The US Unemployment Rate moved down to 3.6% in March, its lowest level since the start of the pandemic and well below the historical average of 5.75%. If you asked most people, they would probably say this is a bullish sign, where a strong economy is good news for the stock market. But is this […]
There are few things investors fear more than an inverted yield curve (the relatively uncommon situation where short-term yields are higher than longer-term yields). Why? Because it tends to be a pretty good indicator of future economic weakness. Case in point: the last 6 recessions in the US were all preceded by an inverted curve. […]
Here are the charts and themes that tell the story of 2021… I. The Free Money Effect In the first few months of 2021, hundreds of millions of Americans (the vast majority whom had never lost a job during the pandemic) received two more tax-free stimulus checks, setting the stage for one of the greatest […]
US National Debt has crossed above $29 trillion for the first time, increasing $6 trillion over the last two years. As a percentage of economic output (GDP), our national debt has steadily increased over the past 40 years from 31% in 1980 to 126% today… Why is the ratio going up? Simply put: we have […]
US economic growth contracted 2.3% in 2020, the worst year for the economy since 2008. Did that hurt the stock market? Not at all. The S&P 500 gained 18%, well above its historical average return of 10%. 2020 wasn’t the first time we’ve seen a higher stock market in spite of an economic downturn. The […]
What do Amazon, Walmart, Costco, Bank of America, McDonald’s, and Starbucks have in common? They’re all among the largest US employers and they’ve all raised wages in the last year. Overall, average hourly earnings in the U.S. are up 4.9% in the last 12 months and 9.6% over the last 24 months. This is significantly […]
Pretend for a moment that you’ve been stranded on a desert island and have no idea where Fed policy stands. After being recued, you’re given the following the information… US Real GDP is at its highest level ever, up 12% over the last year and on pace for its highest annual growth rate since the […]
Core inflation in the US has moved up to 3%, its highest level in 25 years (note: core inflation excludes food/energy). At 4.2%, overall inflation is running at its highest level since 2008. The prices of imports and exports are surging… The price of Copper, one of the most important industrial metals, is now at […]
US inflation expectations continue to rise, now at their highest levels since 2008. If higher inflation is coming (see here for some signs), many investors are wondering how that will impact their portfolio. Let’s take a look at how stocks and bonds have performed historically under various levels of inflation… If we segment calendar year […]
There is one definition of inflation that seems most applicable to today… “Too much money chasing too few goods.” We are seeing the impact of trillions of dollars in stimulus money chasing a limited supply of goods almost everywhere you look… Financial Asset Price Inflation -Stock prices are at record highs, up 50-80% in the […]
If market participants are correct, higher prices are coming, with inflation expectations surging to their highest levels in over 12 years.1 When most investors read the word “inflation” they immediately think of Gold, as conventional wisdom states that there is no better hedge against rising prices. Is this true? Let’s take a look… Since 1975 […]
US National Debt has crossed above $28 trillion for the first time, increasing $4.6 trillion over the last year. As a percentage of economic output (GDP), our national debt has never been higher, steadily increasing over the past 40 years from 31% in 1980 to 130% today… Why is the ratio going up? Simply put: […]
Studying market history is a worthy endeavor for investors. It can provide instructive parallels, much needed context, and reassurance during difficult times that “this too shall pass.” Problems arise, however, when one assumes that the range of possible outcomes in the future are limited to what has happened in the past. There is no better […]
US National Debt has crossed above $27 trillion for the first time. A year ago it was below $23 trillion. As a percentage of economic output (GDP), our national debt has never been higher, steadily increasing over the past 40 years… 1980: 31% 1990: 52% 2000: 58% 2010: 87% Today: 138% Why is the ratio […]
How quickly things change. Back in March, there were widespread fears of a second Great Depression. A few months later, as stocks surged, everyone was talking about the “v-shaped recovery.” What does the data suggest? Let’s take a look. First, we need to put the pre-covid economic environment in context. In February when the economy […]
Non-taxable stimulus checks, extra unemployment benefits paying many workers more than when they were working, forgivable loans for small business, grants and loans for large corporations, payments to state and local governments, grants for healthcare providers, and more. “How are we paying for all of this?” I’ve been getting this question more and more lately. […]
If the dichotomy between markets and the economy has left you dazed and confused, you’re not alone. For on one side of the ledger, you have… 16.5% of the US labor force on unemployment, the highest on record (data back to 1967). US Employment to Population Ratio down to 51.3%, a new low. The prior […]