Good Morning,

First, the reactions around the country over the weekend to the gut-wrenching and terrible circumstances surrounding Mr. Floyd’s death is heartbreaking to watch.

I was in Chicago this weekend and the protests led all the way up Michigan Avenue into the massive shopping areas near the lakefront. Nearly every street level window that could be shattered was – with looting to follow – and then, once empty, 5 stores were burned down.

Terribly sad. In a world advancing far more rapidly than many wish to perceive during this massive (and very young) wave of change, we surely hope we can all find a better way to solve problems – most importantly,together.

Our heartfelt prayers and thoughts are with all those affected by these horrible events. We wish safety and excellent health to all – as always.

A Bigger Next….?

Every single thing we “know” will change. Decades of Disruption was not a joke. And the good news is we are only 22.5 weeks into the game.

For too many focused on news headlines:

“Disruption” will sound scary and negative.

For long-term, patient investors:

“Disruption” will bring long-term advantages, opportunity and significant wealth.

As always – humans get to choose. It’s what separates us from every other thing – the ability to think, perceive and choose.

As bad as this shutdown has been – as much damage as we have all seen self-inflicted on the near-term economic front – as heart-breaking as it is to watch the unrest and screams for change – we will look back on this from levels we cannot imagine today in markets and in our economy’s health.

The main theme one gets if you study history is rather simple – but in the heat of battle and fear – the most often overlooked:

The harder you punch America – and then kick her while she is down…

The stronger she comes back

The more robust her mending – and leading, hurdle-leaping solutions

The more forceful her leadership

…even in the thickest of fogs and darkest of nights – or should I say,especially in the darkest of nights..

So What Got Missed?

There were some positive and far-reaching elements unfolding over the weekend as well.

SpaceX launched two men into space for the first time in a decade – the first time ever by a private company. The mission has so far proceeded without a hitch – and 19-hours after their liftoff, they docked with the International Space Station.

Take time to relax for a moment, destress if you can – and watch a few of the online videos. Notice that the entire docking sequence was done by computer. Hands-free docking at 17,000 miles an hour, hundreds of miles away from the nearest internal plug.

Fascinating to see the dynamics of the world we are living in today. We just need better eyes, no?

Check it out. This video below is an animation of the mission – produced in December 2019 – and so far, it’s unfolded right on track:



As we have stated for a couple years now as Generation Y and the tsunami of technology and science heading our way takes the reigns of the New Economy – take note: Space is set to be a multi-trillion dollar industry…and Star Trek is closer than we think.

Our kids – Gen Y – will birth a many multi-trillion dollar world in space.

Speaking of Technology –

 

As investors, we must never take for granted America’s ability to overcome, leap hurdles and rocket to new highs – even as painful lessons are learned – and even more painful prices are paid. The harder you punch America – the stronger and more robust we come back.

In other words, let’s all support the idea that this virus and related shutdown has created a sea change – and rapidly increased the speed of the shift to the New Economy. We spoke early on in the shutdown, that we expected this to substantially increase the on-shoring wave – along with far higher control of supply chains here in the US.

First, it was Taiwan Semi a couple weeks ago:



And now – it’s the entire industry – looking to be US-based – phenominally positive with patience and focus….



We can likely expect some haggling – and while just a guess – more likely ending up looking more like a bunch of J/V’s or tax credit. In return, we get national security and global leadership of our own technological destiny.

As a theme -expect this beginning trickle of change to be a tsunami in 2-5 yearsas the baton passes to the New World and the New Economy ahead.

More Good Stuff

Left out of last week’s terrible headlines, homeowners are feeling less stress as the world slowly opens back up. The latest housing data show massive upside surprises for closings – and yet, a new multi-decade low in supply. Even with the cloud of the shutdown, we are now nearing roughly 60 days of market supply of new homes.






“Spring-loaded” comes to mind – if we can muster the patience to get there and let the summer fog roll through.

And the homeowners? Well, it seems they are feeling better too:






There are also good signs of thawing in other consumer areas – not often covered by the media.

Let’s take a look…



The good news here is the market is sniffing out improvement. What most are not recalling from the 2008-2009 GFC is that companies use the debacle to get better – at almost everything.

Be confident – It is unfolding again.

We fully expect that by the time we get to a somewhat more new normal view of the future in 2021 and beyond (much earlier as soon as you hear “successful vaccine”), we will see productivity massively increase, costs fall to address more on-shoring – and efficiencies birthed by the disaster itself.

√ This will lead to higher margins, surprisingly non-inflationary pressures and entirely new ways to accomplish more for all of our collective lives.

Something to consider…and it relates back to something Warren Buffett stated years ago.

If rates are near zero for far longer than almost anyone anticipates at this time, if a 10-year bond is prices at 140+ times earnings, if bank accounts and money markets earn anything…what is a fair price for a growing equity stream?

I would venture to say that perceptions of this question will adapt to levels which will be completely shocking for many in the future.

This is the internal question: “Gosh, I can feel ‘secure’ with a bond I pay 140 times earnings for – or I can buy the snazzy, boring, old Proctor and Gamble for 22 times earnings….hmm, let me see…”

To make the point further, Amazon just sold$10 BILLION in 3-year notesfor a cost of just 40 basis points – 0.40%!!!

Change indeed my friends….change…everywhere.

The issue? What a wild ride it will be. Don’t let wild movements terrify you. This will be a bucking bronco for years – and investors will be required to keep their head up and their gaze above the clouds.

How Fast?

Recall the massive amount of ink spilled for years on how and which company would reach the “trillion-dollar valuation” first? Remember how much chatter was exchanged by experts?

It took forward to get to a trillion – and now there are several…and yet – the road to 2 Trillion will be much shorter indeed – spurred on again by the creation and high-level of adaptation already unfolding far more quickly than most perceive.

Here is the latest on Microsoft:



Now, just one more thing before we get this candle lit on the first full week of the summer haze 2020. In the sadness of watching the events all weekend, I was struck by the stunning silence on one topic.

Anyone guess what that is? Not a single commentator, breathlessly describing the new monster which will assuredly put us all in peril, commented on anything related to 6-feet of distancing and the importance of wearing masks.

Even the financial websites went nearly dark on the topic. Let’s hope that is good news – and yet another very good lesson.

In Closing

I thought I’d let everyone know that I am taking writing lessons. Yes, yes – I can hear everyone now – clapping and saying, “Thank God…”

Anyway, you will be pleased to see my first lesson handout:






Please Stay Safe and Healthy

We are here to help in all ways possible.