I generally shy away from sentiment surveys as almost a rule because I believe they are more often than not misleading. The various indices of consumer confidence fall into that categorization, especially over the past few years. According to many, consumer confidence is back to where it was during the housing bubble even though by nearly every other statistic, particularly [...]
I've put off this update as long as I can now, waiting for some clarity, a change in our indicators that might suggest a change to the portfolio. Alas, despite a Fed meeting, a BOJ meeting and a plethora of economic data nothing has moved sufficiently to warrant a change. The risk budget is unchanged this month as is the [...]
The University of Michigan released its September update for their surveys of consumers. The overall index of consumer “sentiment” was unchanged from August at 89.8, and up just 3% from last September. This “confidence” index peaked in January 2015 at 98.1 and has been sideways to lower ever since. Most of the internals were practically unchanged throughout, leading Chief Economist [...]
In many ways it is surprising the bond selloff hasn’t been bigger. After all, the recovery narrative of the unemployment rate has had almost everything going for it since February, at least in terms of perceptions playing into expectations. There was the usual spring rebound in economic data that aided in the “worst is past” argument, while oil prices and [...]
For a central bank, deflation is the starting point which makes inflation the emphasis. So long as there is a “small” amount of positive inflation then economists have suggested deflation, thus depression, becomes impossible. The reason for that belief is twofold, first having to do with the margin for “error”; that is a small positive inflation rate acts as a [...]
The risk budget is unchanged this month although the composition of the portfolio does change. For the moderate risk investor, the allocation between bonds, risk assets and cash remains at 50/45/5. There are changes to the allocation but the overall risk budget stays the same. Credit spreads did continue to narrow this month but other indicators did not confirm the [...]
Economic Reports Scorecard Two reports over the last two weeks epitomize the bifurcated nature of the US economy. The durable goods report last week was just plain awful from top to bottom. Orders down 4% month to month and 6.4% year over year. Ex-transportation -0.5% month to month and -3.6% year over year. Core capital goods orders up slightly month [...]
The news Friday that 2nd quarter GDP expanded by a tepid 1.2% from the previous quarter (annualized) marks a change that needs to acknowledged. The last two years we have seen a pattern of a weak first quarter - for which economists have been searching frantically for an explanation - followed by a second and third quarter rebound. Fourth quarters [...]
Oil prices are like an unfolding train wreck, as it is nearly impossible to look away now. Day after day, not only are spot prices down but the entire WTI curve is now moving lower in almost perfect unison. Prices have dropped six days in a row, more than $4, and at just above $41 seems a much different world [...]
Economic Reports Scorecard The response to the much better than expected employment report today is quite interesting although not in a good way. Stocks will surely get most of the attention, assuming they continue to trade higher by the end of the day (they did), but other markets - bonds and gold - are not confirming the strength of the [...]
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