“If you are distressed by anything external, the pain is not due to the thing itself, but to your estimate of it; and this you have the power to revoke at any moment.”

—Marcus Aurelius

Good Morning,

Man this is getting scary, huh?

“The market is crazy”

“It’s 2000 again – only worse”

“No way this market is remotely related to what is happening in the economy.”

“This thing is rigged.”

“I wouldn’t touch that thing with a 10-foot pole.”

“Everyone is bullish already.”

“This is dangerous and will collapse the US economy.”

I thought we might want to get the elephant in the room taken care of first:

It is correct – the market is scary.

Always has been – always will be.

Correct again – the market is NOT connected to what we are seeing now. It is showing you the efficiencies and rising margins we will see “next” – as in 2022 next.

Face the Elephant

YES – there WILL be a corrective wave to this last 5 months. No DOUBT at all. That should not be your focus though. Unless you need ALL of your money in the next year. I am simply sharing a conceptual perspective – and I amnottrying to suggest a timing in the market.

Here is the thing that will make you even more uncomfortable: All that chatter you see above – regular comments in conversations these days – is NOT what you see at tops. At tops you hear this:

“Mike, what do you think of futures and leverage?”

“You know I have a credit line on my house and it only costs 6% a year – I can beat that easy in the NAS 100, no?”

“Hey My Mom was asking me how to buy Tesla?”

“I finally did it – those CD’s I have been rolling over since March of 2009 – well, I cashed ’em in and bought Apple.”

Throw in a few Uber driver stories about trading on their new 5G iPhone while waiting at a red light – and you get the drift.

√ Fear and disbelief do not exist at market highs.

√ Trillions don’t sit in banks earning ZERO at market highs.

√ Bullish sentiment chatter during the same week equity fund flows show outflows in 11-digit size – does NOT exist at market highs.

I’ll stop.

You are witnessing something extraordinary. We have spoken of it for years. This is the shift. The baton is being passed. Everything will change. The New Economy is literally forming before us. Imagine if I told you in 1982 – at DOW 970 – that the DOW would be 20,000+ in 35 years?

Would you have believed me? No.

The same rocket that got launched in early 1980 is now being launched again in early 2020.

On it’s trip from 970 to 20,000, we had horrendous events along terrifying occurrences, natural and man-made. Massive setbacks, bear markets, corrections, recessions, wars, terrorism, fraud, bank closures, real estate collapses. You name it – we had it.

The next 35 years will likely have even scarier events we will be introduced to – while things steadily move to the upside over time.

Excuse me – I love this:

Let me get this straight now. The same government agency who could not remotely figure out why we were running out of humans to fill jobs 6 months and 2 weeks ago – now know what will happen in the next 10 years?

Good Lord – that would be sad if it wasn’t so friggin’ hilarious.

I wonder if they could walk across the hall and talk to the government agency that forecasts the weather, no?

Back to the scary stuff.

While the new focus seems to be the scary height of the stock market and the country watches all the politics and vitriol, the New Economy is smokin’ – and it’s darn near brand new. I mean we are talking showroom quality type “age” – this bull market is a baby.

Check out the latest manufacturing data – yes, the same manufacturing we thought we shipped off to China 25 years ago.

The Hat Trick!

Production Increases – check

New Orders Record- check

Growing Backlog – check

I start out with a breakdown of the data from yesterday – lost quickly in the scary headlines. The is the New Orders part of the ISM Manufacturing data. Kind of a forward looking thing.

Looking at the August 4-month change data (second image), you see the highest reading in the 72-year history of the data. I thought you may also find compelling to see what the last record was.

Yes – the 1980 read. Ring a bell? It better.

I wonder right now if they even had a clue of what was coming after that record push way back in 1980. They did if they watched Demogronomics™

As you might guess – there is more.

Read ’em and reap:

Check the level of inventories. You have not seen them this low since the debacle of 2009 – at DOW 6,700 and S&P 666.

And the great news is that it is not just the core business inventories that are running very low – it is their customers as well. Plants will be running full speed for months just to catch up to previously “pretty damn low inventories.”

Need more? We got it:

The first chart above shows production. Only one window higher than now – back in 2004 coming out of the Tech bubble bear market. Rolling in at 63 is extraordinary – and covered in the press for about 4 minutes.

The second image above shows that even though production continues to rise, it still appears that demand is outpacing supply as Backlog Orders also expanded for a second straight month. Backlog orders rose 2.8 points to 54.6. That 2.8 point month-over-month increases in the top decile of all monthly changes and leaves the index at the highest level since November of 2018.

Think rocket-ship, on the launch pad for a mission to Mars – fueling up. This data show the economy fueling up.

I will say again, America is in the business of recovery, overcoming setbacks, leaping hurdles, rebuilding better on lessons learned and climbing new mountains to make a better world – and friends – business is good.

Forget Looking for “Normal”

You won’t find it in the rearview mirror.

Don’t be stressed about when things will “get back to X….”

Think “it’s all brand new” instead.

And yes – you canCOUNT on the idea that there will be a corrective wave. I just hope it happens sooner than later. A great set up for the next launch.

Pray for it – expect it and embrace it. It makes the market go up farther over time.

For a review – check this: www.truvcorrection.com

Note we will update the video with the Pandemic as the next “It’s Never Been This Bad” event.

Something Quick for Those Who Love Data Crunching

This from our friends at BeSpoke:

“With a rally of 0.75% yesterday, the S&P 500 kicked off the month with its best start to a September since 2010. Gains of this magnitude are not particularly common for the start of September. Since 1928, yesterday was just the 23rd time that the S&P 500 kicked off September with a gain of more than 0.50%.

The table below highlights each of those occurrences along with the performance of the S&P 500 for the remainder of the month. In the 22 prior occurrences, the S&P 500 saw a median gain of 1.27% for the remainder of the month with positive returns 59% of the time. That may not sound like all that big of an advance, but for all months of September, the median performance from the close on the first trading day of the month has been a decline of 0.10% with gains slightly less than half of the time.”

Yes, your eye will automatically go to the red ink. We are all trained for the fearful item to carry more weight. Indeed, your mind will go to the ugly 1933 number and you will shiver in your thoughts.

Candidly, if you are concerned that anything about the world or economy we live in today is remotely associated with 1922, please stop investing.

In Summary

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

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.

Grab your popcorn and tighten that seat belt. It’ll be the best Disney ride you’ve ever been on.

And remember this: The tougher you punch America, the higher she rebounds. It’s how we are all built – together.