Andrew Milliner, Global Bonds Portfolio Manager at Janus Henderson Investors, has put together the below comments in reaction to current U.S. inflation figures and what it means for the economy and markets moving forward. Please let me know if you have any questions or wish to further discuss with Andrew.
The Northern Trust Economics team shares its outlook for the U.S. economy.
Municipal bonds have held up well this year, despite rising interest rates and inflation. Munis’ long-term outlook is strong too. What accounts for their outperformance in today’s environment?
The latest full set UIG for April is 2.68% while the prices-only measure is 2.87%. Current Headline CPI is now 4.16% and Core CPI is 2.96%.
ETF traders are increasingly wary of the corporate bond market as inflation anxiety boils over.
This morning's release of the April Producer Price Index (PPI) for Final Demand was at 0.6% month-over-month seasonally adjusted, down from a 1.0% increase last month. It is at 6.2% year-over-year, up from 4.2% last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) came in at 0.7% MoM, unchanged from the previous month and is up 4.1% YoY NSA. Investing.com MoM consensus forecasts were for 0.3% headline and 0.4% core.
This morning's seasonally adjusted 473K new claims, down 25K from the previous week's upwardly revised figure, was better than the Investing.com forecast of 490K.
Cathie Wood may be the most polarizing and controversial figure in finance. Her acolytes believe her vision will make them rich. Her detractors credit her sales skills but question her investing acumen.
The 20th century Baby Boom was one of the most powerful demographic events in the history of the United States. We've created a series of charts to show seven age cohorts of the employed population from 1948 to the present.
The Consumer Price Index for Urban Consumers (CPI-U) released this morning puts the year-over-year inflation rate at 4.16%. It is abovethe 3.76% average since the end of the Second World War and above its 10-year moving average, now at 1.73%.
The world’s largest SPAC – Pershing Square’s “tontine” – is “deeply engaged” in a transaction that could close in the next few weeks, according to Bill Ackman.
The switch on the U.S. economy is readying to come fully “on,” more than a year after the global pandemic forced abrupt closures around the world and across industries.
Widespread lockdowns have resulted in record output declines and soaring debt across the euro area. But the political response to the COVID-19 crisis may be positive for the European integration project—and for euro-area bond markets.
Here is a table showing the annualized change in Headline and Core CPI, not seasonally adjusted, for each of the past six months. Also included are the eight components of Headline CPI and a separate entry for Energy, which is a collection of sub-indexes in Housing and Transportation. We can make some inferences about how inflation is impacting our personal expenses depending on our relative exposure to the individual components.
Let's do some analysis of the Consumer Price Index, the best-known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U.
We've updated this series to include the April release of the Consumer Price Index as the deflator and the monthly employment update. The latest hypothetical real (inflation-adjusted) annual earnings are at $43,774, down 5.7% from 45-plus years ago.
The Bureau of Labor Statistics released the April Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 4.16%, up from 2.62% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 2.96%, up from 1.65% the previous month and above the Fed's 2% PCE target.
Note: This commentary has been updated with the latest numbers from last Friday's Employment Report. Consider: Today nearly one in three of the 65-69 cohort and one in five of the 70-74 cohort are in the labor force.
We've updated our monthly workforce analysis to include last Friday's Employment Report for April. The unemployment rate inched up to 6.1%, and the number of new nonfarm jobs (a relatively volatile number subject to extensive revisions) came in at 266K.
A wealth tax “crosses the line and is unnecessary,” according to Ray Dalio.
Global indicators continue to signal a sharp business recovery from last year’s COVID-19 pandemic lows. While inflation expectations are increasing as a result, business improvements offer multi-asset investors good reasons to remain tilted to equities for the next stage of the recovery.
To say that we were surprised by some of the discussion at the Berkshire Hathaway Annual Meeting would be an understatement. The conversation Warren Buffett and Charlie Munger leaned into on inflation was possibly the most interesting. Warren and Charlie gave large credit to Larry Summers for his willingness to stand alone on the effects of today’s fiscal and monetary policy on prices. We thought this was an ideal time review Buffett and Munger’s discussion and see what conclusions we could draw.
Markets are vulnerable to “significant declines” should risk appetites falter, the Federal Reserve has warned. At the moment, there are very few signs of that happening.
