Results 1–50 of 67 found.
"New Bubble" Talk, Premature
That was fast. A little over two years ago, we declared that housing had not only bottomed, but was about to start its first real growth spurt since the bubble (Housing At An Inflection Point 11/2/2011). While some agreed, others expressed polite disagreement or, in some cases, incredulity.
Dow 19,500, S&P 500 2,150
Last year was the best for equities since 1997. The Dow Jones Industrial Average rose 26.5%, the S&P 500 was up 29.6% and the Nasdaq was up 38.3%. Despite these outsized gains, and in spite of all the talk of a bubble, we still think stocks are cheap.
Plow Horse, Trotting
What a year 2013 has been. Remember how it started, with the media hyperventilating over the "fiscal cliff" deal and spending sequester? The vast majority of economists, pundits and politicians believe in Keynesian economics. So, its not surprising that higher tax rates and spending cuts sent them into an intellectual and theoretical funk.
A Dovish-Bullish Taper
They finally did it. At Chairman Bernankes next to last meeting, the Federal Reserve announced a modest tapering of quantitative easing, reducing its monthly purchases of Treasury securities and mortgage-backed securities by $5 billion each ($10 billion total) to $75 billion starting in January. As a result, the size of the Feds balance sheet will continue to rise, but slightly more slowly than before.
Pessimists Get Desperate
Payrolls keep growing. Economic data stays positive. The stock market makes new highs. Its been consistent for nearly five years. And so has the pessimism. In fact, the pouting pundits of pessimism get more determined each month, trying to prove that things are really bad out there.
Consumers Doing Fine
According to the National Retail Federation, Thursday to Sunday holiday sales dropped 3% versus last year. No doubt, this will wake up some dozing bears. And, we are sure that when we say its not as bad as you think, many will argue we are perma-bulls, naive, or downright stubborn. You can think what you want, but we dont believe sales are falling.
QE: Not That Big of a Deal
The most frequent question we get lately is "what happens to long-term interest rates when quantitative easing ends?" Many analysts argue that the Federal Reserve is buying and holding a huge share of Treasury debt and once QE ends other buyers will suddenly have to absorb more. This will cause interest rates to soar, bust the housing market, undermine stocks, and possibly cause a recession.
More #PlowHorse in Q3
Despite the shutdown, the sequester, talk of tapering, and meteors in the night sky, the US economy just keeps plowing along. Reported later this week, we expect Q3 real GDP grew right on trend at a 1.9% rate another, #PlowHorse report.
A Bit More Hawkish, All Things Considered
Todays statement from the Federal Reserve was almost a carbon copy of the last one in September. No changes to the pace of quantitative easing or interest rates, which is exactly as the consensus expected. The Fed made only minor changes to the text of the statement, making it slightly more hawkish in one spot and slightly more dovish in another.
Fear of Debt Spiral Misplaced
Now that things have settled down in Washington DC, politicians are focusing on a grand compromise to fix the budget. Without reform, growth in entitlements will eventually push federal spending back to levels last seen in World War II.
Smaller Government Won!
Well, New York City is not underwater, China did not sell bonds, oil did not stop flowing in the Bakken or Eagle Ford, the Cloud is still wherever it is, or was, the US stock market did not collapse, and the earth is still rotating on its axis. Democrats are still mad at Republicans, who are still mad at the Tea Party, who still fret about the path of fiscal policy.
No Sign of Economic Problems
With the federal government partially shut for the past couple of weeks, the normal steady stream of economic indicators has slowed to a trickle. Weve missed reports on employment, construction, retail sales, international trade, and inventories.
The Only Story in Town
Its strange times in the United States. The government is partially shut down and isnt releasing any statistics. Even John Muir wouldnt be allowed to hike in a national park. All the while, the President and the Treasury Secretary are predicting an economic calamity for the US (and maybe the globe) if the debt ceiling isnt raised. Yet, they refuse to negotiate to prevent that from happen.
Loose and Looser
Larry Summers took his name out of the hat and wont be considered for the top spot at the Federal Reserve. And while nothing is a slam dunk, it looks very much like current Vice Chair Janet Yellen is going to get the call from President Obama to step up and replace Bernanke.
Doesn't Government Lie?
Like a Plow Horse, the US economy keeps plodding along GDP and payrolls keep growing. This confounds many pessimistic, debt-focused, perma-bear investors, who fall back on the belief that anything good must simply be a lie.
The Bond Bear is Waking Up
Weve been bond bears for quite some time, and we still are. The good news is that the violent part of the bear market has passed. We expect a slower, but still painful and consistent, move higher in interest rates during the quarters ahead. The 30-year bull market in bonds is over.
