“The most dangerous people in the world are very smart traders who have never gotten their teeth kicked in.” – F. Helmut Weymar

Good Morning,

In the early 90’s, I spent the weekends vying for a spot on a racing team. I know – nutty huh? Long story short, you grow up in a small city in the south and you see a lot of car racing.

Anyway – I recall one of the instructors speaking to us after a few 60-lap runs for the day. He said, “Everyone thinks they can drive a car fast, until they hit the outside wall in Turn 3 at 180 miles an hour…” LOL

That’s sort of like what this last 6 months has been like. The race was going fine, we collectively blew out a right front tire and – bang, in a split second – we hit the wall at 180 MPH.

Rocks Ahead?

Of course that is what the entire audience thinks. It is going to be the fear for the next decade at least.

I mean, it couldn’t be recovering this well, right?

We are roughly halfway across the doldrums of summer. The sails are not yet filled with consistent air and won’t be for weeks. This is prime time for the robots to push things around a bit – but we should hope for same.

The haze is still thick as most are not really even paying attention. The virus data is still overwhelming most of the media attention. Even that, though, will quickly shift this week – as politics will take center stage, for the foreseeable future.

I’d love to think it will be a pleasant trip through the election – alas, I am confident we are all pretty sure that is unlikely to be the case.

As such, we will continue to work to shine a light on the higher path ahead. The path which tries to help us all look beyond the short-term garbage and overcome all that seems to separate us, instead focusing on the things that are going right:

Manufacturing is recovering

ISM’s are recovering

LEI’s are generally recovering

And Housing?

Well, it’s exploding – just this morning Builders Sentiment knocked the lights out. The index is now tracking at the highest level in the 35-year history of the monthly series and matches the record set in December 1998.

Recall that builder sentiment plunged to 30 in April, when the coronavirus pandemic shut down the U.S. economy, but it has recovered quickly as consumers suddenly sought more space in less urban areas.

Note the dismay in the headline of the story announcing the record:

Once again – the cloak of the negative possibility.

This process we are witnessing is just starting. Sure – the virus helped drive people out of big cities but that is a fringe issue. The huge push is coming from the first tiny steps of Generation Y into home ownership land. After that – families. After that – boom.

Who’d a Thunk It?

Sit back, recognizing the elements we are all living though – and ask yourself, “Is there any possible way we could set an all-time record on retail sales during a shutdown?”

The answer? Yes.

A couple of important items should be noted here:

Back in the Great Financial Crisis, it took 40 months to reviver to old retail sales highs.

Today, after complete global shutdown and stay at home orders we have never lived through in our entire lifetimes, it took 4 months.

More Getting Better?

How about airline traffic?

Once again, “surprisingly” responsive. It implies, strongly, the type of resourcefulness and adaptability we have been covering for you since Day 1 of this “process”. Still more to go – but getting better friends:

That light blue line is breaking out in its trend.

“But Mike, The Market is Topping Out”

Well, it very well may be in for a rest. We too have been suggesting same. Here is the problem with our won suggestion: we are not alone. EVERYONE thinks the market is ready to nose-dive.

Interesting what the data says internally – just the numbers ma’am:

Notice below, there have only been 8 other times where we have a 100-trading-day sprint in the markets closing in on the pace of the one we have just witnessed.

Only one period had any significant difficulty afterward – and that was the 1930–and the aftermath of the Great Depression.

Our choice? We can believe today — in 2020 (8- years later in advancements) is just like that one time – or we can look forward – recognizing we are vastly more able to overcome than we were back then.

The bad news?

We get to choose, a) our perspective and, b) our level of patience.

The Continuing Theme…

As boring as it may sound at times, we need to realize what is unfolding in the larger picture, well beyond COVID.

Adapting, overcoming and making things better are all foundations of American History. Doubting it for anything more than short stints during the shocks themselves – has been a bad bet, forever.

Demogronomics©does not fade.

It may be lost in the haze of fear – but it will remain the underlying current. Ignore it at your peril as a long-term investor.

While tech sectors could sure use a corrective wave to spook even the small percentage of bullish investors away, I suspect setbacks will be short-lived with $18 Trillion sitting in bank accounts and 10-year bonds selling at 135+ times earnings.

Yes friends – the world is changing -forever.

Every single thing will become new again.

The 80’s and 90’s were the Boomer’s Decades.

As stated for the last two years, to the point of getting boring and repetitive, the 2020’s and 2030’s are the Generation Y Decades – and the rocket-ship driving that expansion will be “everything tech” – including stuff we have not even dreamed of yet.