Sometimes good news isn’t met with a smile.  Such was the case yesterday as the earnings report everyone seemed to be waiting for … Nvidia … had results beating expectations … but it was not good enough for some … and the stock price immediately started to decline.  It seems that hopes for another “blowout quarter” were not met and questions are now being raised as to whether the growth of “AI” will slow enough to now be considered sustainable … rather than the exponential advance some anticipated.

Fortunately, this stock is not the only game in town … and major indexes are having a positive day today as revised GDP numbers for the economy showed an even stronger second quarter than previously reported.

Bloomberg Finance is telling of an interesting development as far as market expectations are concerned.  While the present view is rates might drop 105 basis points (1.05%) by the end of this year, what is especially intriguing is the view for 2025 … as the thought is it will fall by another 120 basis points (1.2%) … bringing the difference between today and 15 months from now around 2.25%.  In a word … stunning.

This would, of course, give a needed shot-in-the-arm to the housing market … as down payments reached the highest level in a decade and inventory is on the rebound.  If the Fed does do what is anticipated, we might begin to see a lot more turnover in housing.  Very little has been written about housing “pent up demand” … but with so many present homeowners feeling trapped by the low mortgage rates they are now paying … it seems logical to assume that if mortgage rates fall even closely in line with what is anticipated for rate cuts … many will start looking again … whether it be downsizing or buying a first home.

Of course, the following comment does not belong … but in looking at news stories for today I read that “Beetlejuice Beetlejuice” is getting very good reviews.  I really suspect this will be a “feel good” movie … with most of the stars returning … hold on for this comment … 36 years after the original was released.

One other bit of interesting news has to do with healthcare costs for employers … which is quite worrisome, as this expense so greatly affects the bottom line.  According to a survey by Business Group on Health and reported on Axios, 56% of respondents listed the top driver of costs to a “great or very great extent” as GLP-1.  That’s right … the weight loss drug.  Of course, losing weight would certainly help reduce costs down the road but that is a future expense, and my comment assumes people won’t put the weight back on once it’s lost.  I run into that problem myself, at times … lose weight … get rid of ill-fitting clothes … gain weight back … and then have to go shopping again. Heck, I’ve learned that I need to have a few different sizes on hand … just in case.

That about wraps it up for today.

Speaking of food, I did cheat a little yesterday at Costco.

They had these corn dogs at the food court and, quite frankly, I was disgusted for a moment and didn’t even think I would consider it.
But then some little kid standing next to me completely caused my brain to malfunction and as he looked at the picture of the corn dog and called it a “meat twinkie.”

I bought two.

Have a great day,

Joseph G. Witthohn, CFA

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