CPI and PCE: Two Measures of Inflation and Fed Policy
The BEA's Core Personal Consumption Expenditures Chain-type Price Index for October, released last week, shows that core inflation is below the Federal Reserve's 2% long-term target at 1.41%. The October Core Consumer Price Index release is higher at 1.61%. The Fed is on record as using Core PCE data as its primary inflation gauge.
Regression to Trend: Another Look at Long-Term Market Performance
Quick take: At the end of November the inflation-adjusted S&P 500 index price was 144% above its long-term trend, up from 135% the previous month.
About the only certainty in the stock market is that, over the long haul, over performance turns into underperformance and vice versa. Is there a pattern to this movement? Let's apply some simple regression analysis to the question.
Absolute Return Letter - December 2020
Zombies are firms that are neither dead or alive. They are in so much debt that virtually all their free cash is used to service their debt, and that is very damaging to GDP growth. This month, we explain why there are more and more zombies all over the world, and why they do immense damage to the global economy.
How Much Debt Is Too Much?
The new conventional wisdom in these unconventional times is that advanced-economy governments can take advantage of today's ultra-low interest rates to borrow and spend without limit in order to support the economy. But the fact is that there is always a limit, and it may come into view sooner than many realize.
Making Sense of Sky-High Stock Prices
Many have been puzzled that the world’s stock markets haven’t collapsed in the face of the COVID-19 pandemic and the economic downturn it has wrought. But with interest rates low and likely to stay there, equities will continue to look attractive, particularly when compared to bonds.
Weekly Gasoline Prices: WTIC Up 5.3%
As of November 30, the price of Regular and Premium were up two and one cents each, respectively, from the previous week. According to GasBuddy.com, Hawaii has the highest average price for Regular at $3.19 and Texas has the cheapest at $1.78. The WTIC end of day spot price closed at 45.34, up 5.3% from the last week.
November ISM Manufacturing Index: Continued Growth
This morning the Institute for Supply Management published its monthly Manufacturing Report for November. The latest headline Purchasing Managers Index (PMI) was 57.5, a decrease of 1.8 from 59.3 the previous month. Today's headline number was below the Investing.com forecast of 58.0 percent.
Markit Manufacturing Continues Improvement in November
The November US Manufacturing Purchasing Managers' Index conducted by Markit came in at 56.7, up 1.8 from the 53.4 final October figure. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
Moving Averages Update: November Up 10.75%
Valid until the market close on December 31, 2020.
The S&P 500 closed November with a monthly gain of 10.75% after a loss of 2.77% in October. At this point, after close on the last day of the month, four of five S&P 500 strategies are signaling "invested" — Vanguard Total Stock Market ETF (VTI), Vanguard FTSE All-World ex-US ETF (VEU), Vanguard REIT Index ETF (VNQ), and Invesco DB Commodity Index Tracking (DBC) — an increase from last month's triple"invested" signal.