Let’s start with the most important thing first (insert sarcasm emoji). After the biggest contract in MLB history, Shohei Ohtani is scheduled to pitch his first game tonight following Tommy John surgery. For non-baseball fans, this may not sound like a big deal, but he is possibly the best 2-way talent (pitching and hitting) since Babe Ruth. Maybe ever!
The Dodgers signed Ohtani for 10 years and $700 million last season, only to lead them to a World Series ring as a hitter and defender (while still sidelined as a pitcher). Now he can show the rest of his game. I wouldn’t expect him to throw more than about 50 pitches, so we’ll see how many innings that gets him through.
On the other end of the spectrum, we have missiles between Israel and Iran going back and forth and many civilians being injured or killed. This is not meant to be a political judgement one way or the other, just that it has potential ramifications on the market.
You can see that oil spiked about $10 a barrel briefly to $75, only to settle in around $72 for now. That is potentially inflationary, although I would not consider that price to be hugely consequential to the overall inflation picture.
But, it also affected the markets on Friday. Today we are bouncing back a bit from those lows on Friday.
Will this cause a greater war (bringing in more countries)? That question is still unanswered, but I would guess not. Could it cause a deeper recession than what I have been talking about? Maybe, but at this point I don’t think that is a likely outcome.
It really just points to why we have a relatively conservative stance right now, but we’re ready to change that opinion when the facts change. As of right now, the big money is not betting this is the start of a new multi-year bull market. That could change in a short time, but for now any bad days like Friday and we’re glad to be a bit more conservative than we would otherwise.
The FED is scheduled to meet on Tuesday and Wednesday, with no likely cut to interest rates expected.
Lastly, the current GDPNow forecast from the Atlanta FED is showing about a 3.8% GDP growth rate for the second quarter. We have a couple more weeks in this quarter, so we will see how things pan out.
As always, please let us know if you have any questions about this or any other topic. We will be happy to have a conversation.