From Graham Stephan.
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TRUMP PUSHES FOR LOWER INTEREST RATES:
So far, we’ve seen almost no inflation – whatsoever – from tariffs. According to CNN: “Consumer prices rose just 2.4% last month, that was less than economists had expected, and only slightly higher than the 2.3% rate in April, which was the US economy’s lowest inflation since February 2021.”
Even Jerome Powell admitted that “just a few items are growing in price as a result of tariffs” – although, in terms of why this happening, he offers a single explanation: “Stores are still working through the inventory that came in to their warehouses before Trump put tariffs in place,” meaning prices will go up eventually… just not yet.
THE FALLING US DOLLAR:
The value of our US dollar has had its WORST start to the year since 1973. Fun Fact: In the early 1970s, the US dollar was pegged to gold, which was set at a fixed price of $35 an ounce. At that time, the minimum wage brought in $52 per week (which equals nearly 1.5 ounces of Gold). Today, that minimum wage would have to increase to $4884 per week just to match. Three reasons are causing this:
-Money Printing
-Political Instability
-Money Is Going Elsewhere.
THE STOCK MARKET ‘BUBBLE’
Even though some strategists believe that “AI mania is worse than 1999’s tech bubble,” and that the SP500 is growing increasingly concentrated within the top-10 companies, keep in mind that back in 1999, the tech giant, Cisco, traded at 200 times earnings, whereas today the world’s largest company, Nvidia trades at “only 40x” earnings. This suggests that conditions are not AS BAD as they once were, but it’s something to keep in mind.
A separate analysis found that a few companies leading the market could actually be a GOOD THING for future profits. Since 1950, it was found that rising concentration led to even higher returns, especially since those were the companies generating the most revenue. This is partly why Morgan Stanley reset their price target for the SP500 to 7000 in 2026. Goldman Sachs sees 6,600 in range, and several others anticipate the chance of the SP500 reaching HIGHER than 7000 as tariff concerns begin to alleviate.
HOME PRICES:
According to CoreLogic, national home prices are up just 1–2% compared to last year. When you adjust for inflation, this is basically a mild decline. On top of that, inventory is also beginning to climb, with Zillow noting a 17% increase from a year ago. Not to mention, those homes are also sitting on the market for longer, taking an average of 19-days to go pending versus just 11 during the peak of 2023.
MY THOUGHTS:
After more than 8 years making YouTube videos, my thoughts are always going to be the same: I personally like dollar cost averaging into the overall market (consistently) regardless of price, and studies show that this produces the highest returns.
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