Unlimited public welfare spending will destroy the country if it is not stopped. The exorbitant – and impossible to repay – government debt purchased by the current administration with fiat money to fund it will ultimately crush all investments. This is why Gold (and increasingly, Silver) and crypto are in the midst of rampaging bull markets.
The Fed seems destined to cut interest rates on September 18th. Chairman Powell and his colleagues have stopped talking about inflation and pivoted towards unemployment. What a shock.
The narrative surrounding the latest Powell pivot is squarely focused on what the Fed believes are the weakening prospects for the U.S. economy, with a clear focus on the full-employment component of their dual mandate. Many agree. Many do not.
Perry Capital anticipates an economy that will continue to expand — supported by healthy consumer spending, bolstered by a labor force that continues to grow and which has never been larger, and by a high level of household income, which has never been greater. This, along with robust government support in select portions of the economy, leads us to believe that growth, employment, and inflation pressure will all continue to surprise to the upside.
The S&P 500 once again touched an all-time high (5,523) but closed on a down note for two reasons. First, inflation remains persistent. The Fed’s preferred inflation gauge (PCE) showed prices are still rising substantially more than they were pre-pandemic (+2.6% vs +1.3%.) The key (outside-down-day) reversal lower insured that for the 9th. straight day, the U.S. equity index
All three key US equity indices made all-time new highs for the week on the notion that economic data was softer. We saw:
1. A slowdown in housing activity. (Existing home sales were down -1.9 %, and New Home Sales were down -4.7%, albeit from near-record high levels.)
2. Languishing consumer sentiment surveys (which were at 100 pre-pandemic and bottoming at 50 in 2022) have slipped from 80 in Q1/24 and are down to around 68-69.)
3. Slightly lower inflation expectations (1 year from now nudged lower to 3.3%.)
4. But, most interesting is a notable pick-up in U.S. service activity (the PMI services survey jumped to 54.8 from 51.3), which is where the bulk of the inflationary pressure is causing the greatest damage to households and businesses.
Be patient and remain defensive. I suspect that most assets you might be interested in buying will be available
at lower prices.
50% of the Perry Capital portfolio is in the money market. The T-Bill position remains at 25% of portfolio assets.
Long Treasuries
and Bitcoin. Everything seems expensive.
“Everything we hear is an opinion, not a fact. Everything we see is a perspective…” Read More »
I have an immense appreciation for the great Victor Hugo, who is, I would suggest, perhaps our
finest writer of nautical fiction, among others. I could not help but recall, while witnessing the
margin call on the British pension system, a piece of terrific writing by Master Hugo that describes
the tumult of a loose cannon as a supernatural beast.
“You can reason with a bulldog, astonish a bull, fascinate a boa, frighten a tiger…” Read More »
