Good Morning,

This week, like all previous Memorial Day weekend build-up weeks, likely sees a slowing level of volume coming into the markets.  Don’t fret – it is normal.  Volume will continue to fall into June in all likelihood.  Wow, can you believe we are already talking about June 2021?  Crazy.

We will cover more of this on our Thursday Zoom Call above, but thought it may be helpful to cover some “larger perspective” issues unfolding round us – no matter the news and the monsters born out in the media coverages around the globe.  Those events will pass – The Barbell Economy® won’t.  It is with us for the next 30 years +.

And after that?  Even better news – back-to-back 80MM plus Generations (Gen Y and Gen Z) driving powerful consumer growth and economic visions forward for as far as the eye can see.

The Underlying Current

We will cover a FL (and TX) aspect first.  The state of FL and TX will see significant surges in populations for many years to come.  Why?

Simple – 78 Million Boomers are retiring.  Many of them will not say, “Honey, let’s retire and move to Minnesota.”  They will move to tax-friendly, business-friendly, warm-weather states.

I know there is a lot of bad news out there – and the headlines can be nerve-wracking for sure.  Sometimes a look back to see where we have been – helps provide more confidence in where we are headed over time.

It’s a process.

So…What’s Next?

A bunch of good things – likely to continue to be overlooked by the media machine: maybe it is just too good to be true, I guess – but what a shame to let fears cause one to miss this:

BIG Housing Shortage: It will be with us for years. The demand coming from 88 million Generation Y kids will be long-lasting. A steady flow of young people reaching the age where they begin the larger steps of building their own lives. They won’t live in tents. We are tens of millions of houses short over the next decade.

Expansion Driving More Consumption: Think of what happens when millions of homes get built/sold. Sure, there is all the construction process and jobs benefits – but that is just step 1. Home ownership kicks off decades of consumption. Tens of millions of TV’s, millions of yards of carpet. Tens of millions of drapes and shades, refrigerators, desks, beds, nightstands, tables, dining rooms, throw rugs and lighting fixtures. Millions and millions of shower curtains, hundreds of millions of towels and bath materials. The list goes on an on and the numbers are staggering.

Lots More Kids Coming: Sure, they were late – but that won’t stop Mother Nature. The Gen Y Generation will have millions and millions of children. The normal dominos fall from there, from baby formulas to diapers to toys – the list goes on and unfolds naturally.

Friends – we are the only nation on Earth with this force pushing us along, steadily, into stronger and stronger economic currents ahead.

There is much more good news headed our way:

Surging Healthcare Advances: The technology and science we saw unleashed in the Covid response is now the platform for healthcare advancements that before were deemed a fairy-tale. Boomers aging will demand advances in services and solutions – and the technologies birthed by Gen Y will deliver them. The breakthroughs against major diseases we can expect in the coming years will likely become so “normal” that we won’t even pay attention: like SpaceX launches today.

We Will be Mobbed by Manufacturing: We have covered this often and tens of billions of dollars have been already announced in recent months. Building a new plant to do anything in China will be a no for at least a decade. There are no “cost savings” anymore. Tech fixed that and will continue to drive the US forward in ways we cannot yet imagine. The result: A BOOM in manufacturing right back here in the good ole’ USA.

There is much more that the Barbell Economy will bear as benefits for us – and the dominos fall in our favor for decades.

This is not a one or two quarter thing.

This is a decades thing.

Patience from long-term investors will pay off handsomely over time – but will demand the toughest part of the wealth-building deal: waiting and letting the compounding come to you.

 

One More Thing…

In order to benefit from the massive advancements set to flood our world over the coming years, we must rise above the noise. Like a jet lifting into the clean air at 50,000 feet with a crystal clear view ahead. Fear diminishes the horizon. It tears at confidence. It blinds the mind to larger events unfolding around them.

Case in point: we are not running out of chips because of Covid. We are running out of chips because technology is advancing in our lives so quickly that the fear mongering is blinding many to it.

Here is the latest data:

Intel has announced $30 Billion in factor investments – IN THE US – over the last 60 days alone.  Micron is adding 100,000 feet to their facility.  Peloton is building a $400M plant as of two days ago – here.

The semi equipment orders have hit records for 5 months in a row now.  This is NOT just “coming out of COVID.”  No – not even close.

This is a race to the future society – and the US will win that race.

Everything will change.

The game is not old…it is not even aging.  It has just begun.  The gates just opened to the stadium.  The fans are still getting the hats and flags to wave.  The hot dog and refreshment line is long…and the pitchers are still warming up.

Remember Friends – Time is Your Friend

These trade range gyrations will likely become more numerous over time.  But they pass.

Tech is why.  Kids are why.  Emotions are why.

Markets pay for patience and discipline.

They pay for fighting the emotional surges that plague so many results over time.

They pay for believing in the future ingenuity of this country and the people in it.

They pay for having faith in your plan and the forces that built our lives together.

 

Buckle Up

In the end, there is no end, really.  Just a continuation of time (your greatest ally) and the trek up this very high mountain ahead.  There will indeed be treacherous spots and perilous moments that will terrify many.  It will be our job to keep one focused on the long-term current driving us all forward.

That said – the tectonic shifts ahead are massive.

We have stated this many times over and at the risk of sounding too darn boring, here we go again:

The leverage of change and the Generation Y technology waves ahead are creating massive changes in margins.

Earnings will be far more leveraged and see many more benefits than currently understood.

The pandemic shutdown had one benefit:  if a company was not killed in the pandemic, we would argue it is now “unkillable”.

The armor created, the tools built, the technologies unleashed, the systems implemented and the capital invested during the shutdown storm has set the stage for a complete remake of all that we “know” – and the Q1 numbers are just a tiny glimpse into that benefit.

 

The Bottom Line

This chop during May has more than proven its value:  New doubts, new fears and new monsters are all forming bricks in the new foundation being built for the next leg up as the spring dawns and the US builds into its “new normal.”

So what now?  Cinch that belt tighter.  And grab your popcorn.

The pace of change is going to be head-spinning – with plenty of gut-wrenching interruptions along the way.

Get comfortable with this process…as it is set to be with us, forever.

Corrections and setbacks serve a role – they build your value for the next run – and we are unlikely to get very many of them in the years ahead.

Even when pauses, sector churn and internal chop hurt in the near-term, they work to build foundations which then create the gains of the long-term.

We must all remain diligent and prepared to always stand tall against the storms.  Standing apart from the crowd permits one to always be ready to do what most will not.

And remember, problems don’t come to stay – they come to pass. 

You’re missing out!

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