By Jeffrey Cohen, Investment Advisor Representative
US Advanced Computing Infrastructure, Inc.
July 29, 2022
Our first video is about the GDP advanced read by the Bureau of Economic Statistics. It confirms that the US economy looks pretty good, but is shrinking on a real basis (accounting for inflation).
Things are moving, like that jogger on a treadmill at the health club in winter, but not fast enough to go anywhere. This is why we feel busy, and jobs look good, but we are not creating any lasting growth. I worry about this all the time, as the wealth of the country's poorest is going to pay for fuel, heat, rent and food. Earnings are up a little, but savings are up 3x more than income growth. People are nervous and saving their money. Rainy day funds...for those who can afford it.
In our video we outline the story.
We also explored the action of the stock market. Net-Net this is not a market acting like we are in a recession, nor is it acting like a period of rising interest rates. This is an enthusiastic market in an upswing, with strengthening market breadth. We are as surprised as anyone to see this.
We discuss the details in our video. Point after point show the market rising in the face of bad news. Amazon has a bad quarter, and the stock is up double digits after hours and pre-market.
US Federal Government passes a law to help semiconductor companies, and the established player stocks all drop. OK, that is normal...our government is picking winners and losers with our tax dollars and it upsets the natural order of things.
Pre-market moves across economically sensitive industries is pretty mixed.
Finally, our model shows price volatility to be flattening out this week. It is elevated, significantly, but the growth has stopped for now. The stocks picked by our CQNS UP run are consumer discretionary, food and beverage, and insurance brokers. The B2B industrial stocks and of course, Berkshire Hathaway B-class shares.
A few weeks ago they were picking the NASDAQ large cap darlings like Apple, Microsoft, Google, and others. Those have now run up very quickly, blown out their volatility bubbles, and are back down on the list again. The model is now saying that consumer staples are the group that is consolidating and could either stay flat, or recover.