Economic Insights

President-elect Joe Biden wants to reverse the decades-long trend that has seen workers get an ever smaller piece of the economic pie.

The escalating coronavirus pandemic could reverse decades of gains in the fight against poverty, as U.S. government aid for the vulnerable dries up.

To the extent that stock prices reflect expectations of future value, investors don’t like the prospects for oil, and oil’s demise signals muted prospects for economic growth.

The institutional investor’s role in the effort to combat climate change is misplaced.

We expect the municipal bond market to return to a sense of normalcy in 2021.

After a difficult winter, we expect the global economy to rebound strongly next year. But structural headwinds remain. Will the post-pandemic bounce trigger a durable and broad-based global reflation?

FINRA has released new data for margin debt, now available through October. The latest debt level is up 0.8% month-over-month.

We have recently written a couple of posts about the “exuberance” that has invaded the market since the election. Such is often seen near short- to intermediate-term peaks in markets as investors go “all-in” without a net.

This morning the Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for November. The latest general business activity index came in at 12, down 7.8 from 19.8 in October. All figures are seasonally adjusted.

Today the National Association of Realtors released the October data for their Pending Home Sales Index. According to the National Association of Realtors®, "Pending home sales fell slightly in October."

The latest Chicago Purchasing Manager's Index, or the Chicago Business Barometer, fell to 58.2 in November from 61.1 in October, which is in expansion territory. Values above 50.0 indicate expanding manufacturing activity.

So far this year, shares of HIVE Blockchain Technologies have soared an incredible 715%, well past Ethereum’s gain of 273%. 2020 has been marked by healthy expansion in mining capacity, the most recent example being HIVE’s acquisition of additional access to low-cost green energy.

Recovery from COVID-19 has been a mix of successes and setbacks.

With the release of this morning's report on October Personal Incomes and Outlays, we can now take a closer look at "Real" Disposable Personal Income Per Capita. At two decimal places, the nominal -0.81% month-over-month change in disposable income is unchanged when we adjust for inflation. This is a decrease from last month's 0.70% nominal and 0.53% real increase last month. The year-over-year metrics are 5.72% nominal and 4.48% real.

Personal Income (excluding Transfer Receipts) in October rose 0.78% and is up 2.2% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) MoM was up 0.78%. The real number is up 1.0% year-over-year.

The November Final came in at 76.9, down 4.9 from the October Final. Investing.com had forecast 77.0. Since its beginning in 1978, consumer sentiment is 10.8 percent below the average reading (arithmetic mean) and 9.8 percent below the geometric mean.

This morning's release of the October New Home Sales from the Census Bureau came in at 999K, down 0.3% month-over-month from a revised 1M in September. The Investing.com forecast was for 970K.

The BEA's Personal Income and Outlays report for October was published this morning by the Bureau of Economic Analysis. The latest Headline PCE price index was unchanged month-over-month (MoM) and is up 1.18% year-over-year (YoY). Core PCE is below the Fed's 2% target rate.

Liquidity issues and other business risks could prompt a wave of defaults and restructurings, in turn creating fertile ground for opportunistic investing in distressed credit.

We are cautiously optimistic about economic growth over the next year, but over the longer term, disruptive factors will likely contribute to heightened volatility and lower returns across both fixed income and equity markets.

This morning's seasonally adjusted 778K new claims, up 30K from the previous week's revised figure, was worse than the Investing.com forecast of 730K.

The Second Estimate for Q3 GDP, to one decimal, came in at 33.1% (33.08% to two decimal places), a record increase from -31.4% (-31.38% to two decimal places) for the Q2 Third Estimate. Investing.com had a consensus of 33.2%.

The headline number of 96.1 was a decrease from the final reading of 101.4 for October. Today's number was below the Investing.com consensus of 98.0.

Fifth District manufacturing activity strengthened in November, according to the most recent survey from the Federal Reserve Bank of Richmond. The composite index fell to 15 in November from 29 in October but still indicates expansion.

With today's release of the September S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index saw a 1.27% increase month over month which is cut to 1.21% with inflation adjustment. The non-seasonally adjusted national index saw a 7% YoY increase.

The Federal Housing Finance Agency (FHFA) has released its U.S. House Price Index (HPI) for September. U.S. house prices were up 1.7 percent on a seasonally adjusted nominal basis from the previous month. Year-over-year the index is up 9.1% on a non-seasonally adjusted nominal basis. After adjusting for inflation and seasonality, the index is up 1.44% in September and up 7.95% year-over-year (seasonally adjusted).

