Good Morning,

 

The latest data as of last evening from AAII shows that bears once again outnumber bulls. Yes indeed, a record 131 weeks now – while thousands of points have been ticked off on the markets climb – where bulls have failed to take a majority position.

 

As suspected, that high “neutral” reading is bleeding off into the bear camp.  If the summer chop and churn we expect to continue (normal) does indeed continue, we should see that bear count rise even more.   A good thing for us long-term as any red ink uncorks a flood of media coverage like, “So, Jim is this finally the beginning of the summer swoon so many expect….”

 

Hilarious.

The altitude sickness so many succumb to as they fear higher prices continues to seep into the psyche of the average investor.  It is so much like the early 80’s, the hair on my neck stands up daily as I watch a replay of the confusion back then.

 

Folks – focus on people.  That clarifies ones thinking.

 

Meanwhile….

 

While many more fret over our politics, things continue to improve on several fronts.

 

Jobs are solid (see ADP)

 

Manufacturing ISM is closing in on a 6-year high (see chart)

 

Retail sales saw weekly gains of 2.7% on Wednesday’s data release (even better than last week) – and summer vacations are in full swing.

Even More?

 

This is important to note as well:  The headline ISM index data was strong.  However, the commentary most never see or review paints a picture of even more robust activity.

 

I have included a snapshot of some of the selected commentary from this month’s report. You can see that with the exception of one comment concerning environmental regulations, every other one suggests steady, solid, and or strong business activity.  This tends to be a positive sign when we look at the months and quarters ahead.

Next?

 

Look, I know I sound like a broken record at times.  It’s summer.  It’s boring.  There is a huge reach to make “something” out of what often becomes nothing.  Because of the thin crowd, low volumes and lack of interest if you will, the media process turns it up a notch to grab attention.  Don’t fret.

 

We will hear much about the Fed, Trump, N Korea (a China manufactured event), interest rates, upcoming earnings reports (which should be just fine) and anything else that might work to scare you a bit.

 

Long-term investors will look beyond all that and focus on the real driving forces of the economy.  Patience and discipline has taught us that every summer swoon before us has been a good deal.  A positive, not a negative.  Something to embrace, not something to fear.

 

In Summary

 

Just my two cents worth here, but I have a hunch that the masses are WAAAY over-thinking this process.

 

The data make it clear:  significant growth waves are headed toward our economy.

 

They will surprise most investors – just as they did in the 80’s and 90’s.

 

Why?  Lots and lots of people becoming adults.  Now, we can disagree, we can worry about how others interpret the data, we can fret over minute-by-minute headlines or we can simply get on our surfboard, paddle out into the break – and ride the waves.

 

Plus, the Barbell Economy continues to do as it should – provide a solid cushion for investors to ride through the mess of the day-to-say hype.  The Q2 data summary is below for your review.

 

So relax.  Sure it is choppy – it is supposed to be – it’s summer.

 

Our focus remains the same:

 

Pray for a summer swoon.

 

Think demographics – not economics – we are in far better shape than the vast majority of investors currently perceives.

 

Enjoy the beach plans ahead and time with loved ones and friends – be well and please travel safe!

 

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