A Return to Rationality

In July, the current U.S. expansion became the longest on record. Gross Domestic Product (GDP) in the second quarter increased at an annual rate of 2.1% and there are still new jobs being created. While these and other government figures suggest that U.S. and global economies are continuing to expand, there is growing evidence of weakening economies internationally and signs that the current U.S. expansion is losing momentum.

Tariffs and Taxes and Data, Oh My!

“Volatility scares enough people out of the market to generate superior returns for those who stay in.”

– Jeremy Siegel, Professor of Finance at The Wharton School

The year has started with volatility that we haven’t seen in the last two years, and it continues as I write this letter. There are two primary narratives driving current markets:

  1. A possible China/global trade war and,
  2. A broader technology stock selloff due to backlash over privacy/data lapses, and concerns over government regulation of the largest tech companies.

I will spend some time discussing both topics.

From Hofstadter to Organic Free Range

“Stocks aren’t lottery tickets. There’s a company attached to every share.”  – Peter Lynch

The big news of the quarter was the announcement that Amazon intends to purchase Whole Foods for $13.4B in a deal that will extend the online shopping mall into a bricks and mortar merchant with more than 460 physical locations in the US, Canada and Great Britain. What does this do for the company? Won’t this turn Amazon into one of its outdated, old-line competitors?