Stock Talk - Everyone’s an Economist… But Does It Help? Stock Talk Update, July 9, 2026

Starting point is 00:00:00 Everyone, thanks for joining me for Stock Talk this week. We're in the midst of the dead zone for earnings, so companies really aren't reporting that picks up next week with banks. This week, everyone's an economist, but does it really help? The two key takeaways here. Economic data is valuable, but it isn't perfect. Most government economic reports are backward-looking, frequently revised for months,

Starting point is 00:00:22 and often give investors a false sense of precision. Investors, successful investing isn't about predicting every economic statistics. It's about identifying a handful of factors that actually drive long-term stock prices, be it earnings, valuations, interest rates, and investor expectations. Good evening. Thanks for joining me. Have you ever noticed these days, everyone seems to be an economist. Every jobs report, every inflation report, every GDP release. Within minutes, thousands of opinions appear telling you exactly what it means for your investments. I had all those classes, and I went to a pretty good school for my MBA, and after 35 years of managing equity portfolios, I've learned something very different.

Starting point is 00:01:04 What's that? You don't need to know everything. We're much about anything having to do with macroeconomics to become a successful investor. In fact, trying to predict every economic data release can actually make you a worse investor. Tonight, I want to explain why. First point, economic data isn't as precise as it appears. Let's start with last week's employment report. This data is from Zero Hedge, who our team has relied on for almost five years to dissect, drew up, and interpret these government stats. The headline said the U.S. economy created only 57,000 jobs, roughly half of what economists expected.

Starting point is 00:01:41 At the same time, the unemployment rate actually fell to 4.2%. Everyone, how can job grow slow so dramatically while unemployment improves? The answer lies beneath the headline. The labor force actually shrunk by 700, 120,000 people causing the participation rate to fall to its lowest level in years. If fewer people are looking for work, the unemployment rate can fall even when hiring weekends. April and May payrolls were also revised a combined minus 74,000 jobs lower, reminding us that the first estimate is often not the final estimate.

Starting point is 00:02:19 April was cut by minus 17 percent, and May was even worse at minus 25 percent adjustment down. The worst aspect of the jobs report was once below the surface, where we find that the number of full-time workers collapsed by 514,000, confirming once again that the composition, the U.S. labor market remains, one word, terrible. Remember, under this government accounting scheme in the non-form payrolls report, firing one full-time worker and hiring that same worker back for two part-time jobs results in, one net job being created. The NFP tracks the number of pay positions, not the number of employed people, so each new payroll counts as a separate job.

Starting point is 00:03:05 The number of full-time jobs has dropped more than 2.2 million in about 18 months. Here's what many investors forget. Current government economic data is collected after the fact. It's revised for months. Most often, it's substantially changed long after the headlines disappear. The Bureau of Labor Statistics does. work trying to measure an economy with 170 million workers, many who no longer want to be counted. These estimates are never perfectly precise, which means investors should be careful about making

Starting point is 00:03:38 portfolio decisions based on one or two monthly reports. One of my favorite saying is ECMOT data is often inaccurately precise. We quote it to the nearest thousand jobs, sometimes to the nearest tenth of a percent, but months later, the numbers can look very different. The phrase new to my second point, please, particularly in the stock market, don't confuse correlation with causation. Now, let's talk about another investing myth that our team spent months dispelling a few years ago. For two or three years, particularly post-COVID in 2022, one of the most popular charts on the financial TV compared the Federal Reserve's balance sheet with return of the S&P 500. It was a pretty simple argument. The Fed printed money, the balance sheet expanded.

Starting point is 00:04:25 That's why stocks went up. Here's a copy of the chart that was circulated for months in 2022. This chart was everywhere. To help dispel this notion, RAA advisors produced this one that even had the timing of all QE programs on it. I like his chart because it was pretty apparent this wasn't a real thing. Man, this argument was everywhere and it stuck around for a long time. Firms like GMO as part of their catooning bearish goal in stocks back then highlighted research showing the balance sheet expansion appeared to support equity evaluations and influence market returns.

Starting point is 00:04:59 But here's the problem. Correlation doesn't prove causation. If the Fed's balance sheet alone drove stock prices, then stocks should have struggled as the balance sheet stopped growing or even shrank. The Fed's balance sheet peaked in mid-second quarter at 2022. Here's that chart. And since that time, the S&P 500 has returned almost 85%. It didn't decline with the balance sheet, even in time periods that were discussed. Why, corporate earnings accelerated, productivity expanded, margins improved, and companies continued generating record cash flows. Those fundamentals

Starting point is 00:05:36 helped support stock prices, even as the Fed's balance sheet became a much smaller part of the story. Sure, the balance sheet mattered. Money supply and liquidity mattered, but they weren't the entire explanation. Investing is rarely driven by one variable. It's usually several important. important variables working together, earnings, earnings growth rates, interest rates, real interest rates, inflation, and investor sentiment and positioning. The big lesson, investors need not predict or have an opinion on every economic report. Most of all, we need to understand our earnings growing, our earnings accelerating or slowing, or profit margins improving.

Starting point is 00:06:15 Which way is free cash flow heading? are valuations expanding or contracting due to market-based interest rates. Is the monetary policy becoming more or less supportive for assets? That's a much shorter and much more useful checklist. So everyone, the next time someone tells you they know exactly what one economic report means to the overall stock market or how one government statistics will move the market, probably run. Remember this. The economy is incredibly complex. And given its complexity, it's slow to change direct.

Starting point is 00:06:47 direction. Government data usually gets revised, revised to the point that it's generally not particularly useful in making longer-term investment decisions. Markets and corporations, at least the best ones, can constantly adapt. After 35 years in this business, I'm not interested at predicting or even discussing every headline. I'm interested in understanding the long-term, diverse nature of stocks' revenue, earnings, cash flow that drive wealth creation. Because successful investing isn't about becoming a very much. a good economist, it's about becoming a disciplined investor. Stay focused on earnings, stay focused on cash flow, stay focused on rate but changes, and stay diversified. Try not to let one monthly

Starting point is 00:07:29 data release, particularly in a time where the quarter when companies aren't reporting earnings cause you to lose sight of your long-term investment plan. I'm Chris Paris with Oak Harvest Investment Group. Thank you for watching, and I'll see you next week. All content contained with an Oak Harvest podcast expresses the views of the speaker and is for informational purposes only. It is based on information believed to be reliable when created, but any cited data, indicators, statistics, or other sources are not guaranteed. The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you, and nothing in this podcast should be considered as personalized investment, tax or legal advice, or an offer or solicitation to buy or sell

Starting point is 00:08:16 securities. Indexes such as the S&P 500 are not available for direct investment and your investment results may differ when compared to an index. Specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss and past performance is not indicative of future results.

Stock Talk - Everyone’s an Economist… But Does It Help? Stock Talk Update, July 9, 2026

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