Hollywood Shuts Down & Market Goes Uptown
August 2, 2023 at 8:51 am
According to scientists, July set a file as the most popular month in 120,000 years. So as to beat the scorching warmth, thousands and thousands of People made the pilgrimage to their native air-conditioned film theaters to look at the combo-blockbuster “Barbenheimer” (Barbie and Oppenheimer), which has raked in gross sales of greater than $1 billion globally within the first two weeks of its launch. Fortunately, within the short-run, Barbenheimer has given a shot within the arm to the beleaguered film business that suffered dramatically through the pandemic. The chart below (earlier than Barbenheimer) exhibits business gross sales have recovered (crimson line) considerably, virtually to pre-pandemic averages (dashed mild blue line), however nonetheless has some floor to realize earlier than business gross sales constantly outpaces pre-pandemic ranges.
Supply: Calculated Threat
Film Strike Defined
If films are your gig, you higher race to the theaters now as a result of Hollywood has come to a grinding halt, because of a dual strike of Hollywood appearing unions (SAG-AFTRA) and the Writers Guild of America (WGA) union. The feud between the unions and the film/tv studios facilities round calls for for greater pay, higher working situations, and protections from AI (Synthetic Intelligence) applied sciences, which might theoretically substitute actors and writers. Mixed, the unions virtually carry an estimated 200,000 members, which implies a broad strike like equals no new films, television exhibits, or streaming content material. The final time there was a “double strike” like this occurred in 1960 when former President Ronald Reagan was working SAG. Till the dispute is resolved, you higher tempo your media binging consumption habits as a result of with no new content material at present being created, the dispute might start to eat into your present backlog on Netflix and disrupt your pleased couch-streaming time.
Shares on Hearth
However scorching warmth and red-hot fashionable films weren’t the one issues on fireplace final month. The inventory market continued its fiery, blistering tempo with the S&P 500 boiling greater by +3.1%, making the seven-month whole acquire of 2023 a spicy +20% (see chart under). The Dow Jones Industrial Common joined in on the enjoyable too. Not solely did the Dow improve by +3.4% for the month, the index rose for 13 consecutive days, the longest streak of day by day advances since 1987. Effervescent as much as the highest of the efficiency desk, nonetheless, is the technology-heavy NASDAQ index (residence of the most important Magnificent 7 know-how shares – see additionally Fight the Fed) with a scorching +4.1% return for the month, and a scalding +37% rise for the 12 months, thus far. The tempo of positive factors is just not sustainable without end, so it’s necessary to have a disciplined course of in place to handle the danger of over-extended, over-valued investments, which is precisely what we do at Sidoxia Capital Management.
Supply: TradingEconomics.com
Inflation Transferring within the Proper Route
After such a awful 2022 within the monetary markets, why such a searing return for 2023? The most important purpose may be summed up with three phrases: inflation, inflation, and inflation. Extra particularly, it’s the tempo of “disinflation” we’re witnessing that’s getting folks so excited. As you may see from the chart below, annualized inflation as measured by the Client Worth Index (CPI) has declined dramatically to three.3% (blue line), whereas CPI much less shelter (crimson line) has dropped to 1.4%, which is under the Federal Reserve’s 2% goal (inexperienced line). These traits have gotten buyers excited as a result of they imagine Jerome Powell, the Fed Chairman, is nearer to ending this year-and-a-half lengthy rate of interest climbing cycle. In truth, buyers are at present betting for a number of rate of interest cuts in 2024.
Supply: Calafia Seashore Pundit
And the disinflation phenomenon is simply not restricted to U.S. borders – we’re witnessing the identical disinflationary traits throughout our borders (see chart under).
Supply: The Monetary Time (FT)
Assured Customers
Whereas many economists and merchants have incorrectly been calling for a recession for some two years, a extra resilient U.S. financial system simply reported better-than-expected progress for the twond quarter (+2.4% – Gross Home Product [GDP] progress). The stronger financial system together with the enhancing inflation dynamics talked about beforehand have buoyed Client Confidence too, as you may see from the chart below.
Supply: Calafia Seashore Pundit
Every little thing isn’t excellent (it by no means is). We proceed to expertise geopolitical threat on account of the destabilized struggle between Russia and Ukraine; progress in China has stalled and never recovered from the pandemic; complacency is starting to filter into investor attitudes; and we reside with a dysfunctional Washington political course of. However the financial system stays robust, inflation seems to be cooling, and short-term rates of interest may very well be near peaking. Your air-conditioning invoice could also be going up this summer season, however so will your inventory market portfolio, in case your investments are being correctly managed.
Wade W. Slome, CFA, CFP®
Plan. Make investments. Prosper.
This text is an excerpt from a beforehand launched Sidoxia Capital Administration complimentary e-newsletter (August 1, 2023). Subscribe Here to view all month-to-month articles.
DISCLOSURE: Sidoxia Capital Administration (SCM) and a few of its purchasers maintain positions in sure alternate traded funds (ETFs), however on the time of publishing had no direct place in every other safety referenced on this article. No info accessed by means of the Investing Caffeine (IC) web site constitutes funding, monetary, authorized, tax or different recommendation neither is to be relied on in investing or different choice. Please learn disclosure language on IC Contact page.
Entry filed beneath: Earnings, financial system, Training, Monetary Markets, Mounted Revenue (Bonds), Authorities, inflation, Curiosity Charges, Shares. Tags: bonds, client confidence, CPI, financial system, Federal Reserve, inflation, rates of interest, investing, Politics, Sidoxia, inventory market, Shares, strike, Wade Slome.
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