Weekly Reflection for June 30, 2023

The Week - An Update in Charts

Markets were only saved from mediocracy by a late Thursday surge that carried over into Friday's action, the last day of the month, quarter and half. Slowing inflation was the main driver of enthusiasm.

Dominating trading this year has been a strong rally in technology companies, overshadowing nearly every other sector. Four business sectors remain in the red for 2023 - energy, healthcare, utilities and consumer stapes.

The nickname of the VIX is the “fear gauge”. And when the VIX is low, like it has been for months, the markets are generally flat to positive. The calm isexpected to continue with July historically the "quietest" month for the markets. Calm could be disrupted by worse than expected corporate earnings reports next month or a pick-up in inflation again.

The VIX is an index that tracks the price of financial contracts called "options", which are used to hedge or protect against stock market downturns.

The orange bars represent the personal consumption expenditures rate (PCE) gauge, which is inflation number that the Fed is watches most closely.

Inflation is slowing, now at a pace of 3.8% annually. One would think that this would give the Federal Reserve reason to pause interest rate increases. Instead Chair Powell says that the Fed board as a whole “almost overwhelmingly…think that we need to do more” to bring down inflation, which Powell anticipates will not reach the 2% target until 2025. By "do more he means that rates will be lifted again, perhaps as soon as July. The current rate is 5.25%.

Every month The Conference Board, a non-profit economic think tank, asks Americans how they feel about their own finances. Generally people have been responding that they are in a funk, despite spending and living otherwise. One reason for the disconnect may be the barely-there real wage growth, as outlined in this academic paper. While wages have grown from the depths of 2020, when factoring in inflation, the "real" growth is paltry.

California is seeing a massive drop in its tax receipts this year after the loss of Covid support payments. Large layoffs in the finance and technology industries, where many of the states' wealthiest workers are employed, have damaged its income base. Other states, particularly northern ones, have experienced migrations to the south, hurting revenues.

Population shifts are actually smaller than one would think reading the headlines. In 1988 3.2% of people moved across state borders; 3.3% moved in 2021. The north has been losing residents who are fleeing south inspired by better weather reasons, lower taxes and lower costs of living. Of the some 30 million that move annually, only 2% leave the U.S. entirely. The U.S. does not formally track emigration but it is estimated that over 9 million Americans live abroad.

Man versus Robot

Having a home phone used to be a non-negotiable utility. Now only 30% of homes have home phones, down from 90% just 20 years ago. Modern communication has largely switched over from phone calls to text, social media and Zooming. Yet telemarketers are still persistent in their calls andhome phones seem to be targeted the most, although cell phone numbers are not immune.

Some telemarketing is, of course, legit as a business. Per Indeed, the average telemarketer makes $29 hour, or $59,000 annually, if one could sustain that work for 40 hours a week.

The successful scamming "telemarketers" make billions a year. According to to the Federal Trade Commission, victims lose $40 billion a year. Authorities are desperate to keep would-be victims safe and constantly publish information on the latest scams as well as the typical profile of targets. The most common characteristics are of a rural, college-educated white male who is an extrovert and may have an exaggerated sense of their own worldliness. 85% of victims are over age 65.

One man who is sick and tired of the calls has built a business to fight back using the most technologically savvy tools the world has at its disposal today - automatic intelligence (AI). Roger Anderson's mission is to use chatbots and AI to deter, annoy and waste the time of telemarketers, both legit and illegitimate.

For $25 a year, subscribers to Anderson's tool, called Jolly Roger, can deploy one of several different voices to stand in for them on phone calls. When a suspicious call comes in, users can "merge" the call with the robot so that the AI takes over the call for them.

Afterwards, they can listen to a recording of the call, presumably for the sheer entertainment of it all.

Although Anderson says he had a hard time programming the AI at first, since the chatbots could not grasp the task of wasting another's time through gimmicks, the tool appears to work very well now. Examples of conversations are on the front page of the Jolly Roger website.

it would take a groundswell of adoption for this to make any inroads, as Anderson just works with a few thousand customers now, it is an entertaining alternative to just hanging up and certainly better than being scammed!

Happy 247th!

This July 4th weekend gives the country an economic and vacation boost because the holiday falls on a Tuesday. Many businesses are offering an extra day off for the 3rd as well as the 4th, and celebrations are getting started as of today. For those in hospitality, like hotels, travel, restaurant and bars, business will be booming. Here’s a look at our celebratory ways:

87%: percent of Americans who will celebrate with a parade, barbecue party or fireworks display, or all of those together.

$93.34: our caloric intake, in dollars, of food and drink spent per person on the 4th.

150 million: number of hot dogs eaten in the U.S. just on the 4th.

150 calories: for a hot dog alone; add on the fixins’ and it doubles to 300 calories. (Go ahead, have two!)

74: number of hot dogs on a bun Joey Chesnut can choke down in 10 minutes.

$2.7 billion: estimated amount spent on fireworks in 2022 and will be near that in 2023.

1785: first 4th of July parade recorded, took place in Bristol, Rhode Island and still active 238 years later

Presidential life and death: three Presidents have died on the 4th (Thomas Jefferson and John Adams in 1826, James Monroe in 1831) and one was born (Calvin Coolidge, 1872)

15%: number of travelers, roughly 1 out of 7 people will be on the move this holiday weekend for leisure purposes; revelers are taking to the roads and skies and AAA predicts that volumes will set new highs.

35%: percent of flights delayed at the worst airport so far this summer, Harry Reid International Las Vegas

80s - 90s: the continental weather forecast for the next 4 days and in the east, spicy with the storms. Sweating in the rain is fun, said no one ever.

The U.S. stock market will be open on the 3rd as will bond market, although it will close 3 hours early. All markets are closed on the 4th.