Tracy Nolte talks AAM’s Outlook for Inflation, Fixed Income Market’s Outlook for Inflation, and Managing the Current Rate Environment.
One of the best economic debates that's happening right now isn't between Republicans and Democrats or liberals versus conservatives, it's between policymakers who want to go full steam ahead with as much fiscal and monetary "stimulus" as possible and center-left economists who worry about the economic effects of over-stimulating the economy.
Labor markets are changing course. When will the Fed do the same? India's second wave will disrupt activity elsewhere.
The Labor Force Participation Rate (LFPR) is a simple computation: You take the Civilian Labor Force (people age 16 and over employed or seeking employment) and divide it by the Civilian Noninstitutional Population (those 16 and over not in the military and or committed to an institution).
Today, we find ourselves with particularly high confidence in the likelihood of three scenarios to which we believe all investors should be paying close attention. First, we anticipate the current market euphoria will likely last through the summer.
The latest JOLTS report (Job Openings and Labor Turnover Summary), with data through March, is now available.
As of May 10, the price of Regular and Premium was up seven cents each from the previous week. According to GasBuddy.com, California has the highest average price for Regular at $4.09 and Mississippi has the cheapest at $2.62. The WTIC end of day spot price closed at 64.92, up 0.7% from last week.
The headline number for April came in at 98.2, up 1.6 from the previous month. The index is at the 50th percentile in this series.
The strong economic recovery will not be interrupted by inflation or a credit crunch, according to Ed Yardeni, and the S&P 500 will soon reach 4,500.
Whether your planning approach involves three, five or seven pillars, it is likely you are missing the top financial concern for Americans: health care.
Let's take a closer look at Friday's employment report numbers on Full and Part-Time Employment.
At present, multiple jobholders account for 4.6 percent of civilian employment. The survey captures data for four subcategories of the multi-job workforce, the current relative sizes of which we've illustrated in a pie chart.
The latest monthly employment report showed a gain of 266K nonfarm jobs, which consists of a gain of 282K service-providing jobs and a loss of 16K goods-producing jobs.
What does the ratio of unemployment claims tell us about where we are in the business cycle and recession risk?
Markets are pricing in a liftoff from near-zero policy rates as early as next year, even though the Fed through its new framework has committed to stay behind the curve on inflation. We caution against extrapolating too much from strong near-term activity data amid a powerful restart. We see a high bar for the Fed to change its policy stance and believe this may be underappreciated by markets.
Today the US employment report for April was released and it took the markets by surprise. Estimates were for net job gains of 1 million. Instead, the US economy added 218K private sector jobs. This compares to 708K private sector jobs in March.
It is a particularly good time to invest in the commodities markets.
We are about to see “non-transitory inflation,” according to Bianco. His words were chosen carefully to oppose Fed Chair Jay Powell’s statement on April 28 that the U.S. would face only “transitory” inflation.
One of my all-time favorite quotes comes from Winston Churchill, who was just as witty as he was a great leader: “We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
I've developed this kind of duality. It's hard to think of the next 20 years or indeed the last 20 years without being very optimistic about the future of humanity.
This commentary has been updated to include this morning's release of Nonfarm Employment. April's 266K increase in total nonfarm payrolls had revisions that resulted in 78K fewer jobs than previously reported. ("Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.") The Investing.com consensus was for 978K jobs gained and the unemployment rate to fall to 5.8%.
The markets continue their upward trend, supported by accommodative fiscal policy from the Federal Reserve, strong gross domestic product (GDP) numbers and solid earnings reports.
Economic and earnings data are in boom territory, with more momentum likely near-term.
Markets have massively recovered from panic-driven lows last spring, and investors are now rightly contemplating if we have come too far too fast.
This morning's release of the publicly available data from ECRI puts the WLI at 158.7, up 1.8 from the previous week's revised figure and an all-time high. The WLIg is at 24.8, up fractionally from last week and the WLI YoY is at 37.14% down from last week.
As the U.S. job market comes roaring back, there’s a growing debate about whether there are enough workers to power faster economic growth.
The highest-flying tech names are getting no help from one of the sector’s usual lifelines amid a fierce selloff that’s showing few signs of slowing.
