Another flat to mixed day on Wall Street. The Dow traded in positive and negative territory before closing with a 5 point gain to 21,011 on light trading volume. All is all it was a sleeper.
Goldman Sachs issued a report today saying that the current economic uptrend could continue for some time. The longest economic growth period was 120 months and occurred from 1991 to 2001. The current cycle is 95 months old but with corporate earnings looking good along with labor and housing, Goldman thinks we could get close to if not surpass that record. Risks to this upcycle include debt issues in China as well as rising tensions between the US, North Korea, Russia and certain parts of the Middle East.
The elections in France were a huge landslide for centrist candidate Emmanuel “Big Mac” Macron. This is meaningful because it says that while the EU can breathe a sigh of relief, it is in dire need of economic reform. Big Mac has proposed curbs on the wealth tax and cuts to the corporate tax rate from 33% to 25%. Macron also wants to decentralize corporate bargaining with unions while reducing gubment jobs through attrition. The key issue running through the European Union and the thing which makes it viable is that while many do not like the eurozone bureaucracy they like the euro as a currency. Distrust for local elected officials to set monetary policy in places like Greece and France runs high and this appears to be the ace card keeping the EU together.
I talked to my neighbor yesterday and asked him about Venezuela since he is from that area and has family there. He said the phone calls to home are hard to take. People he knows only eat twice a day now and for lunch they are lucky to have a couple pieces of bread dipped in hot coffee. Tensions are high and after Puerto Rico threw “ace deuce” last week Venezuela might not be far behind. Reports I have read state that China has loaned Venezuela about $50 billion over time and might have to take payment in oil. We shall see how it works out.