“The optimist sees opportunity in every difficulty.”
-Winston Churchill
Here’s what you need to know this week:
· Stocks fall slightly as tariffs begin to take effect
· Markets prepare for another temperature check
· Investing at all-time highs is a surprisingly good strategy
Game On
A portion of President Trump’s tariffs officially took effect last Wednesday, July 9th. A number of countries opted for the three-week extension to August 1st while others stood firm and accepted the new tariff rates while negotiating new deals. Some countries also rushed to import goods ahead of the deadline: Gene Seroka, the executive director of the Port of Los Angeles told reporters that the port experienced a record 32% volume increase from May to June[1].
Even with many countries extending their deadline to August 1st, last week’s implementation of tariffs has driven the United States’ effective tariff rate to the highest level since the 1930s:
Of course, this number is likely to change in the coming weeks as more deals are expected to be finalized.
Check Up
The Consumer Price Index (CPI) report for June was released last month and the report showed annualized inflation at 2.7%, marking the second straight month of increasing consumer inflation:
This report was slightly higher than analysts’ estimates and moves inflation further from the Federal Reserve’s long-term target of 2%. While markets are largely unperturbed by the report, this uptick has decreased the chances of an interest rate cut when the Federal Reserve meets later this month. Last month the bond market assigned a 23% chance of an interest rate cut in July, but after the CPI report the odds fell to just 2.6%[2]. The Producer Price Index (PPI) report for June, which measures wholesaler inflation, will be released tomorrow morning and will give us a greater insight into the current inflation picture.
No Time Like The Present
The S&P 500 and NASDAQ both hit an all-time high yesterday morning and the Dow Jones is less than 2% from its own all-time high. While investors obviously enjoy all-time highs, many feel hesitant to invest more capital at elevated prices. After all, we all know the classic adage of “buy low, sell high” and it always feel good to “buy the dip”.
Surprisingly, this may not be the best strategy. Market highs tend to cluster around each other, and sitting in cash tends to cause investors to miss out on additional gains:
A new report from JP Morgan analyzes the results of investing only on days when the markets chart new highs versus investing on every given day. As you can see, buying on all-time high market days actually delivers higher returns than just buying on any given day. Again, this is due to market highs tending to follow each other. No one knows what tomorrow will bring, but historical data implies that the best strategy is actually “buy high, sell higher”.
What Else
· Central Texas braces for more floods as torrential rain returns to the region
· Israel and Hamas continue to negotiate terms of a ceasefire
· President Trump threatens additional tariffs on Russia in an attempt to induce a ceasefire between Russia and Ukraine
· Andrew Cuomo declared a third party bid for the mayor of New York City after losing the Democratic Primary to Zohran Mahmdani
· Jannik Sinner defeated Carlos Alcaraz to win his first career Wimbledon title
What We’re Reading
The Denver Museum of Nature and Science boasts a strong collection of dinosaur fossils from around the world, but the museum just discovered some new fossils much closer to home. During a dig to convert the museum to geothermal power, excavators discovered a trove of fossils directly under the museum itself! Click below to see photos of the new fossils and read the story of how they were discovered:
What’s Happening Downtown
Bricktown Summer Nights continues this week with Beach Night on Friday, July 18th from 7:00 to 11:00 PM. These concerts are free to attend and feature live music, street performers and food trucks as well as deals from participating restaurants. Click below to learn more:
· https://welcometobricktown.com/bricktown-summer-nights/?mc_cid=b7302e0ca8&mc_eid=71bf387036
To read more from our blog, click here
Written by: Kane Ogle, CFP®
Steve Beck, Kane Ogle, CFP®, Amber Eduvigen, CFP®, Cale Olbert, CFP®, Brett Valentine, CFP®, Brandon Ingerson, Jenni Hess