June 22
The United States military attacked three nuclear weapons sites in Iran. I applaud the President for taking this decisive action.
Equities will begin to move decisively higher in a few months when it is clear that the economy is not slipping into recession and the Fed resumes cutting rates.
The Iran situation will not derail equity markets in the United States or globally. This too shall pass.
Bloomberg and other prominent media organizations argue that diplomacy is the only path to peace in the war between Israel and Iran.
But how can a diplomatic deal be reached with Iran, when the leaders of the country follow a professed policy of killing all Jews, Americans and eliminating Israel from the face of the world? And by the way, Iran has a long history of breaking agreements.
American Exceptionalism continues even against the headwinds of poor economic and political policies. American businesses are exceptional. Most American political leaders are third rate.
Populists on the right and left are in agreement: the United States should stop growing. They both follow an anti abundance agenda.
It looks like a whole new shipping preference law is coming. The House overwhelmingly passed the American Cargo for American Ships Act that would require 100% of transportation project materials to go on US ships, driving up infrastructure costs. https://t.co/o2YJpldizm https://x.com/judgeglock/status/1934626413841162652?s=66
The problem is that the United States effectively has zero cargo ships.
https://www.govtrack.us/congress/bills/119/hr2035
The Cargo legislation is ridiculous.
Markets and Stocks
For the week, the S&P 500 was down 0.15% and the Nasdaq Composite was up 0.2%.
Equities are churning which is a necessary process given the sharp 20% bounce from the early April lows. Typically, after a 20% bounce, equities churn for about 3 months. See CNBC.
I am relaxed. I expect new all time highs, 6,150 on the S&P 500 by the end of September. My year end target is 6,300. The index closed at 5,967.
The economy is slowing but it most definitely is not slipping into recession. Brian Moynihan CEO BAC, says the consumer is just “fine.” Households are spending at a healthy 2-2.5% pace. Bank of America touches over half the population.
Banks act great, up 3% on the week. The largest banks are anticipating capital relief from regulators. The banks will increase buybacks and dividends. My three favorites are GS, JPM and BAC. Among other financial, I like AXP, Robin Hood and Flagstar, FLG.
Robin Hood is a super star. I think it is a multi year winner.
It will be a quiet week for data and earnings. On Friday, the personal income data series will be released . This data set includes the Fed’s preferred inflation measure, the personal consumption expenditure inflation index. The core PCE print should be around 0.1%. Importantly, shelter inflation is receding.
The Fed should cut in September when the full effects of Trump’s tariffs are known.
Remember policy is restrictive.
Micron reports Wednesday. I like MU a lot.
CNBC reports: JPMorgan has high expectations for chip giant Micron Technology when it reports earnings next week, during an otherwise quiet period on Wall Street.
“We expect revenue, gross margin, and EPS to exceed consensus expectations,” the Wall Street firm said in a note to clients Friday. “This is driven by sustained momentum in high-bandwidth memory (HBM) demand trends, along with upside in consumer. The chip stock has outperformed the broader market significantly this year, up more than 44%.
Industrials also act well. CAT and ETN are my top picks.
But the AI trade continues to lead the market and two blasts from the past, are strong AI investments: IBM and CSCO.