I preach that “headline news” is not the best way to understand the true economic or market picture. Successfully trading or investing requires one to do what the professionals do – research. Research can turn up “under the surface” statistics that more accurately reflect the strength or weakness of the U.S. and global economic fundamentals.
As a long-time Californian, Los Angeles evokes an image containing many elements. Interestingly, the image of large cargo ships loading and off-loading huge containers on docks is not one of those elements, even though the city is the number one import/export port in the U.S., accounting for 44% of all the import and export business in the U.S. Import/export traffic in Los Angeles is up 5% for imports and 5.4% for exports in the month of May.
Now, when I picture “LA,” I do think of Disneyland, Knott’s Berry Farm, Hollywood, and myriad other tourist destinations, which leads me to a second interesting indicator – LA is the #2 tourist destination in the U.S. and tourism is up substantially month-over-month. Folks from all over the world, especially China, are going to LA for some Southern California fun.
Moving away from the sunny clime of LA, here is something else that points to an intact economic recovery. A while back, more than a few analysts told us municipal bonds were headed for a crash as city after city and state after state financially collapsed. Interestingly, “something happened on the way to the forum” – quarter-over-quarter state revenues are rising above projections.
In my state, California, the combination of spending cuts and rising revenues has trimmed a projected deficit from $26 billion to less than $10 billion in just six months. Understand, the rising revenues are not from higher taxes, as that portion of the deficit reduction argument has yet to be resolved in Sacramento. No, the increased revenue is from existing income tax rates. In other words, more people are earning more money, which means more income-tax revenue. Once again, the doomsayers only saw the tree, not the forest. Now, we all have an opportunity to find investments in some specific, solid muni trees in the U.S. forest.
As to the market … Earlier this month, I suggested the market was headed for a catnap, perhaps throughout the summer. So far, aside from a start now and then, this has been true. Even though the headline news around Greece has created a sense of imminent doom, the market has not panicked. Consider that the three big indices have dropped steadily since April. Consider as well that the media hammers this fact everyday with hypertensive voices. Now, consider that amidst the shrill din of fear, the S&P 500 is up 16% year-over-year, up almost 3% for this year, and is down less than 5% since the peak in April. In fact, if today’s gains hold, the S&P will once again be knocking at the 1300 door.
The market is correcting not collapsing, as low trading volume and no panic selling suggests. Big money is reallocating, waiting, and watching to see how the big issues play out this summer. With its inner radar on (big threats are out there), the market lightly naps …
Trade in the day – Invest in your life …
