Good News is Bad News
Posted on Sunday, August 8th, 2021
They left me and the boys to hold down the fort. Diane and our daughter took off for a girl’s trip. Our daughter had mentioned that she had some time between her internship and the start of her next semester and would like to take a trip. None of her friends were available so I suggested a girl’s trip to Cape Cod. Get out of the Georgia heat and spend some time together on the beach! Off they went. Our dog Cody has not stopped following me around the house since they left. I think he is afraid I am going to forget to feed him. He might be right. Its hard holding down the fort and keeping the boys fed – and it’s only been one day so far. Wish me luck.
Another quiet week and another step higher for market averages. We have been telling you since the summer began that the game doesn’t start again until everyone comes home from the beach. The week before Labor Day is as good a guess as any as to the starter’s pistol. Market valuations are elevated but that does not make markets go down. The only thing that can stop this market now is a lack of liquidity and the Fed withdrawing support. They have already enacted the reverse repo which has drained $1T out of markets. That’s the start. The jobs report last week was very, very good. Good news will soon become bad news as the better the unemployment situation gets the more pressure on the Fed to taper their support. Their support is what is feeding the markets ascent. Also, the extra unemployment benefits stop right after Labor Day. Another reason to buckle up come the end of summer.
The next five weeks may be critical. The gold market seems to be betting that inflation is transitory and about to dry up. Financials had a great week last week and that means interest rates could move higher once again. It only matters once summer is over. August and September are the worst one two punch on the calendar and we expect market returns to mimic prior years. Our indicators are still just on yellow alert.
I think we aspire less to foresee the future and more to be a great contingency planner… you can respond very fast to what’s happening because you thought through all the possibilities, – Lloyd Blankfein
A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. – Winston Churchill
To learn more about us and Blackthorn Asset Management LLC visit our website at www.BlackthornAsset.com .
Disclosure: This blog is informational and is not a recommendation to buy or sell anything. If you are thinking about investing consider the risk. Everyone’s financial situation is different. Consult your financial advisor.