This morning's employment report for April showed a 266K increase in total nonfarm payrolls, which was well below the Investing.com forecast of 978K jobs added.
The consensus is that U.S. equities will deliver strong performance as the economy recovers, and that higher inflation will drive rising interest rates. All of that is wrong, according to David Rosenberg.
Here's an interesting set of charts that will especially resonate with those of us who follow economic and market cycles. Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation? The purchasing power of your investment has increased to $20,554 for an annualized real return of 14.5%.
Take a look at real (inflation-adjusted) charts of the S&P 500, Dow 30, and Nasdaq Composite since 2000. We've updated this through the April 30, 2020 close
While gold is valued for a variety of reasons, the uncertainty and economic fallout tied to the COVID-19 pandemic saw investment drive the price of the yellow metal to record highs in 2020.
It was ever so tempting to devote today’s letter to a discussion of President Biden’s latest massive government spending, which he proposed Wednesday night in his “First Hundred Days” speech before Congress.
Inflation is likely to rise in 2021—but will the rise be sustained? That seems to be the million-dollar question lately.
Here is a summary of the four market valuation indicators we update on a monthly basis.
Our monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations on investment returns.
Just over a year since the COVID-19 virus began spreading around the globe and significant portions of our economy shut down, today the U.S. is solidly on the road to recovery.
The U.S. Treasury more than quadrupled its borrowing estimate for the quarter through June, and expects to need some $1.3 trillion over the second half of the fiscal year to help pay for a raft of fresh pandemic-relief spending.
Overflowing cargo ships, snarled production lines, copper above $10,000 and a start to earnings season that’s smashing records.
It came as a shock on Wall Street the last few days, how much better the world’s biggest companies were doing than anyone thought. Also unexpected was what the market made of those results. Despite big earnings beats, the share-price performance of the vaunted Faang cohort has been mediocre.
Treasury Secretary Janet Yellen said Tuesday afternoon she wasn’t forecasting interest-rate increases to rein in any inflation spurred by President Joe Biden’s proposed spending, clarifying comments that ruffled financial markets a few hours earlier.
The Institute of Supply Management (ISM) has now released the April Services Purchasing Managers' Index (PMI). The headline Composite Index is at percent 62.7, down 1.0 from 63.7 last month (an all-time high). Today's number came in below the Investing.com forecast of 64.3 percent.
Here is the latest update of a popular market valuation method using the most recent Standard & Poor's "as reported" earnings and earnings estimates and the index monthly average of daily closes for the past month.
The April US Services Purchasing Managers' Index conducted by Markit came in at 64.7 percent, up 5.0 from the final March estimate of 59.7.
Momentum in China’s property market remains strong so far in 2021, driven by healthy demand for housing.
This morning we have the ADP April estimate of 742K nonfarm private employment jobs gained, an increase over the ADP revised March figure of 565K.
The Fed is under the misconception that it controls events, according to James Grant. It is overconfident in its belief it can accurately calibrate and attain a 2% inflation target.
As of April 30, the 10-year note was 113 basis points above its historic closing low of 0.52%, reached on August 4.
Addressing within-country inequality may be the political imperative of the moment.
Quick take: At the end of March the inflation-adjusted S&P 500 index price was 170% above its long-term trend, up from 158% above 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.
Was the March 2009 low the end of a secular bear market and the beginning of a secular bull?
There’s an old bit of advice that one shouldn’t count one’s chickens before they’re hatched.
One of the interesting aspects of “bull markets” is the further they go, the lower forward returns fall.
How to structure your portfolio when interest rates are rising.
We look at the myriad of liquidity measures and what the draining from gains does to asset prices and fiscal and monetary responses.
On April 20, we hosted our first ever virtual Market Outlook Summit. Here is a recap of each session with a link to watch the replay.
Advisor Perspectives has announced its Venerated Voices™ awards for commentaries published in Q1 2021.
The Berkshire Hathaway Annual Meeting was a mixture of caution, wisdom and honesty.
Quick take: Based on the April S&P 500 average of daily closes, the Crestmont P/E is 179% above its arithmetic mean and at the 100th percentile of this fourteen-plus-decade monthly metric.
"Buy American:" easier said than done. Sports leagues are still struggling, and tax evasion is costly.
