July 14
Attitudes about immigration are shifting.
In the past year, Americans have grown less negative about the issue, with the share of those wanting to see immigration decrease now totaling 30 percent, compared to 55 percent in 2024, according to a new Gallup survey. A record high of adults in the United States — 79 percent — now believes immigration is a “good thing” for the country.
https://www.nytimes.com/2025/07/11/us/immigration-poll-trump.html
Americans did not like Biden’s open border policies. Now they oppose Trump’s aggressive deportation actions. Americans understand that immigration is good for the country, especially immigration by the best and brightest.
Markets and Stocks
Mike Santoli of CNBC writes about the state of the stock market. I have a lot of respect for Santoli. He stays in the ballpark. He says:
“As midsummer sets in and the trauma of the springtime sell-off fades, the markets are whispering, “Don’t worry.”
With every orderly ratchet higher to a record high in the benchmark indexes, affirmed by a breakout in bitcoin as gold sleeps, a steep retreat in market volatility and a collapse in corporate-credit spreads, the investment universe is telling you to relax.
It would be unwise to tune out the message, given the tone of the tape and the tilt of the evidence. But it never hurts to try to anticipate what the markets might find if they soon go looking for something new to worry about.”
Santoli is right, the backdrop for equities is positive. But stocks are not cheap. Now is the time to invest cautiously, reduce risky positions
With Trump as President , uncertainty is very elevated. Who knows what he will say or do next.
It will be a big week for earnings and data. JP Morgan, Goldman Sachs and Bank of America report their results. I like all three names.
JPM reports tomorrow. GS and BAC report Wednesday.
ASML reports on Wednesday as well. I believe ASML is a great investment.
As for economic data, June CPI will be released tomorrow. Signs of the inflationary effects of Trump’s tariffs should begin to emerge.
June PPI will be out Wednesday. Both of these numbers could move the market if they show rising inflation from the tariffs.
Later this month when the technology giants report, one focus will be capital investment in AI.
Meta, Microsoft, Amazon and Alphabet Google are projected to put about $337 billion into capital expenditures in their fiscal 2026, up from $311 billion in the current year. See Bloomberg
The hyper scalers are anticipated to show earnings growth in the 14-15% range. These results will drive the tape for the balance of July.
I remain all in on the AI trade
Economics
N. Gregory Mankiw, economics, Harvard University and senior economics advisor to Bush W. says:
According to the 2025 projections of the Congressional Budget Office, the debt-to-GDP ratio will, under current law, continue to rise over the next three decades, reaching 156 percent in 2055.
There is, moreover, no end in sight to this increasing indebtedness.
Even more worrisome, this projection is optimistic. It assumes that the U.S. economy will experience normal economic growth, without a crisis like a major war, a deep recession, or another pandemic, which would push debt even higher.
And it does not account for the so-called “Big Beautiful Bill” that President Trump just signed into law, which will steepen the ascent of government debt.
Herbert Stein once wisely said that “if something cannot go on forever, it will stop.” And I have no doubt that this path of a rising debt-to-GDP ratio will stop at some point.
The open questions are how and when it will stop.
There are only five ways to stop this upward trajectory. They are (1) extraordinary economic growth, (2) government default, (3) large-scale money creation, (4) substantial cuts in government spending, and (5) large tax increases.
https://acrobat.adobe.com/id/urn:aaid:sc:VA6C2:910d107d-4b66-4724-b192-0ab67b228c74
My two cents: The government will not default.
The government will not inflate away the debt. Voters hate inflation.
I believe AI can increase the long term growth rate modestly from the current projected rate of 1.8% to 2.5%. Such an increase would bend the debt curve but federal indebtedness would continue to grow. Sustained 3% growth is required to hold the debt to GDP ratio flat. A 3% growth rate requires productivity growth of 2.5%. Increases in labor supply are the other input in economic growth. Unfortunately, growth in labor supply will be muted because of Trump’s deportation policies.
At some point in the next decade, Congress will accept responsibility and raise taxes significantly and finally reform entitlements, Social Security, Medicare and Medicaid.
When Congress steps up economic pain will be shared across the economy.
The United States has been living beyond its means for too long.
Economic Prosperity
Something to think about:
Arnold Kling, former senior economist for Freddie Mac, , writes at his blog, In My Tribe,
Across countries, institutional differences matter. For example, compare Communist countries with non-Communist neighbors. Cuba before Castro was richer than Mexico. Now their situations are reversed. Taiwan is far more prosperous than mainland China. The difference between Communist North Korea and non-Communist South Korea is especially stark, with South Koreans almost 20 times richer on average. For the forty years when the Berlin Wall separated Communist East Germany from non-Communist West Germany, East Germany fell far behind.
There are important institutional differences within the non-Communist world. For example, as of 2000 it took an average of four days to obtain a business license in the United States. In Kenya or Egypt, it took over 50 days. More recently, a World Bank study found that the cost of starting a business was 1 percent of average income in the U.S., but 11 percent in India and 26 percent in Nigeria.
Business tax compliance time is about 175 hours per year in the U.S., but over 1500 hours per year in Brazil. Contract enforcement time using the court system is about 300 days in the U.S., but over 1400 days in India.
In Western democracies, the percentage of transactions that take place in the underground economy is typically around 10 percent. In other countries, such as Bolivia or Thailand, it is more than 50 percent. In the informal sector, it is much more difficult to raise capital, and property ownership is much less secure.
The Intangible Economy
Economists in the 19th century described production as using tangible resources, notably land, unskilled labor, factories, and business equipment. But by the 21st century, it was evident that intangibles increasingly matter. Human skill level, business strategy, innovation, and the institutional environment determine how wealth gets created.
Joseph Schumpeter anticipated the modern economy with the phrase “creative destruction.” It reflects how new products and processes emerge, displacing older production methods. The net effect is progress that improves the lives of many people, but other people lose their forms of livelihood in the process.
The U.S. and Asia are the leaders in innovation, particularly in computers and communications. A widely-cited study, known as the Draghi report, found that Europe is a laggard, falling well behind the United States in terms of per capita income and productivity. Draghi and others see heavy-handed regulation as a factor holding Europe back. According to Econofact, “EU GDP per capita as a percentage of U.S. GDP per capita fell from 76.5% in 2008 to 50% in 2023.”