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“Normal” – It’s the Opposite of What the Media Says

I hear it every day on the business channels or see it in the business media print: “The economy has to get back to normal.”  But normal means different things to different constituencies.  Wall Street and equity investors certainly don’t want to see the stock market behave normally, if indeed, normal means that PE ratios mean revert and that we have periodic 10%-20% corrections.  Everyone, especially the President, would like …Read More

Q4: A Look at the Post-Hurricane Economy

As Q3 ended, the economy continued on its tepid growth path.  Unknown is the value of the economic carnage of two hurricanes that hit the mainland and a third that completely devastated Puerto Rico.  The bond and foreign exchange (FX) markets have a sense that all is not well, but, the equity indexes haven’t yet espoused that viewpoint. Meanwhile, at its last convocation in mid-September, the Fed’s Federal Open Market …Read More

Deflation’s Persistence Implies Yields Will Be Lower for Longer

Despite what you hear from the TV pundits, the U.S.’s second quarter ended on weakness, and there is little evidence that economic acceleration occurred.  In previous years, slow GDP growth in Q1 was followed by 3%+ in Q2.  Not this time!  The Atlanta Fed GDPNow model, which uses a lot of sentiment indicators, is all the way down to 2.4% for Q2.  I suspect that the Commerce Department’s initial GDP …Read More

Northern NV Will Remain Prosperous in a National Recession

My last column (Sunday, June 24th) was about the possibility of a recession near-term.  On that same RGJ Business front page, the headline was “Reno Median Home Price Tops $350k” and “May Unit Sales Second Highest Recorded.”  The two stories seem incongruent.  But they aren’t. Impact of the Recession In the financial meltdown of the last recession, the Nevada economy was one of the hardest hit in the nation.  It …Read More

Is This Correction Over Yet?

Originally published in Reno Gazette Journal http://www.rgj.com/story/money/economy/2014/10/19/correction-yet/17494021/ I’ve never seen a market correction that wasn’t scary. And this one is no exception, especially since computer-based trading has significantly increased volatility. But, if we include the volatility, which means using intraday highs and lows, the intraday low on Wednesday was 9.8 percent lower than the intraday high on Sept. 19. By historical standards, neither a 7.4 percent nor a 9.8 percent …Read More