An important data came in the United States: PCE inflation index. Here, FED attaches great importance to the core, not the headline, and the monthly target for the core is 0.1. It will most likely come within this framework. Because PCE is basically a derivative of CPI, America's other major inflation data, and the markets are not very wrong about this derivative. It will probably come in line with the targets and this is of course a positive thing and may move the markets up a bit. But the FED does not listen. On Thursday, another member of the FED, Bowman, made a terrible speech and said that he does not see any reason to reduce interest rates in America right now. We're not sure inflation is slowing down. The economy has not slowed down anyway. But this tells me that the FED is looking back a little and is not aware of the new data. I prefer to read company balance sheets. Rather, I like to follow the statements of company CEOs. Because they have the real data.

For example, Nike's balance sheet has arrived. A very bad balance sheet arrived. For this reason, of course, I guess that Nike has lost market share in its sales to some brands such as Hoka, which has recently become popular in America, and On in Switzerland, that is, it has its own internal weaknesses. I don't like Nike's production right now. But in general, there seems to be a slowdown among consumers. For example, FedEx has reduced its target. FedEx is America's largest cargo company. A slowdown in cargo business means that consumption is slowing down. The business of logistics companies is always very weak, which again shows that the economy is slowing down. Also, housing sales came. We saw an incredibly sharp decline in housing sales. There is also a growth in the housing inventory in America. In other words, we see that people cannot sell their new homes. There are signs of shrinkage everywhere. Walgreens is America's largest pharmacy chain. He said he would close 8000 branches. Of course, the business model is also changing here. You know, companies like Amazon and Hips are increasing their direct-to-door personalized medicine deliveries. So Walgreens' core model is also being shaken, so there's also a problem specific to Walgreens. But at the same time, 8000 stores are closing. Many people will be unemployed here, again a sign of economic contraction.

So the economy in America is struggling right now. There seems to be no problem with the upper segment consumers, they continue to consume. But there is a serious dissolution in the middle and lower parts, and remember, America is a consumption economy and I think the FED is looking at past data instead of reading these leading indicators. Unemployment data came in. Unemployment data in America was a little better than expected on Thursday. Although there has been an increase in the number of people who have not been able to find a job for a long time, we do not know how reliable these data are. Because unemployment benefits are quite low in America. That's why many unemployed people don't even apply anyway. When they do not apply, we do not see an increase in the unemployment rate. I don't think it's very realistic either. What I hear anecdotally from the field also shows that it is becoming increasingly difficult to find a job.

Is America in a recession? I think industry by industry is in recession right now. In America, for example, on the automotive side, vehicle prices are constantly decreasing in the area where Tesla is located. The vehicle inventory on hand is constantly growing. There are price decreases in second-hand vehicles. I think there is a recession there. There is a recession on the housing side. Thursday's numbers show that. Sales on the residential side were much lower than expected. We see that there is a recession there. There may be a recession in consumer products, especially sneakers. On Thursday, Southwest Airlines made a statement that it reduced its year-end targets. Southwest Airlines is very important. Because it is a domestic flying airline in America and a company that provides the most economical flights. "We expect a decrease in revenue per seat between 2% and 4%," he said. The economy is shouting that I have slowed down and again a member of the FED appears. “We don't see any slowdown,” he says. This constantly delays the FED's interest rate cut and its effect decreases. Because the effects of interest rates on the economy may not be very intense. Because companies have taken out their debts before, consumer loans etc.

So, in fact, the effect of interest rates was a little bit longer term, while increasing interest rates and reducing inflation. Despite how quickly and harshly they raised interest rates, inflation resisted. Now, when lowering it, the effect will be less. So, if the economy is really in recession, the effect of reducing interest rates will be less there as well, and if they are going to do it with just shy of 25 basis points, at best, July may be even delayed. In fact, on Thursday, one of the managers of the FED said that we do not need to do this again this year, it will not have any effect with those 25 bass points. Because its effect is actually psychological. For example, if they had done this in May, they could have given this message to the market. We see that there is a good decline in inflation, excluding rents. They could have said that we think the economy should relax a little, but they didn't do that.

The longer you delay, the bigger the problem becomes. As the problem grows, it is possible that one day, for example on a Sunday, the FED will meet urgently and make such a harsh statement, such as we are reducing interest rates by one point. This scares the markets, so a decrease in interest rates is good for the markets. This is good in the scenario that we have beaten inflation and are slowly reducing interest rates without collapsing the economy. This would require multiple reductions of 25 basis points. Now, our next runway for this year is decreasing in this regard and I think the FED is still delaying. In this context, I am looking at the markets a little more timidly. What interests me is definitely not an investment recommendation in such an environment, but ETFs such as TLT and TMF attract my attention. Because in America, things that will increase in value when interest rates decrease, interest rates will definitely decrease eventually, recession is coming because it screams, even if the timing is difficult and those TLT and TMF recession come, the values ​​increase in that period. Because interest rates have dropped, they work with reverse correlation there.

