Looking Beyond the Surface –

 

At the risk of sounding like a broken record, there’s a lot going on out there. Are you keeping your head above water?

The team at Oxbow Advisors recently did a nice market roundup that’s right in line with our thinking. Here are some of the highlights: 

• Talks of a new “soft landing” have some investors chomping at the bit, hopeful that it’ll start another epic bull market like it did in the 90’s. However, we’re not in Kansas anymore. Today, the forward P/E ratio of the S&P 500 is above 20x. Another raging bull market just isn’t in the cards.
• Nvidia now has a market cap higher than the entire energy sector, despite its profits making up a fraction of those produced by the large energy businesses. Nvidia revenue growth also runs in big cycles up and down. In fact, on March 8th, Nvidia fell 10% in just 30 minutes. 
• In his annual letter to Berkshire Hathaway shareholders, Warren Buffet included a note on his views of keeping cash on hand. Like we’ve said before, watch #whatthebillionairesaredoing. 

Now, let’s turn towards two hot spots on our radar: jobs and banks.

Workin’ for the Weekend

To get a true sense of our nation’s employment situation, we have to look underneath the surface of the jobs reports.

First of all, regardless of how many jobs are truly added, you can’t forget about cuts eating into those numbers. In February, layoff announcements reached their highest monthly levels since the global financial crisis. 

Now, let’s look at our most recent jobs report. While the headlines show our economy added 275,000 jobs this past month, the number of folks actually employed fell by 184,000. 

Roughly 161M workers were employed in the U.S. in February, the lowest number since May of last year. How did the number of employed people fall if the economy added so many jobs?

Answer: they’re holding more than one job. Reports show a whopping 278,000 Americans picked up more than one gig last month. 

Also, as new numbers come out, old ones get revised. The impressive 353,000 jobs number reported in January was revised down significantly to 229,000. That’s 35% lower than the initial report.

Pay no attention to the man behind the curtain. 

Too Small to Bail?

Regional bank stocks are crashing like waves in a hurricane. 

Even J Powell is getting increasingly more honest. He finally confirmed that there will be bank failures, but it won’t be the big guys. 

Powell said the banks that are in hot water are not the “big banks.” Of course not. 

After the 2008 crisis, they got the “systemically important” stamp, AKA “too big to fail.” Remember, those failures were also due to sketchy real estate assets. We all watched our taxpayer dollars pull those guys out of a black hole.

According to Powell, the failure risk is contained to smaller and medium-sized banks, a problem he says we’ll be working on “for years or more.” He also said that these issues will be “manageable.” 

How we’ll manage, we’ll just have to wait and see. 

Any tin foil hats in the house? If the Fed and big banks were to, oh I don’t know, whip up a little economic crisis, why would they do so? Probably because they always win.

Fire on the Horizon

For those of us who are musically inclined, sometimes a song says more about a situation than regular words could ever express. 

A little tune called Fire on the Horizon by Stick Figure reminds me of how a hero on the journey would handle our current rocky world:

So many miles I’ve walked

So many rivers I’ve crossed

So many battles I’ve lost

Make me who I am today

And when tomorrow it comes

There’ll be a brand new sun

This song’s not over

It’s just begun

There’s a fire on the horizon

There’s a fire, so let it burn

We can get higher over the mountain

Weve fallen, love keeps calling

There’s still so much we don’t know, but we can see the storm coming. In our preparation, let’s keep in mind it’s the battles we all face that make us. 

Where there’s smoke, there’s certainly fire, and sometimes the best thing we can do is surrender, let it burn, and move on to higher ground with newfound knowledge under our belts.

At Dare, we’re always thinking up new ways to harness the power of these crazy times.

Through our Back Room Service, you can expect:

• Greater income (a lot more)
• Owning assets instead of commissions    
• Zero investment down 
• No personal liability
• Fifty-fifty split on risks and profits  

If this sounds right up your alley, give us a call. 

If you enjoyed this newsletter, pass it along to your friends.

Until next time,