This week, we are excited to announce the launch of the Inspired Money podcast. The idea of producing a podcast began when I attended FinCon Masters New York where I met business podcasters Philip "P.T." Taylor, James Altucher, and Farnoosh Torabi. I hope to see them again next month at FinCon Dallas because my article What Financial Health Means to Me was named one of 10 winners of a national #FinHealthMatters Day essay contest granting me entry to the the world’s largest financial content expo.
Today, Equifax announced one of the largest data breaches in history affecting almost half of the US population, as many as 143 million Americans. Based on the company’s investigation, the unauthorized access occurred from mid-May through July 2017.
The information accessed primarily includes names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers. In addition, credit card numbers for approximately 209,000 U.S. consumers, and certain dispute documents with personal identifying information for approximately 182,000 U.S. consumers, were accessed.
This weekend, the crazy dictator in North Korea stepped up the insanity by supposedly testing out a hydrogen bomb. Whether they actually did this is debatable but the rhetoric is going beyond words with missiles and bomb tests. What Kim Jon Un is trying to accomplish is anyone's guess because he isn't winning any friends with ballistic missiles over Japan or nuclear tests. We just hope that a strategic miscalculation doesn't lead to a serious war.
As money managers, we have to decipher whether this is good or bad for the stock market. In April, Barron's Mark Hulbert wrote a piece titled "War is Hell - but Not for the Stock Market." Is this true?
Thank you Ky Trang Ho for quoting Runnymede in her Forbes article published today. An excerpt is below. Click the link for the full article.
US consumer confidence rose for the 4th straight month and posted its second highest reading in the last 16 years. The Conference Board said its consumer confidence index increased to a reading of 122.9 in August which was above expectations. US consumers remain upbeat thanks to the strong stock market, rising real estate prices and a tight labor market. Consumers have thus far shaken off the news of violence in Charlottesville and the increasing tensions between North Korea and the US. While war is always a risk to markets, we believe that cooler heads will prevail. Tougher sanctions will likely be the next step against North Korea unless they do something really crazy. Keep in mind that North Korea is so puny that it is almost laughable. It is like boxer Floyd Merriweather showing up to your house for a fight. For comparison, in one day, the US makes up over 2x the size of North Korea's annual GDP.
As a dedicated reader to our blog, you may have noticed that our blogging pace has slowed this summer much like the stock market. I guess you can say we are both stuck in neutral. Well we are still grinding away but have been busy with conferences and now I am on a much needed holiday to recharge and enjoy some shave ice. Don't worry I will back blogging with more regularity next week. As for the stock market, the sell in May philosophy has worked well again this year. While seasonality doesn't occur exactly the same every year, there definitely are seasonal trends that prevail in the stock market. This year, the S&P 500 has been stuck in a sideways move since June and volatility has picked up a bit as well.
Since last summer, I have written several blog posts on positive earnings from the S&P 500 constituents. We view accelerating earnings growth as a key driver of stock prices moving forward. Schwab's Chief Global Investment Strategist Jeffrey Kleintop just wrote a very compelling post called "Earnings may be about to do something they've never done before." Thanks to global growth picking up across virtually all regions, global earnings (measured by the MSCI All Country World Index) are expected to reach new heights in the near future. This is also bullish for the S&P 500 which generates roughly 44% of its revenues from outside the US.
Despite the weekly doomsday headlines (this week is from filmmaker Michael Moore - we do not recommend taking investment advice from fimmakers, ever), Billionaire hedge fund manager David Tepper called comparisons of today's market with the tech bubble of 1999 'ridiculous' and we wholeheartedly agree. Tepper who runs Appaloosa Management says that the market run doesn't translate into over the top valuations in equities.
Thanks to Uncle David for forwarding a CNBC article on how famed hedge fund manager Stan Druckenmiller raised his stakes in Chinese companies in the last quarter. According to recent 13-F filings, his firm Duquesne Capital bought Chinese consumer and tech stocks in the second quarter.
Last Friday on CNBC, former Fed Chairman Alan Greenspan said that it's fair to characterize the current bond bubble as an "irrational exuberance" type of forecast. He did hedge the statement by saying that he has "no time frame on the forecast." Also note that he started making this bond bubble call in 2015.