicated the investing landscape for many traders and institutions as we move into a contested US Presidential Election. Monkeypox is back. Ukraine is pushing into Russia. Iran is declaring they will seek revenge.
The Democratic Convention kicks off next week. Markets are continuing chug along — with equities showing some nice pumps.
Oil and commodities have rebounded a bit along side equities — but geopolitical risks have kept people vigilant. Iran has been running it’s mouth about an impending retaliatory strike on Israel but nothing of substance has come.
The battle against inflation that the Fed has been conducting since the Covid pandemic might seem like it’s getting better at face value but the reality is many many Americans are struggling at the moment. Household goods, food, car payments, savings rates, and more are not seeing positive developments across the country. While inflation may technically be easing — the cost of goods and expenses across America are not falling. It is getting more and more expensive to live a regular life.
I went out to get ice cream with my wife, son, and in laws yesterday and it was $50 with tip (granted it was Ben & Jerrys) but still. I turned to them and said — this was probably like $5 when you were younger right?
On top of this are the trends emerging in the labour market — in which multiple job holders are at all time highs and full time vs. part time employment is at high levels as well (which has been an indicator of a recession historically).
For a look into some of the outcomes of upcoming Black Swan events check out out post below:
So the question remains — if you’re not already immensely wealthy how can we attempt to outpace this rapid ascent in the cost of living in the US? Asides from making more money — which is becoming harder to do through conventional jobs or without a business — how can the markets can provide the opportunity to offset this burden in America and around the world. I have long preached the importance of focusing on achieving a lump sum at the end of any given month or year to allocate directly towards investments OUTSIDE your 401K.
The easiest way to do this with a cash flowing business. But you can pull ahead by positioning into risk on assets when others think it’s over (we are close with crypto).
Without adjusting your finances — those that are not yet financially independant are going to continue to fall behind particularly as costs remain high, salaries decrease, and the job market worsens.
The Federal Reserve has kept the federal funds rate—the interest rate at which commercial banks lend to each other overnight—unchanged since July 26, 2023. For those that don’t know, this rate serves as the benchmark for Treasury bills and other short-term securities. In June, the Congressional Budget Office (CBO) projected that annual net interest costs would total $892 billion in 2024 and almost double over the upcoming decade — rising from $1.0 billion in 2025 to $1.7 trillion in 2034, totaling $12.9 trillion over that period (PGPF).
The national debt seems to be an after thought to most in the country who assume that this will go on indefinitely and the chickens will never come home to roost. For now that may be true, but down the line this could spark disaster.
The Council on Foreign Relations says a good deal of Economists agree that debt this high will lead to diminishing U.S. economic growth, restrictions on government spending for important programs, and raise the likelihood of financial crises (a big one).