Weak Employment Data, Savings Out of Bullets
Personal income fell -2.7% in August. Still, consumer spending rose 1.0% M/M. What Gives? The economy is still very much an employment story. While the official U3 unemployment rate fell to 7.9% from 8.4%, the underlying data was, simply put, “ugly!” “Excess” Savings Last week, I discussed the theory that the “excess” savings from the […]
The “Excess Savings” Hypothesis vs. Economic Deceleration
There is some speculation that because only a little more than half of the buildup in savings from the stimulus checks and enhanced unemployment benefits was spent through July, Q4 economic activity will continue to show recovery as the “savings” continues to be spent. Call this the “Excess Savings” Hypothesis. Unfortunately, the incoming data makes […]
The Recovery Stalls; Fed Pledges “Lower for Longer;” Equity Markets Pause
With the Fed pledging to keep rates low even when (or if) inflation rises above its 2% target, it is hard to see why long-term Treasury yields (and those of other quality issuers) won’t move toward yields of similar debt in the world’s other industrial economies (i.e., Europe and Japan). The economic lull is now […]
As the Economy Stagnates, Equity Markets Pivot
Market volatility has marred the last few equity sessions. The popular indexes all peaked on September 2nd, with the most closely watched S&P 500 down nearly -7% and the tech heavy Nasdaq nearly -10%. But, don’t be fooled by the indexes. Anyone with a diversified portfolio has likely had a significantly different experience in 2020. […]
The Real Story Of Employment Data
There were two separate events of economic significance the week ended September 5th. First, the financial markets displayed volatility that hasn’t been seen for several months. The S&P 500 began the week at 3,508, rose 2.5% to 3,587 on Wednesday, fell -3.7% to 3,455 on Thursday, and after falling to an intraday low of 3,374 […]
The Economy: On a Sugar High With 28 Million Unemployed
Last week, interest rates moved slightly lower, with the 10-year T-Note falling about 7 basis points from 0.71% to 0.64%, a retracement of 37% toward the 0.51% August 4 low. Like its brethren, the 30-year T-Bond fell 10 basis points from 1.45% to 1.35%, a 38% retracement to the 1.19% low (also August 4). […]