Good Morning,


We surely send our best to all those being affected by the events in Houston.


Another summer ebbing toward its’ close – and our buddy is back.  North Korea.  In a millisecond, he vanquished all of the previous headlines we were being fed just yesterday. Everything is now North Korea – again.  Classic stuff.

And as one might expect, new 2017 lows in the bond world as the fear trade rapidly overtakes all common logic once again.  Note the yields here:

It is easy to assume that the Fed controls interest rate markets.  It does not.  For better or worse, our emotions control this market.  Generally, when we are terrified, we stand in line to pay whatever the price – for the feeling of “safety.”  When we are confident, well, we don’t fret so much over safety.  I use the term “we” for all investors.


More important, in a sea of low rates, the US remains the highest.  Japan is on the border of negative yields and the other majors are all back at 1.00% or lower.  Much confidence building must still be employed before a real understanding of risk can return to the mass audience of investors.


For now, it remains a good thing that fear is so easily ignited that paying 50 times earnings for bonds and shunning 17.8 times earnings for stocks is deemed “defensive.”




There is still time for a summer swoon and maybe the North Korean is the guy to trigger it.

We just need to see what China really wants to shut down their toy soldier.  Where do you think he gets all that stuff?  The funds to pay for it all?  The parts? Technology?   There cannot be a whole lot of room in that budget.  Here is what you get when you Google North Korea stats:

So now, while I thought Harvey would accomplish this for a bit longer, we must await another headline story to take North Korea off the menu.




It remains important that we focus on the issues more vital to the decisions long-term investors will make as we get out of the final parts of the summer haze 2017.


Steady Earnings (see Thomson data summary below)

Solid Regional PMI’s

Strong Industrial orders


Speaking on strong industrial movement in our economy, note even Warren’s team is finding demand building beyond expectations:

With only a few items left to trickle in for Q2 data, the Thomson stats are very, very supportive for 2018 and 2019.  Telling us?  Pray for that correction:

What is the important stat here you might want to note?  The YOY growth rate is now almost 10%.  This is before any type of eventual tax benefit we might see flow through the system, if DC can get out of its own way.


Don’t forget too that the consumer is doing just fine thank you.  Sentiment is very stable and tons of cash in the bank.  Retail sales remain solid and GDP is closing in on a 3% clip.


Latest same store sales data show the back-to-school numbers were anther good step forward – even better than expected.

Don’t forget though, some of these data points can be tricky each month and bring a lot of chop within themselves so try to think more in terms of trend – which remain solid and up.


The Curtain Comes Down


Another summer is coming to a close but the boredom still has a small distance to cover. The volumes this week are likely to dry up even further.  The long weekend expected to last from Thursday to midweek next week.  Just as in the last few years, we can expect the haze to finally wear off by the end of next week.


Don’t fret though.  As soon as you get refocused, we will see the annual media hype about how bad October is for the markets.  No rest for the weary as they say.


Enjoy The Rest of the Haze….


Ho hum – just generally positive and supportive news here.  Boring, right?


That’s why you don’t read it in the mainstream press – it would not get much attention. We are all wired to sense bad stuff first, which blocks out most of the good stuff from the start. Simple, I know.


Look – overall, prices have not moved much all summer long.  This falls within the norm for lack of interest as covered all summer.  When the dust does settle though and this summer is in the history books, my hunch is the experts will come back from the beach and find all sorts of “bargains” have been unearthed again…and the process will go on.


Enjoy the remainder of your summer vacations.


Hazy as it is, we will soon long again for the days we can relax…and be chanting for the next break.


Travel safe, be well.


Focus on demographics – not economics.


The Barbell Economy is growing just fine.


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