In The Lonely Bull

The U.S. Department of Labor  just reported that our economy expanded at a 4.1% rate for the second quarter.

This is a massive improvement over the 2 – 2.5% rate we were growing just recently.  Obviously, tax cuts and regulation relief has had effects.  Almost all economic sectors are participating.  Almost all portions of the labor market are also benefiting.

This acceleration was expected, the only question was how much?  The next question is whether it is sustainable or a “sugar high” blip; one fueled by easy money and one-time benefits.  That question will be answered over the next year or so.  Our guess is that yes, a new higher momentum will endure.  There may be some moderation, but we do not see returning to the 2% rate anytime soon.

This has implications for where and how to invest.  In short, companies tuned to the business cycle should benefit; that, in investing parlance, is value stocks.  A transition already is taking place.  This should accelerate along with the higher growth rates.

Stay steady, my friends.

The Lonely Bull

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