August 2018

We are seeing continued strength in the economy and surprisingly technology stocks, but not social media. A GDP of 4.1% and revised numbers for the first quarter reveal we are still in a very strong position. Many technical investors are still very bearish and there are many doubts the market and the economy can continue its positive direction. From the IS-LM-FE model of economics, we are seeing a very good example of how our economy is expanding, while the employment drops and the money supply is decreased through interest changes. What has declined to makes the conditions possible is the US savings rate has declined from ~6% in 2016 to 3% today. Less people saving, or more accurately, more people spending, is driving the economy. From this deduction, the Fed will continue to raise interest rates, impacting companies trying to secure debt at the previously enjoyed low interest rates. This will ultimately slow growth, but not in the near term. Encouraging news is the lack of any real impact on the "Tariff Wars" and the ability to negotiate reduced tariff for US goods overseas, impacting many of the stocks in the S Fund in a positive way. They will have more markets open to them, and their raw materials will probably not increase as much as the pessimists feared. My distribution summary reflects these trends. Keep investing!