To begin the August trade yesterday as the US halts attacks on Iran for the time being, the Dow Jones Industry Average closing at a record high.
Now this sent oil plunging through even though President Trump saying that the naval blockade in the Strait of Hormuz could continue, will continue unless Iran makes a deal.
And meanwhile, the markets may have a little breathing room until the next Fed Reserve meeting in mid September.
Now joining me to discuss this.
And more is Tim Anderson, the managing director for TJM Investments.
Tim, thank you so much for joining us today.
Johnny, it's great to be with you this morning.
So Tim, let's focus on the macro.
US GDP coming in at 1.5% in Q2.
You're also tracking consumer spending, ISM manufacturing.
So how do you view the backdrop of the economy right now?
From what we see, the GDP report of 1.5% is just far removed from reality of what's really going on in the economy, and there are really three shortfalls in the GDP number that made up for most of that disparity.
You had negative trade data in Q2, where exports, even though they rose 5%, were down from a 10% hike the previous quarter.
And imports were up about 11%, so that imports up 11%, exports down 5%.
That's negative trade data you mentioned earlier that some of the trade numbers for May and June have improved, so we expect that that's going to reverse sharply when we either on a revision.
Later this quarter when we'll get a revision in August or when we get a Q3 GDP number much later in the year.
Also, inventory declined about 0.1%.
That's probably from a lot of companies instituting AI procedures and AI methods into their inventory management system that makes them much more efficient.
And also you had government spending fall off quite a bit largely because of the way it's calculated the release of oil from the Strategic Petroleum Reserve when oil was above $100 early in the second quarter when the Iran war first broke out.
That shows a sharp that ends up showing after all the calculations. are done a sharp default and a sharp fall off in government spending.
So go ahead.
No, so very interesting because I want to kind of start looking at the Fed because we saw that the markets did plunge last week after Kevin Warsh's press conference.
So this next meeting is going to be in mid September with a rate hike, I'm sorry, a rate hike expected.
So what is your outlook for the central bank?
I don't think we're going to get a rate hike in September.
I doubt that we'll get one before the end of the year.
We're going to have two full sets of employment and inflation data between now and the September meeting.
We've already seen a number of inflation metrics come out during the last 6 weeks that have been positive, and if we get any follow through on that, that's just going to tamp down inflation expectations and as we've seen in the past these expectations.
Of a 75% probability of a rate hike could go down to 25% very, very easily.
So look, we might be in a little bit of a minority position right now, but that's the way we think this is going to play out.
So let's also talk about your thoughts.
Where do you feel the markets stand with the Dow with the Dow on a 4 month winning streak, but recent volatility with the AI trade because AI has been top of mind for a lot of people and AI has been the one thing that I would say is driving the market.
So let's get your thoughts on that.
Well, it has been driving the market quite a bit, and one thing that we saw that was somewhat constructive was when we had a sell-off and a lot of the high octane AI-driven stocks from Mid June to late July, you didn't see really the Dow came off maybe 1.5, 2%.
The S&P came down maybe 2, 2.5%.
Right now we're back on the cusp of new highs for both of those major market indices, and what we saw was a broadening out in the market which a lot of technicians and market strategists have been looking for.
And uh we also saw that the, the, the, the real, uh, selling was concentrated in stocks that had just had, uh, 200-300% gains year to date where we're not going to say that they were that we were in a total bubble territory, but some of those, some of those stock prices were stretched.
To where investors were almost looking for a reason to take profits on some of their holdings in those names.
All right, Tim, earnings season in full swing.
So what exactly are you paying close attention to?
And another thing I want to point out, SpaceX is going to report after the close.
That's also been a big talk.
So let's get your thoughts on that.
Well, aside from what SpaceX reports, and we all know that the only division they have that's actually profitable and making money right now is Starlink.
They are investing for the future and all of their other operations, but when some of the insider stock gets unlocked on Thursday, Let's see how the stock acts with what will most likely be some selling from insiders that own it from quite a while ago and didn't sell on the IPO.
So the price action in SpaceX Thursday, Friday, early next week will be critical, even probably more critical than exactly what they say in their earnings report tonight.
And on a broader issue.
Clearly we're looking for guidance for the remainder of the year.
Companies that have spent a lot of money instituting AI procedures in their day to day operations.
How much more productive and profitable they've become because of that?
How are they delineating that their AI investments are transmitting to bottom line improvement?
And also, what about CE spending going forward?
That's the hot topic.
That's what everybody wants to talk about.
Clearly, we had an issue with, uh, with Google through, uh, about 2.5, 2 weeks ago or so.
It's Google's almost back to a new high.
All right, Tim, so to wrap up, we have a quick less than a minute.
So talk to us.
How do you feel about commodities and crypto right now?
What are your thoughts?
Well, I think that commodities are still very much.
Better to buy than to sell.
I'm talking about hard commodities, materials, metals, even some commodities that border on the precious metal sector like silver, copper, and uranium.
Uranium is clearly a key component for a lot of the data center buildouts.
As well as the solar panel industry, and crypto just seems to have lost a lot of its luster to other speculative avenues that people have available like prediction markets that have come into vogue over the last 18 months.
I think that a lot of money that was being used speculatively in crypto. is now being used in maybe a little bit of the resurgence of the IPO market and also some of these people are playing in the prediction markets a little bit seeing whether or not that's going to be a real thing going forward.
Well, I can tell you firsthand prediction markets definitely a big topic here.
So thank you, Tim Anderson for joining us today and getting your insights on what's going on.
It's always, it's always great to talk to you and your team.
Thank you.
