“It’s the Economy, Stupid”

Happy Independence Day to all!

This year has been a much more volatile year in the stock indices in comparison to 2018. Many of our clients have questioned the ups and downs we’ve experienced for the last four months, pretty much since President Trump has started down the path of placing tariffs on some of our most notable trading partners. These moves are part of what I believe to be a series of negotiable steps to move toward a more favorable trade environment for the United State.

At OLV, we have a very positive outlook with regard to the economy. We’ve had to take the approach of only looking at the headlines and completely blocking out the narrative. We don’t care if you watch CNN, MSNBC or Fox News, we really don’t think any of them are doing the headlines justice and come at all stories with extreme bias. This can be very dangerous to an investor’s health – both mental and financial. When we read the headlines and ignore the narrative, we see a lot of good information, such as an extremely positive unemployment situation. The department of labor said that the unemployment rate reported in June was 3.8% (dol.gov). Honestly, I don’t need them to report how good the unemployment situation is, because I can look almost anywhere and see “help wanted” signs.

Two of my clients who are in charge of employment for both a manufacturing company and a large court house are both telling me the same thing: they can’t keep employees due to extreme wage pressures and staff being poached by other firms offering better work packages and work environments. I’ve even heard of signing bonuses for manufacturing jobs! The Atlanta Federal Reserve just upped their 2nd Quarter forecast for economic growth to 4.8! (frbatlanta.gov). This number is larger than anything I could ever have predicted 18 months ago. In fact, we haven’t seen 4.8% growth since the 1990s (statista.com). Add to this the fact that for the first time in history, there are more job openings than job-seekers, with a record 6.7 million job openings and 6.4 million possible employees (dol.gov)!

I don’t care what side of the aisle you support in Washington, the numbers speak for themselves and they are speaking loudly. We think this could be the second inning of this economic expansionary phase and that we could be well rewarded over the next 5-7 years for staying the course in our investment strategies.

As Bill Clinton’s campaign strategist, James Carville, said in his 1992 campaign: “It’s the economy, stupid!” In fact, it looks like President Trump stole a page out of Slick Willy’s playbook from that campaign, which included the phrases, “Change vs. More of the Same,” and “Don’t forget health care.”
In summary, if investors insist on watching the mainstream media, I encourage them to ignore all the narrative and just watch the headlines. In my opinion, things in the economy are really solid, and it looks like there is much more to come.