We hope everyone had a nice 4th of July. My family spent the holiday weekend trying to prop up the price of Disney’s stock. Judging from the crowds, the economy seems to be doing pretty well. Unfortunately, outside of Disneyland, the global economic statistics are not looking quite as magical. The June employment numbers in the U.S. and Europe were disappointing and there is a long list of “potential” headwinds. However, here are a few silver linings:
1) The price of oil is down 20 percent from a yearago and down $30 a barrel from just earlier this year. The decline in oil prices will put more discretionary income into consumers’ pockets and also help to keep a lid on inflation.
2) Most, if not all, of the bad news you have been hearing is already reflected in today’s stock prices. Second quarter earnings do not need to be good. They just need to be less bad than expected for the stock market to hold up or even rally. The consensus among leading economists is for a 2 percent decline in earnings. If earnings come in flat to slightly up, that will be good for our investment portfolios.
3) Despite all the challenges, the Global Dow is still slightly positive for the year and all domestic markets are solidly in positive territory YTD.
Have a great week.