The tide in the $20 trillion Treasury market appears to be turning in favor of the bulls for now, with expectations growing that the Federal Reserve will boost purchases of longer-maturity debt as soon as next month.

Amid historically low rates, the income solutions of yesterday are not going to cut it. Global X ETFs has recognized and reacted to this paradigm shift by developing alternative, higher-yielding strategies.

“I predict the bull market will continue next year,” says Jeremy Siegel. “Stocks are not overpriced.”

In a market ruled by historically low bond yields, income-seeking investors are being driven to products that carry risks, many of which are hard to identify or evaluate.

Who's in charge of fiscal policy? That's the real issue behind the recent dispute between Treasury Secretary Steve Mnuchin and Federal Reserve Chairman Jerome Powell regarding the Treasury's decision to end certain emergency lending facilities by December 31, 2020.

The Department of Energy's Energy Information Administration (EIA) monthly data on volume sales is several weeks old when it released. The latest numbers, through mid-September, are now available.

Value managers often use static point in time multiples such as Book to Price to identify attractive companies. P/B is a “cheapness” indicator rather than a measure of a company’s intrinsic value, as it does not include the essential components to value a company: profitability, growth, competition, and risk. On the other hand, growth managers focus on a companies ability to growth their business assuming it will lead to creating shareholder value.

Amid an environment of near-zero benchmark and T-bill yields, for a modest increase in risk, PIMCO's short-term strategies may offer higher levels of total return and income for stepping beyond the confines of money market fund strategies.

Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) increased to +0.83 in October from +0.32 in September. Three of the four broad categories of indicators used to construct the index made positive contributions in October, and three of the four categories increased from September. The index’s three-month moving average, CFNAI-MA3, fell to +0.75 in October from +1.37 in September.

Anne N. Mathias is a senior strategist for Vanguard and a member of the firm's Fixed Income Group, with a focus on global macroeconomics, interest rates, and foreign currency. I spoke with her about the outlook for the economy and the credit markets.

Gold “is a hedge on policymakers screwing up, and there has been a lot of screwing up in the last 20 years.”

A new normal is the norm. Changes are inevitable and therefore imaginable, even during this era of ever-growing technological breakthroughs such as cryptocurrencies, blockchain, robo-everything, 5G, EVs, AVs, AI, VR, AR, and IoT.1 We remember when ecosystem referred to a Costa Rican rain forest.

Today I’m going to blend a few thoughts about The Great Reset with some other historical analysis I recently discovered. It adds up to a disturbing outlook, even if (as seems likely, given the latest vaccine news) we’re past the pandemic by late next year. We’ll find different challenges on the other side.

The S&P 500 has started the week off high, falling slightly at EOD Wednesday and closed the week down 0.68% from yesterday. The Friday before Thanksgiving is showing the index is up 10.11% YTD and is 1.91% below its record close. 

Whether you’re celebrating in-person or virtually, we’re wishing you and your family a Happy Thanksgiving! Giving thanks may seem difficult to do in a year that’s resulted in the loss of so many lives, jobs, and businesses, but we believe this holiday is the perfect time to reflect on all we are grateful for.

In our view, inflation-fighting asset classes look considerably cheaper and offer higher long-term estimated returns than mainstream stocks and bonds.

This morning's release of the publicly available data from ECRI puts the WLI at 143.8, up 1.9 from the previous week. The WLIg is at 8.6, up from last week and the WLI YoY is at -2.70, also up from last week.

I updated Bill Bengen’s groundbreaking analysis to examine the impact of investment expenses on historical retirement outcomes.

Ten-year Treasury bond yields may rise as high as 1.6% in 2021, reflecting prospects for faster economic growth.

Sinology explores how U.S.–China relations can develop under President-elect Biden administration in three key phases.

The latest index came in at 11, down 2 from last month's 13, which indicates expansion in November. The future outlook remained at 21 this month. Here is a snapshot of the complete Kansas City Fed Manufacturing Survey.

The latest Conference Board Leading Economic Index (LEI) for October was up 0.7% from the September final figure of 107.5. Investing.com predicted a 0.7% increase.

This morning's release of the October Existing-Home Sales showed that sales rose to a seasonally adjusted annual rate of 6.85 million units from the previous month's revised 6.57 million. The Investing.com consensus was for 6.45 million. The latest number represents a 4.3% increase from the previous month.

