| Good morning.
The Dow has been jealously watching the other two main indexes (the S&P 500 and Nasdaq) break quite a few records over the last few weeks and finally has been invited to join the party. Even though the index fell back on Friday after hitting an intraday record, the Dow still closed over 40,000 and if futures hold up, it appears it will continue its advance.
What is the reason behind the positive market attitudes?
In nutshell … while this can change … right now it appears that the whole “soft landing” thing that many hoped for is finding converts believing it will … at long last … be achieved. And the thought that three rate cuts could be in store this year is also helping.
One item on the mind of investors was this weekend’s assassination attempt on presidential candidate Donald Trump. When it was fortunately realized he was fine, the “betting odds” for his winning the nomination (over Joe Biden) on sites Polymarket and Predictit jumped … and investors are starting to review how certain stocks and industries might be expected to perform under another Trump Administration.
Helping markets along the way is what presently appears to be a drop in inflation as Reuters reported on Friday that we just saw the first drop in monthly consumer prices in four years and Daily Shot claimed the monthly increase in “core inflation” (which excludes food and energy) was at its lowest point since early 2021. Even with this, however, people have become frustrated with higher prices overall (especially with “trade services” … business markups … and the U. Michigan Consumer Sentiment Index took quite a tumble).
A final note of interest I read over the weekend came from Moody’s Analytics and had to do with the growing rate of office vacancies … but at long last, the “this time it’s different” statement that those on Wall Street have made fun of so many times in the past might actually have validation. It seems that not only are office vacancies at a record high, but the projection is that almost a quarter of offices in the U.S. might be vacant in about two years … and not due to an economic downturn.
Thanks to technology … and the ease in which people can be productive outside of a home office … many companies are finding less need for everyone to make a 5 day a week, 9 to 5 appearance in the main office … keeping in mind that this does take a bit of trust that employees are, in fact, working (off-site) as expected. When it comes to the need for office space many are starting to conclude that this time it really may be different. And, frankly, I am torn. It typically takes me 2 – 3 hours to write a note … and the time is the same whether in an office or at home (where I have an office set up) … but I do find myself loafing off more at home (including foolishly surfing “the net” and daydreaming a bit too much at times).
I even went out the other afternoon to play frisbee with my dog.
It didn’t go well.
I came to realize that I need a flatter dog.
Have a great day,
Joseph G. Witthohn, CFA
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