Carty Capital Management
CFP | Fiduciary



They Missed Again

Good Morning,


The GDP report, long since rumored to assuredly have been affected by the hurricanes and Mother Nature's Q3 anger - came in far better than expected!


Keep in mind, this is a first run - with two more adjustments due.  History suggests the number likely goes higher still.  All in all, a far cry from the howling at the moon over a slow and paltry economy.


You move a $20 Trillion economy at a 3% annual growth clip and things usually turn out quite nicely indeed.


The Overlooked Benefit?


The significant deflationary forces of Generation Y, permitting more and more energy to build into the foundation of our economy - without the growth killing domino effect of inflation.




Note also, as we have been covering, the data from early indications in Q4 suggest not only did the storms have little downside pressure in the economy, they likely actually boosted activity on almost all fronts:




Kansas data joins the Empire region and Chicago area activity to suggest the country is moving forward quite nicely indeed.


Of course, as one might expect - even as tech's big names literally knocked their numbers out of the park, sentiment remains tepid at best given record highs in prices and earnings.  Here is your latest.


Another three weeks of this and we will have witnessed 3 straight years of AAII bullish sentiment remaining below 50%.


Pray for another three years - please:





The most notable part of the data above is watching how the numbers shift.  Recall, we had expressed before that the high "neutral" reading often rolls bearish when "bullishness" is merely skin deep - quickly erased on red ink.


Indeed as one can see - almost 4 times as many left the neutral rank to turn bearish in the last week.


While bullish sentiment may have ticked higher, bearish sentiment surged 5.1 percentage points to a seven-week high of 33.0%.


Now, I get that 33% may not sound like much, and it is lower than the 39.6% bullish reading, but when you consider markets have been meandering around or hitting record highs on a sometimes daily basis, it suggests one note a healthy degree of skepticism is deeply-seeded.


Keep this in mind - with such tepidness remaining in place, the character of selling  (when we do see it) tends to be quick.  The patience level of the mass audience to "stand by" for red ink has all but evaporated.


Oddly enough, yet another good sign for the long-term investor.


Like I said above - pray for three more years of this - please : )


And the Latest in Q3 Earnings?


Well, let's not get too carried away but the numbers are stellar - and setting records.  I won't bore you with more charts today.


It is the weekend - and we wish you the best as always.


In Summary


Just remember - the higher these market numbers get, the more intense the "altitude Sickness" we often cover will become.  Make no mistake about this though - "bullishness" espoused in the press is only skin-deep as the data continue to suggest.


Let a week or two of red ink unfold in markets (please) - which is what we continue to suggest we pray for - and those bullish feelings will vanish and a whole flock of new Black Swans will appear.


More of the Same On Tap


...for the long-term investor who does not care to get involved in the trading/knee-jerk chop, let's stay focused on the valuable earnings data.


It's the long-term current we need to invest upon - not the short-term waves which will assuredly always roll ashore to block the horizon.


Those waves are the noise too many get lost in...and the reason the long-term game is so hard to win based on fearful activities.


Play it Again Sam....


Pray for that correction.


In the end, like it or not, long-term investors have learned Demographics Rule The Long-Term Game


Generation Y is set to do much greater things - far beyond what the Boomers accomplished - or what can be defined today.


Imagine explaining an iPhone X to your buddies in 1982 - and then extrapolate that forward for the next 35 years.


"Drinks at the new bar on Mars tomorrow at 7:00 anyone?"


Until we see you again - may your journey be grand and your legacy significant.


InvestingMike Williams