Is The US Economy Showing Cracks?
Good afternoon. This is James Cordier of OptionSellers.com with a market update for August 4th. Recently, my wife and I were driving through Tampa and we were driving past the Tampa Port Authority. Krista says to me, “Look at all the cars.” I looked to my left and I saw the largest car lot of my life. All cars with the exact same emblem on the front, the only difference was the colors of the car. They were sitting looking for a home. It looked like a sea of automobiles waiting for the car dealer to possibly call them and say that they needed them. 30 days later, those cars are still there. I noticed that again today… Interesting.
Over the past week, automobile sales came out approximately 15% below what they were in this same period last year. Automobile inventories were approximately 40% higher than where they’re supposed to be during a healthy U.S. economy. Practically every barometer of the U.S. economy right now is showing either signs of stagnation or great weakness. It’s quite interesting… you have the U.S. dollar falling to a near 2-year low based on these facts, and yet the stock market continues to climb, making a new record-high practically every other day.
So what gives? It’s really hard to tell. Needless to say, interest rates in the United States were supposed to climb 3 or 4 times this year. It looks like they only maybe raised once or twice, and I guess that is all the ammunition the computers need to keep pushing the stock market higher. Eventually, the U.S. economy is going to have to show some growth for the stock market to continue to climb. We’ll have to wait and see exactly when that happens. Of course, some very special months of September and October are coming up, and maybe they’ll have something to say about it.
We certainly are rooting on the stock market, for any of our clients that do have equity holdings. We’re certainly not rooting against it, but by no means would we want to necessarily be pushing stock markets right now. It’s certainly at an extremely high level, practically new highs every day, and yet the U.S. economy continues to show signs of slowing, if not cracking, definitely making for an interesting scenario.
I was speaking to one of my clients recently in Florida. She mentioned that she is a closet bear in the stock market. As a matter of fact, a lot of her friends that do quite well for themselves are stock market bears, as well, she went on to say. I kind of like that phrase, and I asked her if I could possibly borrow that from her, and I just did.
Opportunities in commodities right now, we think, are extremely high, with a lot of uncertainty and a lot of investors trying to seek the ability to move their investments around and not be all allocated in just one implementation. Our looking at opportunities in commodities with the weaker dollar, I think, there will be many now and in the future. Energies and metals are two that we are following very closely. We think that they’re going to be making a pretty decent move over the next 6 months, and we’re going to be positioning ourselves accordingly.
Of course, we spoke of coffee recently. We’re currently putting positions on there. As August is often a cold-weather season in Brazil, and I’m looking at forecasts there and there is nothing happening anytime in the near future as far as southern Brazil, where cold temperatures can actually affect the crop. They don’t grow coffee in southern Brazil anymore.
Anyone wanting more information from OptionSellers.com can visit our website. If you’re not already a client of ours and would like to become one, you can certainly contact Rosemary at our headquarters here in Tampa about possibly becoming one. As always, it’s a pleasure chatting with you, and I’m looking forward to doing so again in 2 weeks. Thank you.