An issue I have been mentioning for the past couple of months is finally starting to get some attention: the U.S. is facing a potential crisis as the government runs out of money. Sometime this fall, likely in September, the government won't have the funds to pay its bills.

This morning, I spent some time speaking with a client who wanted to know why markets had slowed down recently. But I am not sure I agree with her. We hit all-time highs just the other day, although in recent days, the market has been taking a bit of a breather. Will that down time continue, or could we get another leg up?

Q2 2019: it was the best of times, it was the worst of times. Okay, it wasn’t either, but last quarter we did see something that looked like both. After hitting new highs in April (the best!), markets declined significantly in May for the first time all year (the worst!) and then bounced back in June close to all-time highs. Internationally, we saw the same story, although to a lesser extent, as both developed and emerging markets echoed U.S. performance with an up-down-up pattern. We closed the quarter on a positive note, though, with all major indices up around the world. As far as the stock market is concerned, it was a good quarter.

Happy Independence Day! Independence Day is actually one of my favorite science fiction B movies. It gave me one of my best laugh lines for speeches: “You remember the movie Independence Day—it started with aliens destroying Washington, DC. Later on, though, it turned out they were hostile.”

There has been a great deal of coverage on slowing growth. Indeed, on this blog we have looked at signs that the recovery may be close to the end. What that means, of course, is that a recession may well be in the cards in the next couple of years. Although we are not there yet, now is a good time to take a closer look at what it could look like. After all, it has been more than 10 years since we last had a recession, and that one was not typical.

“More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness. The other, to total extinction. Let us pray we have the wisdom to choose correctly.”

As I kind of expected, some news did hit yesterday while my son and I were fishing that is definitely worth a closer look. The Conference Board’s survey of consumer confidence—one of the most underappreciated economic stats there is—dropped from 131.3 in May to 121.5 for June. This result is the lowest level since September 2017.

I spent this morning the way I usually do, reading the newspapers, looking at the economic reports, and scanning the futures markets. Also as usual, I found things to worry about: Consumer confidence, still high by historical standards, dropped more than expected in June, falling to its lowest level in almost two years. New home sales also missed expectations, declining for the second month in a row instead of climbing. The markets are down a bit as I write this . . . So far, so normal.

So much for sell in May and go away. The S&P 500 has hit another all-time high and is on track for the best June in more than 60 years (since 1955). New public offerings have exploded, with Beyond Meat and Slack the most recent wunderkinder. Companies are racing to go to the market. They know that with valuations at all-time highs and the risks rising, now is the time to sell at the best price they will likely get.

The market has concluded that the Fed’s decision to keep rates steady, along with the accompanying statement from yesterday's meeting, is unreservedly dovish. The expectation is for two more rate cuts this year, starting in July. Markets are, unsurprisingly, cheering. Lower rates are good for economic growth and for stocks. In fact, that reasoning would explain why the Fed would cut. If the Fed does cut, it will be stimulative and should help sustain the expansion—as intended.