The oft-leveled charge against politicians in DC is that they are “out of touch.” Such desultory description is often deserved, however, so it isn’t really cliché so much as connecting republican (small “r”) values through time. In the case of the 2015 economy, however, the idea that the economists sitting on the FOMC board (and their academic statisticians) aren’t in [...]
In another of the innumerable cosmic coincidences that so abound these days, producer prices in China have been in “deflation” since March 2012. Not only is that 41 consecutive months of falling prices (insofar as this index captures that effect), that month is ubiquitous as a trend demarcation in so many other places. It’s as if the Chinese economy and [...]
Yesterday was the eighth anniversary of the end of the eurodollar standard as a functioning system. Though the attainment of such dizzying scale was completely artificial, finance unbacked by real economy, it at least to that date had remained in more than superficial order. Reviewing the systemic break of that day remains quite useful in understanding where we are now, [...]
The S&P 500 Cap-Weighted Index ((IVV)) held support at the 200-day moving average (at least temporarily) after failing to get back above the 2120 level last week. The index has been straddling between the 50-day and the 200-day moving average for some time now. The S&P 500 is up 2.17% for the year. The S&P 500 Equal-Weighted index ((RSP)) is [...]
US monetary policy is the major driver of the global cost of capital. As a Fed rate cycle approaches, we see the effects of raising required returns across the globe. The increased volatility is a reflection of investors' changing return requirements, risk assessments and the associated unwinding of leveraged exposure. As we approach the anticipated Fed rate hike, look for he [...]
US stocks declined for the seventh straight day on Friday, a dismal streak not seen for almost four years. The S&P 500 is now down 5 of the last 7 weeks although in total it is just 2.5% below the all time high. If you just own the index I suppose that is not much to be concerned about but [...]
I am lowering our risk budget this month based on several factors. For the moderate risk investor, the allocation between risk assets and bonds moves to a defensive 40/60 versus the benchmark of 60/40 and last month's 50/50. Credit spreads have resumed widening as crude oil prices have resumed their downtrend. The downtrend in high yield credit prices may be [...]
Top News Headlines Dow falls seven straight days; longest losing streak in four years Bonds up for third week in a row; diversification does work Apple stock in correction territory Republicans hold first debate; Fiorina, Kasich biggest surprises Media stocks clobbered; Disney leads to the downside on ESPN woes Economic News Incomes up modestly, spending still weak ISM Manufacturing index [...]
It may be related or it may not, but the setup and decision by the Bank of England is far too close to the Federal Reserve to simply ignore or dismiss. While the FOMC added the word “some” to its policy statement at the last meeting to downgrade, really, its economic assessment, BoE accomplished much the same through different means. [...]
The monthly payroll report needs to be rebranded the monthly labor force report. By far, the most accurate measure of the series continues to be the apathy of Americans not currently working or looking toward purportedly massive employment expansion. Those two positions are not only inconsistent, they are by all intuitive sense mutually exclusive. No less orthodoxy than Janet Yellen [...]
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