Part-Timers and the Labor Market
Over the past few weeks we keep getting the same two questions about the labor market. Basically, investors want to know whether the labor market is really improving if so many of the jobs are going to part-timers and if the more expansive definition of the unemployment rate (the one that includes discouraged workers and part-timers who want to work full-time) is about double the regular unemployment rate.
A Bear Market Is Here: In Bonds!
While it certainly hasnt made the headlines that it should have, the bond market has been kicked in the teeth. After bottoming at 1.61% on May 1, the yield on the 10-year Treasury Note hit 2.84% on Friday, its highest level in two years the worst bear market move in bonds since the end of the 2008-09 financial panic.
More Plow Horse in Q2
Forecasting economic growth for the second quarter of the year is always precarious. The reason is that the initial report on the second quarter is when the government goes back and makes revisions to GDP for the past several years. This time around, its particularly iffy because the government for the very first time is going to start accounting in GDP for the value of R&D spending by companies.
Deficit? What Deficit?
Hope that title caught your attention, but, you should know, we are only half joking. In June, the federal government recorded a $116.5 billion surplus! Yep, you read that right surplus! the largest surplus for any June ever. Government spending fell to $170 billion for June, 47% below last year.
Obamacare and Stocks
For much of the past four years, we have felt like psychologists who constantly must help hypochondriacs over their fear of one thing after another. There is no reason to remind everyone of the list its been endless, but the stock market and the economy have moved consistently higher despite these fears.
Watching Nominal GDP
One of the most important foundations of modern macroeconomics is something called the equation of exchange. It dates all the way back to John Stuart Mill but, in the past couple of generations, was popularized by free-market icon Milton Friedman.
Fed Slightly More Optimistic
The Federal Reserve made only slight changes to the text of its statement, but those it did make signal slightly more optimism. It said labor market conditions show further improvement, rather than some improvement and sees diminished downside risks for the broader economy.
Is QE Really THAT Important?
The punditry has decided that anything good happening is actually bad. It is all just a sugar high based on Quantitative Easing and government stimulus and that talk of winding down or tapering QE is negative. So the latest fear is that any good data on growth is actually bad, because it means the Fed will wind down QE. They say the economy cant possibly grow on its own without support from the Fed and Ben Bernanke.
Fed Doesn't Budge
It would be hard to find a policy statement from the Federal Reserve with as few changes as the one issued today. The Fed made no changes to monetary policy and only minor changes to the language of its statement. Even the lone dissent, from Kansas City Fed Bank President Esther George, was a carbon copy from the last statement in March.
Fed Still Inching Toward Optimism
The Federal Reserve made no changes to monetary policy today and only some small changes to the language of its statement. Once again, the Feds comments were slightly more optimistic about the economy than they were after the prior meeting.
The Plow Horse is Trotting
In October 2012, we raised our recession odds from 10% to 25%. We saw an increase in uncertainty and fear over the election and the fiscal cliff as having the potential to cause a drop in velocity. Panics (falling velocity) are rare. As a result, our base case (75% odds) was for a 2.5% to 3% increase in real GDP for 2013. Real GDP increased just 0.1% in Q4, but now it appears the Plow Horse is starting to trot a little.
There the Bears Go Again
The S&P 500 is up 6% since the start of the year and 12% from a year ago. On cue, the bears have started to claim this run-up in stocks is just plain crazy, based on unreasonable euphoria or "it's just technical." It cant possibly last because "the fundamentals are bad."
Ignore the GDP Headline
Next week, Fourth Quarter Real GDP will be released. Our forecast of 0.9% annualized growth, if correct, will encourage the pessimists to continue fretting about the economy in the year ahead. But we will ignore that dour response. Beneath the surface of the report will be evidence that the plow horse economy is picking up some steam.
Greedy Innkeeper or Generous Capitalist?
Over the centuries, people have come to believe that because Jesus was born in a stable, and not in a hotel room, Mary and Joseph must have been mistreated by a greedy innkeeper. This narrative persists even though the Bible records no complaints at the time and there was apparently no charge for the use of the stable. It may be that the stable was the only place available. Bethlehem, like other small towns, was overflowing with people who were forced to return to their ancestral homes for the census - ordered by the Romans for the purpose of levying a tax.
Fed Talks Louder, To Little Avail
When someone doesn't speak your language, yet you must communicate, funny things can happen. At first, most just talk normally, hoping the message somehow gets through with a hand gesture or two. If that doesn't work, some people start talking really slowly. And if all else fails, how about saying it REALLY LOUDLY, and emphatically, to finally get our point across. That's where the Federal Reserve is today. In its own collective mind, it has a very important message to convey: that monetary policy is going to be as expansionary as necessary to get this economic recovery off the ground.
Results 1–50 of 67 found.