Good Morning,

 

In case you had not heard it 4,578 times already, history suggests August is the worst month for the Dow Industrials, with an average loss of 1.39% over the last 20 years.

 

The good news?  Don’t fret – September is the worst month if you want to check the last 50 and 100 years.

 

The funny part most people miss though as they focus on the bad is that the fourth quarter is usually very strong.  If one cares to review, October, November, and December have averaged gains of 1.96%, 1.93%, and 1.47%, respectively, over the last 20 years.

 

For those who like math, that’s a compounded quarterly gain of 5.5% for Q4’s vs. a 1.3% average loss for Q3’s.

 

Not too shabby right?

 

This helps explain why I start suggesting we “pray for a summer swoon” starting about May 1 of each year.

 

“Ominous”

 

The great former Fed Chairman, Alan Greenspan, warned us all last week that he has new and growing “ominous” concerns about a bond bubble.  We have covered the bond bubble for so long I yawn when I type it.

 

Here is something to note of importance:  Alan is 91 years old now.  As has been previously pointed out, records show he traditionally has had most of his money invested in Treasury securities.

 

Sadly, like many retired folks, right after their healthy stuff each day – the morning run, coffee, yoga lessons and 5K sprints – worrying seems to be the new national pastime for those who watch too much financial TV.

 

The Good News?

 

I read a nice piece from Mr. Navellier.  It pointed out that current Fed Vice Chairman Stan Fischer does not seem to share Mr. Greenspan’s “concerns” as the former gave a long speech last week that attempted to explain that global interest rates remain stuck at historically low levels, even though the Fed has been raising key short-term interest rates.

 

His message?  Basically – don’t be afraid.

 

Many experts clearly remain puzzled by the fact that bond yields remain ultra-low as fixed income investors strive to find higher yields.  We suspect that confusion will continue for sometime as highlighted yesterday in your notes:

The Culprits?

 

One thought:  Generation Y is a deflationary, hard-charging, high-tech driven force.  They are moving through every sector of our economy.  The changes are just beginning.  If you could see what is “in the pipeline” your head would spin – mine too.

 

Indeed, a serious lack of inflation (and an even more serious bout of long-lasting internals fears) is keeping bond yields so low across the globe, the Fed has stopped raising key interest rates until inflationary pressures reemerge.

 

By the way – in case you are worried about rates – the notes above are positive.

 

More Good Stats

 

The good news Friday was on jobs.  The Labor Department announced that 209,000 new payroll jobs were created in July, significantly higher than economists’ consensus estimate of 180,000.

 

The unemployment rate declined to the lowest level in 16 years.  Average hourly earnings rose again to $26.36 per hour.

 

This likely explains two things:  a) why retail sales remain on a steady upward clip and b) why the latest job openings skyrocketed to new highs – and no one even smiled.

By the way–check the stats below on the surge in chip sales.

 

Who do you think is driving that?:

One Overlooked Element?

 

The Commerce Department announced that the trade deficit declined by 5.9% in June – to an 8-month low!

 

In June, exports rose by 1.2% to $194.4 billion, which is the highest level since late 2014. One can expect that with a smaller June trade deficit, the next read on second-quarter GDP will likely need to be revised higher.

 

Slowly but surely, we are inching closer to that 3% GDP growth as the trade deficit shrinks, oil costs fall, tech use increases and our exports surge.

 

Just so you know ahead of time though, bears will have some ammo on new fears to instill into your quiet mind soon:  When Apple introduces the iPhone 8, expect imports to be much, much higher – creating a near-term headline.

 

But, focus on this instead:  The empowerment those new phones will bring should easily ignite even more productivity and business growth.

 

So, don’t sweat the small stuff.

 

Relax friends.  This is early…in a very long game.

 

The generational dynamics moving through our economy are setting the pace for decades to come.  Not weeks or months.

 

Think demographics – not economics.

 

Patience always positions itself as the tougher requirement – especially during the worst of the summer churn and haze.

 

Bring on the darn summer swoon already.

 

(Please read Morgan’s piece again – it is really, really good – and I have clipped it in below in case you missed it from yesterday)

 

Enjoy the beach and travel plans ahead.  Time with loved ones and friends is sacred – enjoy, be well and please travel safe!

 

Until we see you again, may your journey be grand and your legacy significant.

 

Nothing in these notes, comments, charts, educational video reviews is ever intended nor should ever be construed as an offer to buy or sell a security.  These comments are the author’s thoughts on the date of writing and can change at any moment.  Past Performance is not a guarantee of future results. Any investment can and often does carry substantial risk. Please consult your advisor before making any investment decisions as nothing in these presentations is intended to be, shall be deemed as or perceived as an offer to buy or sell a security in any jurisdiction or personal investment advice. All investing carries risk.

 

COPYRIGHT © 2017 DEMOGRONOMICS, LLC.

 

P.S.  A Good Read:

 

“NEW YORK – The S&P 500 closed at a new high on Wednesday in what analysts hailed as the accumulated result of several hundred million people waking up every morning hoping to solve problems and improve their lives.

 

The index finished up 4 points. Goldman Sachs strategist Bill Blake said the move was the result of unidentified marginal buyers being a little bit more motivated than unidentified marginal sellers. “We’ve now had 241 years of people in daily competitive pursuits to do things a little better, and those benefits add up over time. Mix that with some good luck and where we happen to be in the business cycle, and here we are,” he said. “My job is to sound smart, but you can explain this stuff to a five year old,” he laughed.

 

Corporations earned $5.89 billion in after-tax profits. Financial advisors and middlemen took in $710 million in fees. The difference, Blake said, would accrue to investors over time.

 

Analysts warned of several metric tons of dopamine and cortisol careening through the global economy, which they said created a near certainty of poor financial decisions. At some point, Blake said, these bad decisions create social proof and feed on each other, leading to recessions. “When is the next recession?” he asked. “I don’t know. Whenever the second mortgage you took out to buy a boat to appease your insecurity convinces your brother in-law to do the same, and his boat gives the boat salesman enough misguided confidence to become a day trader, and then all three of you crack under a collective bout of geopolitical bad luck or something. But we’ll move on.”

 

About 9,000 new businesses formed on Wednesday. Another 8,200 dissolved. Analysts expect the trend to continue, calling it an “unmistakable example of basic capitalism.”

 

Fifty-five million American children went to school Wednesday morning, leveraging the compounded knowledge of all previous generations. Analysts expect this to lead to a new generation of doctors, engineers, and problem solvers more advanced than any other in history. “This just keeps happening over and over again,” one analyst said. “Progress for one group becomes a new baseline for the next, and it grows from there.”

 

Three dozen political pundits yelled at each other on TV in front of an audience of 75 million. Meanwhile, a couple hundred million people were reasonable and productive in front of an audience of zero.

 

Just over 1,700 patents were filed at the U.S. Patent and Trade Office, with a few expected to change the world over the coming decades. “Pretty cool” said Sarah Donald, a PTO spokeswoman. “I wish more people paid attention to this kind of stuff.”

 

Facebook stock fell $0.23 to close at $169.16. Four-hundred seventy one news outlets covered the move. No one knows why.

 

Analysts expect more of the same tomorrow, with the trend continuing into next week.”

 

– he is good.