I currently intend to increase the cash in the portfolio a little. This is an important decision. I am also a bit wary of companies that sell products directly to consumers. I mean, even at Tesla, if it didn't have an autonomous driving story, I would be hesitant, let me put it that way. I look at positions like Sofi and PayPal that are directly based on consumer purchases with some trepidation. I haven't reduced my position yet. I even bought a lot of Sofi last week, but I'm starting to get a little scared of them. That's why I want my cash to be stronger. My hopes for small stocks are also getting a little dashed. Because I think that as this work is delayed, bankruptcies will increase in small companies. So we're in a bit of a rough patch and I'm generally bullish on the American market. I have earned very well since October 2022. Now it's time to look a little more shyly.

And then July comes into play. I watched Trump and Biden debate on Thursday. Trump won by a landslide. So, we saw that Biden's mental activities are no longer fully strong, so to speak, let me put it that way. Otherwise I may be censored. Trump emerged as the clear winner here. It was already reflected in the polls immediately. There is such a development there. Markets loved the Trump issue. We saw a slight increase in futures immediately in the evening. Trump because he is more market friendly, he does not like taxes, he likes to inflame the markets. But that is the later issue, so our current issue is what the FED will do, and I think time is running out. That's why I think that the recession in America has already started to occur in certain sectors, and if the FED does not make the right decision, I think it may spread. In such a situation, ETFs such as TLT and TMF attract my attention since interest rates will eventually decrease.

My interest in small stocks has never been sparked, and the longer it delays, the more trouble there becomes. Because some of those companies may go bankrupt. And of course, those who sell to very large customers, that is, those who have a lot of cash or who have a lot of cash, create new sectors like Nvidia, and invest in businesses such as artificial intelligence and robotics that will create productivity leaps, I still think it is good. But it's time to be a little more careful. In that context, I will follow the inflation data very carefully and the market's reaction to that data is very important. In fact, if the PCE arrives as expected and the market does not react well, I will be frightened. If the PCE comes as we expect and the market reacts well to it, my hope will increase a little. But I still think it's time to be a little more careful.

I think many companies will be beaten hard in their July balance sheets. It takes a lot of focus. In other words, you need to believe that your company will deliver a good balance sheet, be cash flow positive, maintain growth, and have the strength to weather a difficult recessive environment. Because I think the possibility of the FED not being able to do this job in America has increased slightly. Last year, in the middle of 2023, I was giving 8 - 9 out of 10 that the FED would achieve this and this soft landing. Earlier this year, my score had increased even more and reached 9. Because inflation was falling very fast and FED Powell was doing very right things. This year I was in the 7-8's early in the second quarter. Because inflation increased a little, but the FED was still right. But Powell's ridiculous attitude at the last FED meeting, the speeches made by FED members since then, their laziness, remember that they announced their own projections without evaluating the latest inflation data that day, and they went through Powell at the press conference. So it was very bad because the meeting. I'm a little closer to five now.

Approaching five means that the chances of not being able to do this job are equal to the chances of being successful. Let me say that I'm still a little hopeful that they can do it. Maybe that's why I have to say 5.1 out of 10. But with every delay, the problem grows. So a little more cash. Although I do not know when the interest rates will definitely be reduced, it has started to seem more meaningful to me to bet on this, to find companies that can move forward even if there is a very strong recession, and perhaps reduce the positions of small, weak companies. There are so many topics, I wasn't very sure. But I'm getting more and more depressed. This may not mean that the stock markets will crash tomorrow. Stock markets may actually happily welcome news of a recession that the FED will have to cut interest rates. But frankly, I lost a little taste, it's worth saying that.

I'll watch, I don't have any major position changes right now. I'm starting to build some TLT, TMF. I'm heavily into small stocks IWM. I'll keep him waiting for a while, now we'll see. I have no problems with big games like Nvidia. I have no problems with Tesla. This is not investment advice, I could be wrong about all of them. But I think stories that are outside of artificial intelligence will have difficulty. In artificial intelligence, small companies or Micron Technology, an example of an example that is valued for its value in artificial intelligence, have been beaten quite hard by the market. I think we need to be a little more careful about these.

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