June 12
Today Investors will obsess over whether Federal Reserve officials pencil in one or two interest rate cuts this year. It really all depends on the data. Policy is restrictive. The economy and the labor market will slow. Wage inflation will fall. And at some point, the Fed will cut. It will all depend on the data. So, rather than fixating on the Dot Plots, I will pay attention to the data.
Inflation expectations remain reasonably well anchored.
Rent inflation will continue to fall.
The bottom quintile of households account for only 9% of consumption.
The Apple AI news merits a shrug of the shoulders. Apple is however a good long term investment.
https://barrons.cmail19.com/t/j-l-gfao-jhlhujkiq-j/
The U.S. is throwing money at the semiconductor industry. And Japan as well as South Korea are doing the same. Countries all over the world are investing in the semiconductor supply chain. That means that stocks like ASML, KLAC, AMAT and LRCX are great investments.
Semiconductors will be a great investment space for decades. I like Nvidia, ARM, Analog Devices and Micron. I think Intel is a dog that will keep barking.
When the Fed cuts, banks and small caps will move higher. The Fed will cut this year.
Industrials are being neglected. I like CAT, DE and ETN.
Economics
Biden is wrong on tax policy. His tax proposals would make the country poorer over the long run. Raising corporate taxes is terrible policy.
A corporation does not pay taxes. Shareholders, workers and consumers all pay some portion of corporation taxes. Almost 60% of households own shares.
Is it fair that one percent of the population pays about 44% of all federal taxes; while 50% of the population pays zero federal taxes of all kinds over their lifetimes ?
https://x.com/beachww453/status/1800175965286347193?s=43&t=j4fI4u23jBCkVkOYFTSLyw
https://thehill.com/homenews/administration/4714120-white-house-hits-gop-corporate-tax-cuts/
Politics
Progressives are trying to undermine the United States Supreme Court. Why I do not know. If Trump wins, progressives will genuflect before the Court.
Asked how the country can become less polarized, Alito responded: “I wish I knew. I don’t know. It’s easy to blame the media, but I do blame them because they do nothing but criticize us. And so they have really eroded trust in the court. … American citizens in general need to work on this to heal this polarization because it’s very dangerous.”
https://www.politico.com/news/2024/06/10/alito-wife-supreme-court-recordings-00162610
Progressives cheer speech by the three liberal members of the Court. Progressives do everything they can to censor speech by conservative members of the Court. Progressives do not believe in the Constitution.
The New York Times reports: A Ukrainian official with a long record of anti-corruption advocacy resigned on Monday from a government agency overseeing mostly Western-financed reconstruction work in Ukraine, citing poor management of funds. His departure highlights the tension inside the government of President Volodymyr Zelensky over the allocation of wartime aid.
The official, Mustafa Nayyem, who had been director of the State Agency for Restoring Ukraine, did not allege any outright embezzlement. But his claims of abuse and mismanagement risked setting back efforts by the government to assuage concerns among the United States and other allies about providing billions in aid to Ukraine’s war effort.
He was the second top official involved in Ukraine’s reconstruction effort to depart in the last month, following the firing in May of Oleksandr Kubrakov, the minister of infrastructure. Mr. Kubrakov’s ministry oversaw the agency Mr. Nayyem headed.
Mr. Kubrakov was perceived in Kyiv political circles as a figure aligned with the United States on spending priorities for rebuilding aid — a stance that grated on other leaders in the government who resented what they viewed as intrusive American oversight. Both he and Mr. Nayyem had spoken out against bribery in the construction business.
https://www.nytimes.com/2024/06/10/world/europe/ukraine-reconstruction-resignation.html
Corruption will undermine support for Ukraine.
Sociology
NBER working paper 32550 discusses the importance of sleep.
There is growing evidence on the importance of sleep for productivity, but little is known about the impact of interventions targeting sleep.
In a field experiment among U.S. university students, we show that incentives for sleep increase both sleep and academic performance.
Motivated by theories of cue-based habit formation, our primary intervention couples personalized bedtime reminders with morning feedback and immediate rewards for sleeping at least seven hours on weeknights.
The intervention increases the share of nights with at least seven hours of sleep by 26 percent and average weeknight sleep by an estimated 19 minutes during a four-week treatment period, with persistent effects of about eight minutes per night during a one to five-week post-treatment period.
Comparisons to secondary treatments show that immediate incentives have larger impacts on sleep than delayed incentives or reminders and feedback alone during the treatment period, but do not have statistically distinguishable impacts on longer-term sleep habits in the post-treatment period.
We estimate that immediate incentives improve average semester course performance by 0.075--0.088 grade points, a 0.10--0.11 standard deviation increase. Our results demonstrate that incentives to sleep can be a cost-effective tool for improving educational outcomes.
https://www.nber.org/papers/w32550
Ben Franklin was right, ‘early to bed, early to rise,’ is the recipe for good grades and a prosperous life. I never understood why anyone would stay up to watch Johnny Carson.