In December of 2008, I went to a new client meeting and made a call: ‘I don’t think we are in a second Great Depression.’ With the benefit of hindsight, that doesn’t seem like much of a prediction, because we know after the fact that gross domestic product (GDP) only fell -4.3 percent during the 2008 global financial crisis, which is small compared to the estimated -15.0 percent decline in… Read More
There was fairly downbeat sentiment surrounding commodities and commodity-linked stocks yesterday. The Bloomberg Commodity index hit its lowest level in 16 years, and is close to setting an all-time low since its launch in 1991. Not surprisingly, the dollar’s strength (up 1.93 percent yesterday and 9.66 percent year-to-date) in the wake of the Fed liftoff yesterday has been getting a lot of attention. Some investors thought that the increase in rates… Read More
Confirm payrolls for November rose 211,000, above the consensus estimate of 200,000, which follows the strong and upwardly revised October reading of 298,000 new jobs. The unemployment rate held at five percent and the labor force participation rate rose slightly to 62.5 percent from 62.4 percent. After the terrible showing on Thursday, ‘Super Mario’ Draghi flew to New York and spoke at an Economic Club event. Knowing that his communications the day before had… Read More
Back in 2012, Draghi famously said that the ECB was ready to do ‘whatever it takes’ to preserve the euro. Although he was talking about keeping peripheral countries within the euro during their sovereign debt crisis, the ECB has developed a reputation over the past few years for exceeding investor expectations with their economic stimulus programs. That ended yesterday when the ECB failed to deliver the stimulus that markets were… Read More
Vanguard put out an interesting research piece on Friday, which you can read in full here, arguing that the bursting stock market bubble in China isn’t as big of a risk as a potential fall in their housing market. According to their research, housing is a much larger portion of total household wealth than stock ownership, which is the opposite of the US. In China, housing makes up 43 percent… Read More
Although there was no specific catalyst for yesterday’s trading action, investors are clearly worried about global growth. The chart below shows the most recent Forecasts from the International Monetary Fund (IMF) that were produced in July. While the global growth picture is flat and advanced economies are growing, according to their projections, emerging markets and China are slowing down. This isn’t news: the market volatility that we’ve been dealing with… Read More
Earlier this week, Ryan Craft and I went to Washington DC for a full day of presentations put on by Macroeconomic Advisors. We heard from some of the country’s top economists, including the Director of the Congressional Budget Office (CBO) and the Chairman of the White House’s Council of Economic Advisors (who also happened to be Hollywood superstar Matt Damon’s freshman roommate at Harvard). While I plan to share some… Read More
One of the interesting comments that I read in the early part of last week when markets were falling was that financial markets were doing poorly while the real economy was doing reasonably well. Over the last five years, I’ve heard people say countless times that we’ve had a nice recovery in financial assets while the real economy has sputtered along at growth rates well below our historical long-term trend… Read More
I was reading in the Wall Street Journal that homes with 15 or more bedrooms were becoming very fashionable and, in a different article, master suites are now so large that they feature media rooms, offices, gyms, kitchenettes and laundry rooms. In other words, housing is back! Okay, maybe those things and the race to build a $100 million spec home (yet another article) signal that the rich are doing… Read More
My favorite television show of all time was The Wire, a gritty HBO series about the hard life of the people and institutions in Baltimore, from cops and drug dealers to longshoremen, politicians, lawyers and middle school kids. When the US Treasury announced last week that they intend to replace Alexander Hamilton on the $10 bill in 2020 with an important woman in American History, my first thought was about… Read More
