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Tag Archives: economic growth

How Will Markets React to Growth Deceleration?

Economic fundamentals were ignored as if they were merely background noise as markets attempted once more in early August to breach their record high levels put in late last January. The common theme in the business media is that, due to great corporate earnings (24%+ in Q2), the equity markets are cheap. Never mind that a good part of that earnings growth was due to one-time tax reduction (in fact, …Read More

The Italian Job Shouldn’t Have Been Such a Shock

The good news is that it looks like manufacturing got a bit stronger entering Q2, and consumer spending was slightly better, too. So, Q2’s U.S. GDP may actually be a tad stronger than Q1’s. But, the good news stops there, as the rest of the world, especially Europe, appears to have hit a wall, a barrier that has displayed itself for the last couple of months, but, till now, was …Read More

Before Political Correctness, We Called This “Stagflation”

“Those that cannot remember the past are condemned to repeat it.” (George Santayana 1863-1952). This time, indeed, could be different. It certainly is in the realm of possibility. But, the odds are against it. One doesn’t get up on a particular morning and find an entry in the calendar on our smartphone, like “Cinco de Mayo” or “Mother’s Day,” that says “Start Day: National Recession.” In fact, the National Bureau …Read More

Sources of Uncertainty (Resulting in Market Volatility)

Over the past several months, I have talked a great deal about volatility. The fact is, volatility increases in direct proportion to market uncertainty. So, today’s volatility is just symptomatic of the confusion and uncertainty now prevalent at least in the near-term outlook. The Trade Issue The talking heads on bubblevision would have you believe that the bickering over trade and tariffs, especially between President Trump and China, is the …Read More

The Headlines Say Growth…

The headline numbers, for jobs and GDP, and most of the sentiment indexes, would lead one to conclude that the economy was robust and accelerating. Even the Fed agrees, as they upgraded their view of the economy to one now in “solid” growth mode. The reality is that much of the data was distorted by the hurricane rebuild effort, and Q4 data will also be plagued by distortions due to …Read More

Turning a Sow’s Ear into a Silk Purse

It wasn’t a big surprise that Wall Street advanced the narrative that the havoc wreaked by Hurricanes Harvey and Irma is actually a positive for the economy, now aided and abetted by the strangest employment report, perhaps of our lifetimes. (Conveniently ignored is Hurricane Maria, which completely wiped out Puerto Ricco’s economy, Hurricane Nate, and the California Wine Country conflagration.) The Recent Data Let’s begin with the most recent underlying …Read More