WHERE WE ARE INVESTING NOW o
Entrepreneurial companies — with diversification across many holdings o Reduce concentration risk — more equity positions o Entrepreneurial companies with shorter duration o Entrepreneurial companies with low debt (bank exposure to companies that have refinancing needs) o Entrepreneurial companies that do NOT have elevated Market Cap/Rev or relative valuations o Markets will recalibrate with new interest rate scenario — stock pickers market o Pockets of optimism still exist, earnings have provided mixed results, short term horizon is less bullish o September/October will remain choppy o November/December may end year on higher note (compared to September) o CPI data had been steadily dropping but Sept had major spike — October may also be elevated. Nov & Dec may see CPI dropping again o Fed may FINALLY signal rate hike end on Oct 31/Nov 1 meeting o Key focus will shift on number and timing of future fed rate drops (reduced from 4 to 2 at recent Fed meeting)
US UNEMPLOYMENT RATE IS STILL NEAR A 50 YEAR LOW – SOFT LANDING STILL MORE LIKELY THAN A RECESSION Despite Federal Reserve tightening, the US unemployment rate is still extremely low @ 3.8% • Unemployment rates are still among lowest US has experienced in 50+ years • Technology companies continue to announce 100,000+ layoffs o Most layoffs are coming at the expense of H1B foreign workers o H1B foreign worker layoffs do not appear in unemployment statistics o US has 80m baby boomers which have started to become eligible for retirement since 2012 o 4.3m are becoming eligible per year (6.01m workers are unemployed as a basis of comparison — 3.8%) o As more baby boomers retire, the unemployment rates would otherwise drop (if not for weakening economy) o The Federal Reserve is worried about wage inflation — this could become a problem in the future as companies rehire tech o There may be pent up demand for retirees to leave work force o Unemployment will likely remain low due to seniors leaving workforce (eventually)
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