- ...Sometimes you win, sometimes you lose and sometimes you get the blues...
- Journey
What Morgan Stanley Sees...
In their mid-term report at the beginning of June, the investment firm looked at six points of interest. They saw weakness in global growth, but no US recession. They see inflation slowing with a possible rise in the 3rd quarter and then, falling. They hedged by saying a possible rate cut by the Fed. Speaking of which, the Fed meets today. We see no rate cut. Trump will explode. Continuing, they hedged again by saying that governments might push stimulist packages. The US dollar will continue to weaken. We agree. Oil will continue to fall with excessive supply. We see consolidation.
They see money flowing into AI, data centers and defense. They mentioned the stability in bonds. No argument on any of these.
We Take Exception
Granted these reports are general in nature as they address an audience of different levels of knowledge, but they offer poor explanations for important points like the dollar and oil. They were correct on the flow of investment money, but they did not mention the dangers like we see happening in the Middle East. The conflict spiked oil. It could go higher as 30% of oil tankers pass along the waters adjacent to Iran. What about Ukraine? To say money will enter defense, but no connection to the stock market? What about the Trump tax cuts to the value of the dollar? This will be the biggest issue going forward. A lower dollar makes inflation rise. The Fed buying treasuries so the federal government keeps its reckless spending is status quo. This is the root cause for inflation. It is one reason why we say, "End the Fed!"
Unemployment
The May report stated it was 4.2%. We see it rising. The on again, off again tariffs will begin to appear in June and by the end of August, unemployment will be the sounding board of the Democrats even though Trump is attempting to do the right thing. As for the economy, Journey has you covered. Costo and Dollar General are winning. The Gap and ANF are losing. Monro tire chain and Marelli auto parts got the blues. We worry about M-2 money supply. There was a $1 trillion drop between April 2022 and October 2023. The percentage was twice as great as the dip in the Great Depression of 1929. This type of effect takes a couple of years to be an impact.
Very Sad
Boeing had another disaster as well as Netanyahu. Neither has creditability. So, we cannot believe whatever they say.
Looking Ahead
Trump can replace Powell at the Fed as his term expires next year. He might test the waters about running for a third term. Keep an eye on the trails on Netanyhu in Israel and ex-president Bolsonaro in Brazil. Politics hides the truth. Peace.
