Get a load of this line from the June Federal Open Market Committee minutes:
The information available at the time of the June 14-15 meeting suggested that U.S. real gross domestic product (GDP) was rebounding to a moderate rate of increase in the second quarter after having declined in the first quarter.
Now, compare that line with this: At the time of the meeting, as per this chart from the Atlanta Fed's brilliant GDPNow nowcasting service, it appeared that the nowcast for second quarter GDP was 0.0%.
Ahem. How is that a "rate of increase"? Wouldn't it be "lack of rate of increase." Obviously, as most are aware, the updated data points that compose the Atlanta Fed's forecasting tool have since declined dramatically and GDPNow is now calling for a 2.1% decline.
That is a rate of decrease.
But these technocrats at the Fed don't appear to know that. They sit in their Ivory Tower and sip Chardonnay while you deal with record-high prices at the pump and food inflation that made July 4th feel like Dependence Day.
Now, here's another one:
In May, the 12-month change in the CPI was 8.6 percent, while core CPI inflation was 6.0 percent over the same period.
And that was immediately followed by this goodie:
Measures of inflation expectations derived from surveys of professional forecasters and of consumers generally suggested that inflation was expected to remain high in the short run but then fall back toward levels consistent with a longer-run rate of 2 percent.
How can the second sentence possibly follow the first one? Do they even read what they are writing?
So, the U.S. economy will continue on; leaderless, rudderless and frankly, clueless. I am guiding my clients' portfolios by just listening to the experts -- including me. Uh, yeah, me. For better or for worse, I am the resident expert at my website, www.excelsiorcapitalpartners.com. What am I doing? I am buying a boatload of energy stocks on this week's pullback, and have reinvested in my HOAX portfolio by adding Equinor ASA (EQNR) , which was already in HOAX 2.0, and to HOAX 2.0 by adding Antero Midstream (AM) , which was already in HOAX.
See what I did there. I added to investments I believe in by reinvesting, and in describing said action, I in fact composed two sentences that don't directly contradict each other. That's why I could never work for the Fed.
So, we will keep buying energy stocks, keep risk-aversely investing in the preferred stocks that make up PREFS and keep betting against Cathie Wood, which I did yesterday by buying some of Michael Tuttle's brilliant anti-ARK Innovation Fund (ARKK) , (SARK) , for a client.
When will that strategy change? Either a.) when the cult of environmental, social, and governance -- "ESG" -- is removed and the world is investing in hydrocarbons in ratable form to their use (supply) or b.) when Elon Musk's money furnaces are producing enough electric cars that the world doesn't need more hydrocarbons (demand). 2030? 2035? Or, never.
We are sitting in the catbird's seat with a 31% year-to-date gain in ExCap's flagship model portfolio, HOAX. We are taking advantage of opportunistic reinvestment opportunities like this week's pullback in Exxon (XOM) or the market's collective forgetfulness that AM's 10% yield is just a bit attractive. They zig, we zag. Always.
Otherwise, it is just a festival of technocrats. Let me warn you, though, to be careful with your stocks ahead of a second-quarter earnings season that is not only going to be awful in the rearview mirror (reported earnings per share) but truly horrific in terms of guidance for the third quarter and beyond. That's what to expect in a recession. But the technocrats don't care about your portfolio. They also don't care that your gasoline bills -- or residential electric bills, if you are charging your Model 3 at home, as most do -- are going through the roof.
You have a choice. By reading Real Money instead of the God-awful (and awfully expensive, both in terms of monthly cost and horrible investment advice) content on "other financial websites," you have made the first, and right choice. Please continue to do so. Ignore the technocrats. They don't care about you ... so why should you care about them?
