State of the Economy:

Best not to overpredict. Unexpected events can never be predicted and they are what cause markets to move the most in the short-run. We know that leading economic indicators are in recession territory but other factors such as labor market growth and earnings are merely slowing. Contradictory data tells us nothing much. Long-run fundamental shifts may be better predictors. The tendency for excess demand due to easy monetary policy is likely to fade into less importance. Supply problems in labor, materials, and capital investment may become more acute. This would make it more difficult or impossible for demand oriented policies such as monetary policy to get us out of a supply-constrained recessionary environment.

Other than reducing the marginal tax rate such as under the Regan administration, politicians are ignorant of what supply-side factors are or what other types of discretionary government policies might spur growth on the supply-side. For example, President Biden advocates that congress give rail-road workers what they demand. This would be an anti-supply-side policy that would increase production costs for railroads and reduce supply. A better policy would be to ask congress to disband all industrial unions, including those of the rail-road workers, and thereby decrease costs of production across the board. Given that there are no more monopsony employers, other than the government, this would be a rational supply-side oriented policy. Of course, President Biden lives in the past when unions were held in higher esteem than now so don’t expect that to happen. Politicians and individuals may have to unlearn Keynesian economics and sacrifice older institutions while developing a more relevant supply-side knowledge base in order to adapt to what appear to be changing economic circumstances.

For individual investors, you can stack the long-run odds in your favor by investing and putting money to work while things look gloomy. Nobody knows exactly when there will be a bottom are when things will look better. All we can say is that st some point the bear market will end and after that there will be a bull market once again.

For growth oriented stock expected to perform well over the next 3 months or longer you should consider the following stock tickers: MCY, GLP, RBA, SANM, BSXL, GAIN, ANET, CGBD, RPTX, PARR, PERI, HDSN, and CECO. For growth stocks that also pay dividends, consider: DCP, GLP, LOMA, PBR, TCPC, VIV, BXSL, DGBD, GDBC, and HTGC. Over the previous 3 months, the best ETFs were: KBWP, XLE, IAK, IBB, and XLF. For those wanting the best CEFs for non-tax sheltered investment portfolios, consider: RFMZ, LDP, PTA, FLC, RFM, RMM, PFN, PFL, ETG, EXG, HTD, and ETW. For tax-sheltered IRA’s: BCAT, ECAT, JEPI, BRW, PCEF, VVR, PHT ARDC, BSTZ, BMEZ, BOE, QYLD, RYLD, XYLD, BGY, RLTY, JEPI, ASGI, JRI, HNW, PDO, HYB, XFLT, ECC, OXLC and DFP are among the better choices. As always, good investing!