Thoughts {07.21.16}

Futures are slightly lower this morning.  I'm guessing this has as much to do with buyer's exhaustion as anything else.  Markets have been on a parabolic move higher for the last three weeks so at some point we should be in for a healthy bout of profit taking.  Markets are very overbought now.

One of the reasons the equity markets have been moving higher is likely because there is now a sense that the corporate earnings season is off to a pretty good start.  Companies that have reported 2nd quarter earnings so far have generally beaten estimates and generally given positive guidance for the rest of the year.   This week and next are the meat of the reporting season so we should have a better view of expectations by then.  

In that vein, expect the chatter about a possible rate increase by the Federal Reserve at their next meeting to start up again if we continue to see more optimistic economic numbers.  I think the probability of a rate increase at any time prior to our elections is low but the chattering classes are going to need something to talk about after the conventions and when we hit the summer doldrums.

I haven't seen much of the Republican Convention until yesterday.  Newt Gingrich listing off all of the terror attacks around the world in the past 37 days I thought was perhaps the most effective section of a speech given last night.  Indiana Governor Mike Pence I thought acquitted himself fairly well in what amounted to a "coming out" address.  {I use that term in it's traditional sense of somebody being introduced to a large audience.}  Ted Cruz's non-endorsement of Trump in his keynote address was odd and has to significantly hurt his political future, especially if he decides to run again for President in four years.  My sense is that many Republicans won't forgive what he did last night even if they don't like Mr. Trump.  

Then again there may not be a GOP in four years.

The real stars of the convention so far have been the Trump children.  

Back Monday.