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We Don’t Live in “Normal” Times

The equity markets are in one of those rare moods where they continue to rise no matter the news, even when there are riots in the nation’s capitol complex, and when non-farm payrolls fall -140K.  Would you say this is “normal?” Regarding inflation expectations, interest rates rose rapidly along the Treasury yield curve with the 10-year T-Note yield rising from 0.93% (93basis points) from its close on January 4th to …Read More

The Economy: On the Other Side of the Abyss

The good news is that a vaccine is definitely coming.  But getting to herd immunity is going to take more than a quarter or two, especially given the resistance of about half of the American population to getting the vaccine, at least early on. The economy is likely to remain soft until well after the pandemic passes.  There are many reasons for this including a decade of poor policymaking and …Read More

Faster Growth Deceleration Prompts Increased Market Turbulence

Market volatility looks to have become the norm of late, with intraday swings of 500 points on the Dow Jones Industrials seemingly commonplace. The days of complacency and ever rising stock prices appear to be firmly in the rear-view mirror, now replaced by daily angst. And, with good reason. Markets have fully recognized that “synchronized” world economic growth has ended, that the U.S. economy is not an island, immune from …Read More

No Recession in Sight; Just Volatility, End of Cycle Worries

As June began, market volatility re-emerged with both the stock and bond markets fluctuating wildly on a daily basis. The good news is that it looks like U.S. manufacturing got a bit stronger entering Q2, as did consumer spending. So, Q2’s U.S. GDP will be stronger than Q1’s. The May employment report, too, was stronger than anticipated; more good U.S. news. Unfortunately, the rest of the world, especially Europe and …Read More

Get used to heightened market volatility

The sentiment surveys indicate that the economy continues to perform well. The underlying data say otherwise. People take their cue from the stock market when it comes to assessing economic health. And, as long as the stock market is near dizzying heights, the sentiment surveys will say the economy is doing well. The hard data  January’s data showed negative retail sales vs. December, negative real weekly income, negative aggregate hours …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