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New Market Highs: It’s Not the Economy (Stupid)!

It had been 210 days since the S&P 500 had made a new record high, but, on Friday, August 24th, after several days of struggle, the market finally broke to a new high (2874.69). The struggle actually began the prior Tuesday (August 21st). During that trading day, the S&P 500 actually pierced the old record high intra-day (during the trading session). But Wall Street has its own set of quirky …Read More

The Middle Class Continues to Fall Behind

February’s job growth was significantly stronger (+313,000 Establishment Survey) than market expectations (200,000).  Strangely, though, the unemployment rate (U3) remained at 4.1% (Household Survey) for the fifth straight month.  Why?  Because a significant number of those who had previously stopped looking for work rejoined the labor force, perhaps indicating more labor force slack than the unemployment rate would indicate.  The biggest disappointment, however, was the slowdown in the growth of …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

At Recession’s Onset, There is No Bell, Bugle, or National Anthem

From my reading of the business media, there are few business economists who believe, like I do, that the probability of a recession in the next 12 months is greater than 50%.  A recession is generally viewed as two consecutive quarters of negative real GDP growth. Looking forward, a recession isn’t inevitable, as there have been ‘soft landings’ in the post-World War II era.  Nevertheless, from my lens, there doesn’t …Read More

Market Melt-Up: Caution – Sentiment in Nosebleed Territory

Since my last column, the Dow Jones Industrial Average (DJIA) did indeed hit 20,000 and has since gone well beyond.  Most of the post-election run-up initially appeared to have occurred in the November 8th to December 20th period when the index went from 18,333 to 19,975, a rise of 1,642 points (7.9%).  Over the next 44 days, until February 2, the DJIA was flat, actually losing 116 points.  But since …Read More

Strong employment, higher inflation means slightly higher interest rates

For some, the Bureau of Labor Statistics (BLS) report that 271,000 net new jobs were created in October was a surprise. But readers of my reports should not have been surprised. For at least the last year, I have commented on the underlying strength of the consumer, the service sector, housing, and the labor markets. And in the latest employment report, we have finally witnessed the first recognition that wages, too, are …Read More