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Look For The Preponderance Of The Evidence, Don’t Rely On One Factor

The headline on my LinkedIn page on Friday (October 4th) read: “Jobless rate reaches half-century low, HP plans to cut up to 9,000 jobs…” Is this good news about jobs, or bad? I’ve learned many times over the years to rely on the preponderance of the evidence, and not on any single indicator. The jobs numbers, themselves indicate that the economy is still expanding. But, the lower level of job creation, along with …Read More

A Strange New World: Economic Slowdown, Liquidity Issues

The world’s slowdown continues. China’s growth rate is the slowest in years. Exports there are down as are imports, and pork prices (their protein staple) are up 40% due to swine flu. India, formerly the fastest growing economy in the world, had their manufacturing sector grow +0.6% (stagnation for them and the slowest growth since 2012), and auto sales there are down 41% from year ago levels (hard to believe!). In the world’s third …Read More

The Goldilocks Labor Report: “Just Right!”

It isn’t ever a good sign when markets become manic. August was quite volatile with five days out of 22 (23%) where the S&P 500 intra-day market swings exceeded 2%, and three days when the market closed down more than -2.5% from the prior day’s close. (We haven’t seen such price volatility since 2011!) While, so far, September has been less volatile, the market is still susceptible to tweets. For example, news about the …Read More

The Deer in the Headlights

The big event of August, the one that was going to move markets, was supposed to be Jay Powell’s remarks at the KC Fed’s annual symposium at Jackson Hole.  Turns out, his speech was a non-event! The Powell Non-Event The media made it their purpose, prior to his speech, to spotlight the fact that the FOMC members, the Fed’s rate setting committee, are very divided on the appropriate policy, given …Read More

The New Mercantilism Rates Race to the Bottom Currencies Depreciate

During the recent period of world growth, where nearly every country’s exports were rising, there was little incentive for governments to manipulate economic policies to foster even more economic growth. Getting back to “normal” seemed to be the universally adopted mantra, and that implied rising rates and tighter monetary policies. However, today, when world trade is contracting (some of which may be due to “trade wars,” but much of which is due …Read More

What Investors Believe: Central Banks Have Their Backs

In a world of fragile economic growth where the odds of recession have been on the rise, investors are now convinced that central banks (CBs), led by the Fed, have their backs, as they see the CBs as “buyers of last resort.” Note that the Fed, whose legislative mandates are low unemployment and stable prices, has morphed into the role of equity market savior beginning in the Greenspan era and rolling …Read More