Worried about what’s going on in the world right here, right now, you aren’t alone. There is some serious signal to focus on, with a Mt. Everest size amount of noise to go with it.
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For those not in the know, signal is real and noise is not. Or at least not now. But such noise can become signal. Confused enough? Don’t be. There are simply things that are real to focus on, and things that are ghosts you might be chasing. The boogieman under the bed as I like to say.
Source: iStock Photos
So, what is the signal right now? Here goes. 1) Artificial Intelligence is here, and it’s properly scary as hell. But there is also grand ambiguity over who is going to be out of a job, and who isn’t. I’m about 50% replaceable with AI, but not 100% because I write from what I know and have experienced. That’s my Alpha and helps me sleep at night…sometimes. Because I’m a literary artist and a musician of words.
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2) What is happening in the Middle East is scary as HE double hockey stick as a good little six grader would say. That is the signal. It’s scary as said HELL. What is the noise is that I don’t believe anyone can say with almost any confidence how this is going to play out. Anyone that anchors to something right now, be advised that they could be wrong within a day or two. That said, this is scary.
Source: Federal Reserve Bank of St. Louis
3) Through all of this, the top-down part of economy is doing well. Like really well. And has been for an incredibly long time. Signal, signal, signal! The United States economy gets knocked down from time to time, but had never been out.
Source: Federal Reserve Bank of St. Louis
4) Jobs are rocking and rolling in the right direction. This is the last year.
Source: Federal Reserve Bank of St. Louis
5) Stocks are also rocking and rolling in the right direction.
Source: Federal Reserve Bank of St. Louis
6) Corporate bonds have been really solid for the past three years. Like ‘sleep well at night’ solid for going on three years.
Source: Federal Reserve Bank of St. Louis
7) Finally, home prices have blown through the roof. I mean just gone on an upward march since 2020. I did the math; it’s a 54% gain in the credible Case-Shiller National Home Price Index. Take that to where the rich people live and it’s off the chart.
Source: Federal Reserve Bank of St. Louis
8) And finally, the NBA, NHL and MLB are all in season, or pre-season. The Master is about 45 days away. But before they tee it up in Georgeo, we have one of the greatest sporting events of all sporting events. Hoop it up boys and girls. Hoop it up!
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Now, let’s talk about some things that will sober those up who are feeling endless glee right now. 1) Feeling glee is a short and has been for a while. People love their portfolio values and asset holdings, but that’s whistling past the graveyard. A really nice, and much more valuable graveyard. But a graveyard, nonetheless.
Data Source: The Conference Board
2) Stocks are expensive. While not at the all-time high expensive as when the dot.com bubble burst, they are still not cheap.
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3) This is all very scary, and because of the fluidity of the situation, I can’t say much more. Sometimes it just feels like you need to put a lifejacket on every morning.
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4) Jobs being lost to AI is also scary, I will say with determination, that I am lucky to not be building financial models for public companies anymore. Dunzo!
Source: iStock Photos
So, there it is on the scorecard, eight good to great things happening, and four to keep you up at night. I call that a win for the good guys, assuming you are long. Everyone has their “kink”, one of mine happens to be a really good slice of pizza.
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