With yields near zero, many investors may question the value of fixed income within a portfolio. Western Asset’s Head of Product Management, Doug Hulsey, joins our Head of Equities, Stephen Dover, to discuss fixed income investing with an active-management lens. He makes a case for the asset class for investors in light of market uncertainties and outlines where he sees opportunities today.

The latest Manufacturing Index came in at 26.3, down 6 from last month's 32.3. The 3-month moving average came in at 24.5, up from 21.5 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. The Six-Month Outlook came in at 44.3, down 18.4 from the previous month's 62.7.

The Northern Trust Economics team reviews the outlook for developed markets facing COVID-19.

The yield on the 10-year note ended November 18, 2020, at 0.88%, the 2-year note ended at 0.16%, and the 30-year at 1.62%.

The US elections have implications for emerging markets in the area of global trade relations in particular, but for investors, it’s important to look at countries and companies individually within the asset class, according to Portfolio Manager Andrew Ness. He joins our Head of Equities Stephen Dover to discuss how emerging markets are navigating today’s challenges—including the COVID-19 pandemic—and note they are home to some of the most innovative and resilient companies in the world.

He is not sure when it will happen, but David Rosenberg is confident investors will face another big correction in the stock market.

When the definitive story is written about U.S. financial markets during the coronavirus pandemic of 2020, expect America’s housing market to play a starring role.

The traditional “60/40” portfolio of stocks and bonds can be saved with a few modest tweaks.

The economic calendar remains less interesting than politics, market gyrations, and the coronavirus. Those will be the media topics. A bigger challenge is finding a way to identify what is important and to determine the causal relationships.

In coming years, US Congress and the Biden administration could implement spending programs and tax reforms at the national level that trickle down into state and local government policies too. Our Katie Klingensmith joined Muni Bond Team Research Director Jennifer Johnston to discuss the potential implications for the municipal bond market, against a backdrop of COVID-19.

Month-over-month nominal sales in October increased by 0.37%. Real Retail Sales, calculated with the seasonally adjusted Consumer Price Index, increased by 0.23%.

Today's report on Industrial Production for October shows a 1.08% increase month-over-month, which was slightly above the Investing.com consensus of 1.0%. The year-over-year change is -5.34%, up from last month's YoY decrease.

Abstract investment themes are much more than entertainment. They’re serious business and have roles to play in portfolios. I share my process for incorporating then into mine.

A multilateral framework is needed to reverse the effects of secular stagnation and should be the primary focus of President-elect Biden’s administration, according to Larry Summers.

Government legislation designed to limit executive compensation runs afoul of economists and academia who chose to base executive compensation on “performance.”

This short article investigates the rebalancing premium that investors may expect from risk-parity portfolios.

This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions at 6.3 was a decrease of 4.2 from the previous month's 10.5. The Investing.com forecast was for a reading of 13.5.

“The stock market is not the economy.” Such has been the “Siren’s Song” of investors over the last couple of years as valuation expansion has been the sole driver of the market’s performance. However, given that corporations derive their revenue from economic activity, the “Buffett Indicator” suggests investors may be walking into a trap.

Washington will likely focus on fiscal stimulus immediately – but given the realities of governing and the pandemic, economic recovery will take time.

Today we’ll talk about the political changes, what they mean for the economy, and then how the latest vaccine news may affect the outlook.

"Travel on all roads and streets changed by -8.6% (-23.4 billion vehicle miles) for September 2020 as compared with September 2019. Travel for the month is estimated to be 248.3 billion vehicle miles." The 12-month moving average was down 0.78% month-over-month and down 10.7% year-over-year. If we factor in population growth, the 12-month MA of the civilian population-adjusted data (age 16-and-over) was down 0.85% month-over-month and down 11.1% year-over-year.

Actual third-quarter earnings may be less important than what business leaders say about their expectations.

Election results (a divided Washington) and good news on a potential vaccine boosted share prices, although there were some concerns about surging COVID-19 cases (163,402 reported on November 12) and possible difficulties in distributing the vaccine.

The Franklin Templeton–Gallup Economics of Recovery Study has heralded some interesting results in regard to the attitudes and behavior of Americans in response to the ongoing pandemic—and what developments could change both.

According to conventional wisdom, US President-elect Biden will find himself immediately paralyzed because Republicans will follow the same obstructionist playbook they used to sabotage Barack Obama’s administration. But there are five new features of US political dynamics that this argument has overlooked.