Market Minute – August 30,2024

One of my biggest pet peeves is ordering a Latte from Starbucks. This time of year, I admit, I am someone who enjoys their signature Pumpkin Spiced delights. Entering the store, my sense of smell kicks in as the aroma of freshly brewed coffee fills the air. As I walk to the pick-up counter and see the cup with my name on it, without fail, my $6.25 Latte is half empty! 

Thursday, the real Gross Domestic Product (GDP), was revised .2% higher to 3.0%. However, as we remove the lid on GDP, we realize the cup is half full. Real Gross Domestic Income, (GDI) grew at a much weaker pace, which is consistent with an economy experiencing a slowing labor market. GDP paints a sunnier picture of the economy than GDI. Real disposable income increased just 1.0% in the second quarter, significantly lower than consumer spending. Personal savings as a percentage of disposable personal income has dropped to its lowest level since 2008.  Consumers will have to cut spending as they are running out of savings, suggesting slower economic growth ahead. The alternative of course is living on more credit, a dangerous game that usually ends badly. 

Nvidia, the mega AI chip maker, reported earnings Wednesday. They beat estimates on earnings per share and total revenue, growing 122% in the last 12 months, however, the stock traded lower on Thursday. There was an interesting trend with earnings this week. Best Buy, which caters to higher end consumers, reported robust earnings for the quarter, followed by a positive outlook for the remainder of the year. Dollar General on the other hand reported disappointing earnings and guided them lower for the year, stating the consumers are tightening their belts. This company caters to the population of lower income earners. As I mentioned last week, there is a division in America that is widening. Homeowners who have invested in the market and controlled their debt levels probably feel pretty good about their situations and have a neutral to positive look on the economy. Renters who view their chances of home ownership as slight and struggle to make minimum payments on their high-interest credit cards probably have a more pessimistic outlook. 

Seasonality 

September is historically the toughest month for the market. On average the return in September is -1.1%, vs 0.8% for all other months. However, during election years, the September return is 0.2%. Gold leads all return during this month, with an average return of 1.4%. Gold has been trending higher since November of 2022, and I believe this trend will continue. We continue to use Gold as a hedgein all our strategies.   

Omnistar will be closed Monday for Labor Day, a day that celebrates the contribution of the American worker. The United States was built on the shoulders of those who were willing to work hard and understood the sacrifices necessary to create a sustainable country. America still rewards those who are willing to do the same. Those who sacrifice can make a better life for themselves, and their families. I speak of the ones who are willing to put in the long hours, hard work, and dedication to achieve more. Unfortunately, that mentality is only instilled in a minor part of the population. As we honor the men and women who came before us, let’s try to be an example that instills the practical habits that built the greatest nation of all time.  

Enjoy your Holiday Weekend.