Hope you had a great 4th of July! We’re grateful every year to call this country home.
Here’s a thought experiment: if someone had handed you a newspaper back on January 1st listing everything that was about to happen this year, a war involving Iran, oil prices spiking, inflation picking back up, a brand-new Fed chair, and interest rate expectations flipping from “cuts coming” to “hikes possible” would you have guessed the stock market would still be up over 9% by mid-year?
Probably not. And that’s exactly the point.
Markets have a way of humbling anyone who tries to predict them, and often your gut instinct is the wrong move. The people who panicked and moved to cash back in the spring locked in their losses and now face the much harder problem of figuring out when to get back in, likely at higher prices than where they sold. This is why we say time in the market beats timing the market, over and over again.
What Meta’s Stumble Teaches Us About AI
One of the more interesting stories this week came out of an internal meeting at Meta, where Mark Zuckerberg told employees that AI development isn’t moving as fast as the company expected and admitted they jumped the gun on a major reorganization built around it.
Why does this matter to you? Earlier this year, Meta cut about 8,000 jobs and shifted another 7,000 employees onto AI-focused teams, backed by roughly $145 billion in AI spending this year alone. If any company had the money, talent, and motivation to prove AI could quickly replace human workers, it was Meta. And even they’re finding it’s harder and slower than they thought.
There’s an old idea (often credited to futurist Roy Amara) that we tend to overhype new technology in the short run and underestimate it in the long run. Remember when the internet was supposed to wipe out every local business by 2002? Instead, the dot-com bubble popped, and the real transformation, online shopping, cloud computing, smartphones, unfolded over the next twenty years. Same with ATMs: they were supposed to eliminate bank tellers, but a decade later banks employed more tellers than ever, because cheaper branches meant more branches.
Our take: AI is likely following that same pattern. It’s making people more productive; the engineer, the analyst, the advisor and historically, productivity gains have driven economic growth and higher living standards, not mass job losses. So, we’d encourage some healthy skepticism toward both extremes: the promise that labor is about to become free, and the fear that jobs are about to disappear.
The Jobs Report: A Reality Check
On the employment front, June’s jobs report broke a three-month streak of pleasant surprises. The economy added only 57,000 jobs, well below the 115,000 expected, and April/May were revised down by a combined 74,000. Professional services led the gains; leisure and hospitality actually lost jobs.
The unemployment rate did drop to 4.2%, but that’s not the good news it sounds like — it happened because fewer people were participating in the workforce at all (the lowest level since March 2021), not because more people found jobs. We call this a “denominator effect” — the math moved because fewer people were counted, not because more people are working.
Bottom line: we’re not concerned, and this data still supports the Fed holding rates higher for longer.
Have a great week and remember, volatility is simply the price of admission for long-term returns.
Best,
Morgan, Josh, and the entire team at Park City Wealth Advisors
