According to Fast Company magazine, “51% of U.S. employees have cried at the office within the last month.” I am not one of them, but I understand the urge. It’s difficult to understand what’s going on, and AI keeps asking if it can help.
Let me share what is so confusing.
We are in a war with Iran and are both exchanging fire and claiming that we are in a ceasefire. Oil prices are rising as the Strait of Hormuz remains closed. At the same time the stock market is surging. Analysts say it is because earnings this quarter were so positive, but what about inflation? It’s moving in the wrong direction – heading upward, while the Federal Reserve is wanting downward. Kevin Harsh is expected to be confirmed this week as the new Fed Chairman. He has aligned himself with the administration’s call for interest rates to be cut, but that would only cause inflation to worsen. Tech companies are laying off workers, but unemployment is not rising.
I assume that it will all make sense in hindsight, but it would be nice if clarity came sooner. In the meantime, we continue to maintain that a conservative asset allocation across investment classes and sectors is your best route to steady gains.
Among other signs of nonsense, GameStop is proposing to pay $56 billion in cash and stocks to buy eBay – a company that is much larger and richer than GameStop.
In other upside-down news, corporate spending on AI now exceeds consumer spending, and corporate stock buybacks exceed individual investors buying the dip. Corporate spending is clearly on the rise, while individuals are cutting back. It’s the K-shaped economy in action.
Greg Ip of The Wall Street Journal calculates that “the AI economy grew at an annualized rate of 31% during Q1, while the non-AI economy added just 0.1%.”
But as you all know from your social media feeds, those big companies that are leading the markets and leading the AI revolution are NOT leading in paying federal income taxes. As it stands now, the U.S. Treasury will have to borrow more than $166 billion every month just to keep functioning – about $2 trillion for the year. And a trillion is nothing to sneeze at.
A Reddit poster put it in perspective: One million seconds is about 11 days. One billion seconds is about 31.5 years. One trillion seconds is over 31,709 years. Our federal debt is now almost 39 trillion dollars.
While the April jobs report showed 115,000 net new jobs created in the month, the share of American men working or looking for work sunk to the lowest level since 1948 (except for the Covid era). Traditionally female jobs in healthcare and education are still hiring, while traditionally male jobs like manufacturing, transportation, and mining have been cutting workforces. According to the Washington Post, “Among men 16 years and older, 67 percent were working or looking for a job in April, down from 73.5 percent two decades earlier.”
For the week ending on May 8th, the Standard & Poor’s 500 finished at 7,398, the Nasdaq Composite Index at 26,247, and the Dow Jones Industrial Average at 49,609. The yield on the ten-year Treasury Note closed at 4.364%. U.S. West Texas Intermediate crude oil cost $96.82 per barrel, while international Brent crude cost $103.08 per barrel. Although oil is produced in various countries and by various methods, pricing is established worldwide. New York gold finished last week at $4,735.45 per ounce. One Euro was worth $1.18.
Elizabeth E. Cook
Partner, Diastole Wealth Management
News and information presented here was gathered from sources believed, but not guaranteed, to be reliable, including (but not limited to) Yahoo Finance, Barron’s, The Wall Street Journal, Bloomberg, Axios, CNN, USA Today, Fortune, CNBC, The Bureau of Labor Statistics, The Washington Post, Fast Company, Reuters, The AP, Morning Brew, and Business Insider.
According to Business Insider, the deepest hole humans have ever dug was apparently not the one I made in my backyard when I was nine. No – it is the “Soviet-era Kola Superdeep Borehole which is just 12.3 kilometers deep. That’s only 0.2% of the distance to the planet’s core.” As the president goes to China this week to ask its help with negotiating an end to the Iran war, one must be surprised that the quickest way there is to FLY, not to slide down a tunnel. Not the world I anticipated when I was nine.