Lost and Found

Brit Ryle

Posted August 1, 2023

After a couple years of pandemic-related sadness and isolation, my family’s annual beach week is once again happening. My son, stepdaughter and I were the first ones to make it to our Fernandina Beach rental on Saturday. My brother, his wife and their two kids arrived about an hour later. My cousin and his wife and daughter got here a little after that. 

We were made whole when my daughter got here from New Orleans yesterday.

Something about knowing the people you love most in the world are all converging on the same spot to cook together, eat and drink together, sit around the table and play poker together – the best of times…

A week at the beach has been a family tradition for my entire life. As a kid, there was a week at my aunt and uncle’s house on Isle of Palms in Charleston. There was a 5 or 6 year stretch of Nags head beach week with my dad and his brothers families from California. 

We’ve done a long stretch on Amelia Island, at American and Fernandina beaches. Probably 10  years straight, before COVID…

Though there are still grandparents around, my cousin, my brother, and I now represent the old generation. Kids range from 11 to 31. 

I never thought too much about the significance of those week-long vacations at some beach house packed with 12 to 15 aunts, uncles, parents and kids – how special they were. 

Of course it was a ridiculous amount of fun. But it wasn’t until I got a bit older that I realized just how the family bonds mean to me. And the hiatus of the COVID years, well, we missed each other terribly and it is so, so good to all be under the same roof again. 

The best part now, as one of the “directors” of beach week, is that I know I’m passing a tradition on to my kids that will be the best of times for them too. My kids and step daughter are making fish tacos for dinner right now, while I type at the kitchen table (grinning from ear to ear).

Lost And Found

So I’ve had the time we’ve lost on my mind, and how good it is to get it all back. And then this morning, in one of the many e-letters I get every day, Bloomberg had a couple great charts about this exact thing – getting back something that had appeared lost. 

In the first chart, it’s U.S. GDP growth in dollar terms. 

As the author writes, the Great Financial Crisis seemed to reset GDP growth permanently…

Before the crash, GDP growth had chugged along on a pretty predictable trajectory for years. Then the housing collapse happened and growth just dropped to a slower trajectory – maybe you remember all those years of 1%-2% GDP growth. 

And maybe you remember how economists basically decided that the twin deflationary forces of technology and globalization had put a permanent dent in growth that would also weigh on inflation. 

Nope. Wrong again, economists. 

We’ve obviously seen the impact of inflation. But now that so many of the assumptions about a globalized economy are changing, so are the actual data points, like what’s on the chart above. 

The chart for Personal Consumption Expenditures (PCE) looks almost identical…

The takeaway here is pretty clear, and it might sound weird to say it – but the U.S. economy seems to have really needed a bout with inflation. 

Look at the strength of recent GDP. The economy grew 2.4% last quarter even as interest rates should have been slowing growth down. And the labor market has remained strong against that rising tide of rates too. 

So now that the Fed is about done with its rate hikes, and inflation certainly seems to be tracking a reliable trend line lower, what should we be expecting? 

Well, take a look at the stock market which has been relentlessly powering higher. 

I know a lot of people are saying “AI Bubble” and “Tech Stock Bubble” and “recession is coming.” 

But that’s not what the stock market’s been saying. Kinda the opposite, really. This market certainly seems to be hinting that we are entering a powerful virtuous cycle of growth. And it’s happening right now. 

I’m going to follow up with this idea on Wednesday, but I’m gonna have a beer with my kids. Y’all take care and I’ll talk to you Wednesday…

Briton Ryle
Chief Investment Strategist
Pro Trader Today 
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