Dan Miley

Commentary for the week ending 06/26/2021

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So we have an infrastructure deal, or do we?  I was happy at first to hear that a “normal” infrastructure deal had been struck on Thursday.  Then President Biden pulled the rug out from under us by saying it had to be tied to the progressive deal on the so-called “human infrastructure bill” (essentially a long liberal “wish list”).  Then this weekend Biden tried to walk that statement back by saying he would still sign the “normal” infrastructure bill!  More of the same from a do nothing government.  As for Biden, I am reminded of an old Buddy Hackett routine where he played a rude Chinese waiter who grows frustrated with a couple who can’t make up their mind on what to order.  He finally says “make up your f-ing mind, one from column A or two for column B!”.   read more

Commentary for week ending 06/19/2021

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Well, it looks like the Fed has finally acknowledged that inflation may be a problem.  But what did they do?  Essentially nothing.  No decrease in asset purchases and no increase in the fed funds rate.  All it did was signal that they may do so by next year (according to the “dot plots”).  Curiously, the ten year yield is still at 1.45%.  Some folks think that the market is actually two steps ahead of the fed – that is, they think that the fed will raise rates, slow down the economy and then be forced to lower rates again!  I don’t know that the market is that sophisticated.  I think it is just confused by mixed signals.  Personally, I see the fed raising rates by the end of this year (not the next) – and that the 10 year note will be yielding 2% by year end. read more

Commentary for week ending 06/12/2021

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New inflation data showed a 5% jump in consumer prices on a year-over-year basis in May.  But the market shrugged this report off, perhaps believing the Fed’s line that “inflation is transitory”.  I don’t believe that inflation will be transitory so I am less than sanguine about the short-term prospects of the stocks in the Growth portfolio.  So, I would not add to positions in the growth portfolio at this time, but I would not sell anything either (otherwise known as a “hold” recommendation!).   read more

Commentary for the week ending 05/15/2021

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This week has shown some signs of market nervousness on inflation, with the S&P 500 recovering on Thursday and Friday after steep losses on Wednesday.  The CPI leapt 4.2%, the sharpest rise since 2008.  So as I have been warning, I think we are probably in for more bad news on the inflation front.  Workers are staying home as a form of a “strike”,  not only as a result of government largesse, but as a method to force employers to raise wages.  This “wage push” inflation will eventually force companies to raise prices, thus causing workers to ask for more money – you can see the pattern.   So I am worried that this will happen this year.  So, how do you protect yourself?  First, don’t panic, as panic is never a good strategy.  Own stocks for the long term and hopefully collect some yield while you wait.  Second, as Mark Twain famously said, “buy land, they stopped making that”.  Hold on to your real estate holdings and perhaps buy a REIT like Simon Property Group (SPG) or National Health Investors (NHI).  Third, invest in energy companies like Chevron (CVX) or Exxon (XOM).  Also, consider a natural resource like water (again, they stopped making that!).  Good choices for this include Invesco Water Resources ETF (PHO) or Invesco S&P Global Water Index ETF (CGW).   Finally, consider investing directly in commodities like gold, copper or even collectibles.  But be careful here, collectible values are in the “eye of the beholder”, and you could get burned.  And then there is bitcoin, but as recent events have proven, it is not for the faint of heart as it is very volatile. read more

Commentary week ending 05/08/2021

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Well, another week has gone by and Joe Biden has proven that he is more anti-business than Obama ever was.  His latest attack is “waiving patent rights” for companies who make vaccines (like Pfizer and Moderna).  I was nonplussed when I heard this!  I didn’t know that the government had that power.  What is the purpose of a patent if it can be taken away by government fiat?  If anyone should have the right to waive a patent – it is the company who owns it – not the government.  More importantly, this serves as a disincentive for companies to produce vaccines (and other drugs) if their rights can be taken away with the stroke of a pen.   Finally, this plays into the Chinese’s hands – they have been stealing US intellectual property for years and now Biden is giving it away without the Chinese stealing it – they get it for free thanks to their Uncle Joe! read more

Commentary for the week ending 05/01/2021

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Well, another week, and another trillion dollars or so of spending proposals by the Democrats.  Actually, Biden is proposing a total of about 6 trillion dollars in federal spending.  In the meantime, the economy is improving on its own but Biden, of course, like every President before him, is taking credit for it.  Presidents actually have very little to do with the macro economy, it is the Fed and Congress which has the greatest impact on the economy.  As for economic impact of the spending plans, there are already signs of supply pushes on inflation – commodity prices in cooper, gold, oil, etc. are rising.   This will eventually lead to increased consumer prices and wage increases (i.e., inflation).  The Fed seems to think that they will be able to control it once inflation goes above their target rate of 2% for an “extended period” (whatever that means in Fed speak).  I fear that they will not be able to so, and they will be forced to “slam on the brakes” with huge increases in the fed fund rate.  So be prepared – I think that the ten year note will be at least 2% by the end of this year, and very much higher by the end of 2022.   read more

Commentary for week ending 04/17/2021

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First, an amusing anecdote:  I received a note from my broker on a stock in my personal portfolio – Westrock (WRK).  It has been upgraded from “sell” to “hold”.  These kinds of upgrades always amuse me – if I sold the stock based on the recommendation, how can I hold it?  As for Westrock, it is a corrugated packaging company (i.e. it makes cardboard boxes).  It is up about 74% since the March 2020 lows, so actually the broker may be right to rate it is a hold (although CFRA rates it a “buy”).  I believe that the stock is probably good long term stock as the economy is improving and hopefully the company will restore the old dividend soon (it was cut 42% due to COVID).   read more

Commentary for the week ending 04/10/2021

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 One more comment on the infrastructure bill.  Every time someone questions the items truly unrelated to infrastructure like child care, the government representative brings up broadband (about $100 billion of the bill).  I think most people would agree that improving broadband is important and I also agree it should be part of the bill.  But not the other unrelated items!  Mentioning broadband is just another attempt at obfuscation by the administration.   read more

Commentary for week ending 04/03/2021

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Sorry I am bit late for this post.  “Close enough for government work” as the old saying goes.  Speaking of “government”, I assume you have all seen the “infrastructure” bill proposed by President Biden.  I put “infrastructure” in quotes because only about $583 billion of the $2 trillion are for true infrastructure improvements.  The rest are “wish list” items including money for “transformative” projects (whatever that means), child care (!), and other liberal agenda items unrelated to infrastructure.  I think we all agree that we need to improve roads, bridges, airports, etc. but not put money into unrelated items, especially since we are already so far in debt.  As stated before, I would have cut the COVID relief bill in half and spend about a half trillion for infrastructure improvements.   read more