Supply chain disruptions may be a near-term challenge, but base effects will slow inflation next year.
This morning the Institute for Supply Management published its monthly Manufacturing Report for April. The latest headline Purchasing Managers Index (PMI) was 60.7, a decrease of 4.0 from 64.7 the previous month and in expansion territory. Today's headline number was below the Investing.com forecast of 65.0 percent.
The April US Manufacturing Purchasing Managers' Index conducted by Markit came in at 60.5, up 1.4 from the 59.1 final March figure. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
Valid until the market close on May 310 2021.
The S&P 500 closed April with a monthly gain of 6% after a gain of 4.24% in March. 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) — unchanged from last month's quadruple "invested" signal.
Chief Economist Scott Brown discusses the latest market data.
We believe Asia is the core of growth and innovation within emerging markets, and companies domiciled in Asia comprise over 75% of the benchmark universe.
There has been much commentary suggesting bonds have gotten overvalued due to historically low rates.
Economic Insights
US Inflation Figures
Andrew Milliner, Global Bonds Portfolio Manager at Janus Henderson Investors, has put together the below comments in reaction to current U.S. inflation figures and what it means for the economy and markets moving forward. Please let me know if you have any questions or wish to further discuss with Andrew.
Taking Flight
The Northern Trust Economics team shares its outlook for the U.S. economy.
Why Munis Should Hold Their Shine Amid Higher Rates
Municipal bonds have held up well this year, despite rising interest rates and inflation. Munis’ long-term outlook is strong too. What accounts for their outperformance in today’s environment?
Underlying Inflation Gauge: April Update
The latest full set UIG for April is 2.68% while the prices-only measure is 2.87%. Current Headline CPI is now 4.16% and Core CPI is 2.96%.
Biggest Credit ETF Sees Shorts Soar
ETF traders are increasingly wary of the corporate bond market as inflation anxiety boils over.
April Producer Price Index: Core Final Demand Up 0.7% MoM
This morning's release of the April Producer Price Index (PPI) for Final Demand was at 0.6% month-over-month seasonally adjusted, down from a 1.0% increase last month. It is at 6.2% year-over-year, up from 4.2% last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) came in at 0.7% MoM, unchanged from the previous month and is up 4.1% YoY NSA. Investing.com MoM consensus forecasts were for 0.3% headline and 0.4% core.
Weekly Unemployment Claims: Down 25K from Last Week
This morning's seasonally adjusted 473K new claims, down 25K from the previous week's upwardly revised figure, was better than the Investing.com forecast of 490K.
Cathie Wood and Ark – Hype or Substance?
Cathie Wood may be the most polarizing and controversial figure in finance. Her acolytes believe her vision will make them rich. Her detractors credit her sales skills but question her investing acumen.
Baby Boomer Employment - April 2021
The 20th century Baby Boom was one of the most powerful demographic events in the history of the United States. We've created a series of charts to show seven age cohorts of the employed population from 1948 to the present.
Long-Term Look at the CPI
The Consumer Price Index for Urban Consumers (CPI-U) released this morning puts the year-over-year inflation rate at 4.16%. It is abovethe 3.76% average since the end of the Second World War and above its 10-year moving average, now at 1.73%.
Bill Ackman’s SPAC is “Deeply Engaged” in a Transaction
The world’s largest SPAC – Pershing Square’s “tontine” – is “deeply engaged” in a transaction that could close in the next few weeks, according to Bill Ackman.
One Hot Economy, Two Burning Questions on Value and Income
The switch on the U.S. economy is readying to come fully “on,” more than a year after the global pandemic forced abrupt closures around the world and across industries.
Will COVID-19 Accelerate Euro-Area Integration?
Widespread lockdowns have resulted in record output declines and soaring debt across the euro area. But the political response to the COVID-19 crisis may be positive for the European integration project—and for euro-area bond markets.
Inflation: The Components
Here is a table showing the annualized change in Headline and Core CPI, not seasonally adjusted, for each of the past six months. Also included are the eight components of Headline CPI and a separate entry for Energy, which is a collection of sub-indexes in Housing and Transportation. We can make some inferences about how inflation is impacting our personal expenses depending on our relative exposure to the individual components.
