We got the latest report on economic growth last week and it surprised most everyone. Real GDP expanded by an annualized 3.3% in the fourth quarter, well above the consensus estimate of 2%. Nominal GDP expanded an annualized 4.8% quarter to quarter and 5.8% year-over-year. The annualized quarter-to-quarter change is exactly the average annual change since 1990. Real GDP grew [...]
The spread between the 10 year and the 30 year mortgage is starting to normalize. If this continues and mortgage rates keep coming down, housing could turn soon and start adding to GDP:
Crude oil futures have returned to backwardation after a couple of months of contango. Near-term demand improved relative to supply. https://www.cmegroup.com/markets/energy/crude-oil/light-sweet-crude.quotes.html#venue=globex The crude oil chart looks like it is setting up for a rally:
The financial commentariat first started to worry about recession in April of 2022 when the spread between the 10-year Treasury rate and the 2-year Treasury rate turned negative - the yield curve inverted. It subsequently righted itself to positive territory until July of 2022 and has stayed inverted ever since. Since an inverted yield curve has preceded almost every recession [...]
I'm back! I took most of the month of December off, as I do every year, to do some thinking. Per the title of this essay, the purpose of these year-end musings is to gain some perspective. In the day-to-day, week-to-week, movements of the markets it is easy to forget that we are investing with a timeline measured in years, [...]
The index is down from 52.7% in November to 50.6% in December. While current activity registered a jump to 56.6% from 55.1%, the composite is being held down by employment, inventories, trade and new orders. Employment -- 50.7 in Nov to 43.3 in Dec, down 7.4% Inventories -- 55.4 in Nov to 49.6 in Dec, down 5.8% Imports -- 53.7 [...]
The employment numbers came in progressively better throughout the week. Friday, the US Bureau of Labor Statistics reported that the US added 216,000 jobs in December. The following industries reported the largest gains: Leisure and Hospitality (Hotels, Restaurants, Gambling, Live Entertainment) -- 40,000 Health Care -- 38,000 Local Governments -- 37,000 Professional and Business Services (Accounting, Architecture, Computers, Consulting) -- [...]
Personal consumption of services is 45% of US GDP. Employment is strong and the service sector continues to be strong. S&P Global PMI report came in at an expansionary 51.4. Output rose for the 3rd straight month and at the sharpest rate since July. New orders rose at the fastest rate since June. This translated into employment clocking in at [...]
The economic backdrop today: Employment is strong Employment drives personal consumption Initial Unemployment claims dropped by 18,000 to 202,000. This is the 4th lowest number of initial unemployment claims of the year. Continuing claims dropped as well and the slope of the 4-week moving average is now negative indicating an incrementally easier environment to find a new job. Today's ADP [...]
The labor market is softening, but still strong. Disclaimer: This information is presented for informational purposes only and does not constitute an offer to sell, or the solicitation of an offer to buy any investment products. None of the information herein constitutes an investment recommendation, investment advice or an investment outlook. The opinions and conclusions contained in this report [...]
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