U.S. economic expansion is long in the tooth, but it’s been marked by anemic growth, minuscule business investment, drifting wages, and slumping entrepreneurship. Consequentially, the velocity of money has been in total freefall. The trend appears to be turning. It would mean greater inflation, but it’s the kind that comes from economic activity that raises wages and spreads prosperity.
Signs of Prosperity: Local
Yesterday, in Jersey City, I was looking for a bite to eat when I saw a Ruth’s Chris sign and jaunted over -only to discover it was a temporary hiring center. There were a lot of applicants and recruiters inside who looked cheerful. The stock, Ruth’s Hospitality Group (RUTH) has been trending higher for a year, and recently touched an all-time high.
There are additional signs that businesses of all sizes are on the upswing, including entrepreneurship. I’ll have more on that today. Meanwhile, after the close on Monday, Etsy Inc (ETSY) popped, reflecting the growing importance of the gig economy.
Signs of Prosperity: National
By now, everyone knows I’m pumped over the amount of Class 8 truck orders placed this year after a monster surge in 2017. So, you could imagine how excited I was last week when it was reported July’s big rig orders were a record 52,250. The fact this happened in the notoriously slow month of July just further enforces the idea the economy is not only rocking, but businesses also anticipate this continuing for some time to come.
The Message of the Market
In the last couple of weeks, I pointed out the moves in Transportation (DJT) stocks, which have really built a head of steam led by the rails.
Consumer Discretionary (XLY) names are solid and perhaps influenced by the spike in SeaWorld Entertainment (SEAS), which I personally wrote off years ago. It’s great they were able to Free Willy and still find ways to reinvent. One fun story after the call is how management offered free beer at two of the company’s Florida locations.
Something tells me that could be the last-ditch part of the many revival plans.
In case of an emergency, break out the free beer.
Market bias is clearly to the upside as the stealth rally picks up steam ahead of Disney's financial results. Meanwhile, the biotech sector will see monster moves in both directions. But the upgrade of Biogen (BIIB) is a reminder that initial reactions of what seems like good news can often be the wrong reaction.
We are watching crude, as the United States officially pulls out of Iranian nuke deal, and big companies like Daimler immediately follow (company dropped its expansion plans in Iran) despite the European opposition to the administration's decision. (The notion we could get the EU to unite and fight with America against unfair China policies was a joke until the administration played hardball with them first.)
Look for the S&P 500 to reach a new high to trigger the entry of more sideline money.