The Asset-Location Decision and Related Topics
The advisory industry is unaware that the traditional asset-location rules (i.e, put bonds in tax-deferred accounts and stocks in taxable accounts) don’t work in our low interest rate environment. The exact opposite is appropriate for most retirees.
Global GDP Themes and Forecasts
The COVID-19 pandemic has tipped the global economy into what appears to be the deepest recession in decades. No region has escaped the impact, but some have fared better than others. Read on for a visual snapshot of what 2020 growth may look like across the globe.
The Compassion Paradox
As the COVID-19 crisis and the challenge of the economic recovery process continue, it’s critical to understand how to care about our clients without caring too much. Don’t risk your own well-being and become unable to help those who need you.
Europe’s Non-Hamiltonian Muddle
Although any joint EU action should be welcomed, the current COVID-19 response plan hardly amounts to a radical break with business as usual. Far from a long-awaited embrace of debt mutualization, the newly proposed European recovery fund risks being both politically unpalatable and economically inadequate.
ISM Manufacturing Index: Up 1.6 in May
This morning the Institute for Supply Management published its monthly Manufacturing Report for May. The latest headline Purchasing Managers Index (PMI) was 43.1, an increase of 1.6 from 41.5 the previous month. Today's headline number was above the Investing.com forecast of 43.0 percent.
The Battle at Resistance Rages On; Will the Shorts Capitulate on a Break?
The narrative moves on with investors focused on economic re-openings and the path to a COVID-19 vaccine. We have written at length about how while many think that the market is disconnected from the economy, we do not think that is the case.
Markit Manufacturing: "Ongoing COVID-19 impact drags output down further in May"
The May US Manufacturing Purchasing Managers' Index conducted by Markit came in at 39.8, up 3.7 from the 36.1 final April figure. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
SPONSORED: Consensus Expectations May Be Overestimating the Recovery Trajectory
The continuing threat posed by the coronavirus, necessitating ongoing social distancing, means it is hard to gauge how long the current economic disruption might last. Consequently, we believe consensus expectations may be overestimating the trajectory for improvement and that a return to a “normalized” environment may take longer than anticipated.
Wheels Up! Economic Recovery Could Be Faster Than Expected
As troubling as these developments are, it’s important not to lose sight of the good that appears to be taking place right now. Investors that focus only on the negative tend to miss out on the opportunities.
Economics in Orbit
Today I’ll share some more insights from the Virtual Strategic Investment Conference. Frankly, I could go on for weeks like this, but this is going to be my last letter on the SIC. We had so much expertise and wisdom beamed in from all over the world. I’ll give you a few more highlights and then offer my own personal takeaway.
An Inside Look at the GDP Q1 Second Estimate
The accompanying chart is a way to visualize real GDP change since 2007 and uses stacked column chart to segment the four major components of GDP with a dashed line overlay to show the sum of the four, which is real GDP itself. Here is the latest overview from the Bureau of Labor Statistics.