Components of the CPI: April 2021
Let's do some analysis of the Consumer Price Index, the best-known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U.
Middle-Class Wages in April 2021
We've updated this series to include the April release of the Consumer Price Index as the deflator and the monthly employment update. The latest hypothetical real (inflation-adjusted) annual earnings are at $43,774, down 5.7% from 45-plus years ago.
Consumer Price Index: April Headline at 4.16%, Largest Increase Since 9/2008
The Bureau of Labor Statistics released the April Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 4.16%, up from 2.62% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 2.96%, up from 1.65% the previous month and above the Fed's 2% PCE target.
Demographic Trends for the 50-and-Older Work Force
Note: This commentary has been updated with the latest numbers from last Friday's Employment Report. Consider: Today nearly one in three of the 65-69 cohort and one in five of the 70-74 cohort are in the labor force.
U.S. Workforce: April 2021 Update
We've updated our monthly workforce analysis to include last Friday's Employment Report for April. The unemployment rate inched up to 6.1%, and the number of new nonfarm jobs (a relatively volatile number subject to extensive revisions) came in at 266K.
Ray Dalio – A Wealth Tax “Crosses the Line”
A wealth tax “crosses the line and is unnecessary,” according to Ray Dalio.
Back to Business: Spending Surge Signals Demand
Global indicators continue to signal a sharp business recovery from last year’s COVID-19 pandemic lows. While inflation expectations are increasing as a result, business improvements offer multi-asset investors good reasons to remain tilted to equities for the next stage of the recovery.
Inflation: It’s Just the Start
To say that we were surprised by some of the discussion at the Berkshire Hathaway Annual Meeting would be an understatement. The conversation Warren Buffett and Charlie Munger leaned into on inflation was possibly the most interesting. Warren and Charlie gave large credit to Larry Summers for his willingness to stand alone on the effects of today’s fiscal and monetary policy on prices. We thought this was an ideal time review Buffett and Munger’s discussion and see what conclusions we could draw.
Reflation, Inflation, Deflation: Stocks Can Live With Everything
Markets are vulnerable to “significant declines” should risk appetites falter, the Federal Reserve has warned. At the moment, there are very few signs of that happening.
A Jumpy Market Waiting for The Fed to Move
Tracy Nolte talks AAM’s Outlook for Inflation, Fixed Income Market’s Outlook for Inflation, and Managing the Current Rate Environment.
Biden and Powell Versus Summers and Dudley
One of the best economic debates that's happening right now isn't between Republicans and Democrats or liberals versus conservatives, it's between policymakers who want to go full steam ahead with as much fiscal and monetary "stimulus" as possible and center-left economists who worry about the economic effects of over-stimulating the economy.
Fed's Patience Tested, Slow Labor Markets, India's COVID Crisis
Labor markets are changing course. When will the Fed do the same? India's second wave will disrupt activity elsewhere.
Long-Term Trends in Employment by Age Group
The Labor Force Participation Rate (LFPR) is a simple computation: You take the Civilian Labor Force (people age 16 and over employed or seeking employment) and divide it by the Civilian Noninstitutional Population (those 16 and over not in the military and or committed to an institution).
Three Fixed Income Predictions for the Roaring 2020’s
Today, we find ourselves with particularly high confidence in the likelihood of three scenarios to which we believe all investors should be paying close attention. First, we anticipate the current market euphoria will likely last through the summer.
Job Openings & Labor Turnover: March 2020 Update
The latest JOLTS report (Job Openings and Labor Turnover Summary), with data through March, is now available.
Weekly Gasoline Prices: Regular and Premium Up 7 Cents
As of May 10, the price of Regular and Premium was up seven cents each from the previous week. According to GasBuddy.com, California has the highest average price for Regular at $4.09 and Mississippi has the cheapest at $2.62. The WTIC end of day spot price closed at 64.92, up 0.7% from last week.
NFIB Small Business Survey: "Optimism Up, But Job Openings Remain at Record Highs"
The headline number for April came in at 98.2, up 1.6 from the previous month. The index is at the 50th percentile in this series.
Ed Yardeni – The S&P is Going to 4,500
The strong economic recovery will not be interrupted by inflation or a credit crunch, according to Ed Yardeni, and the S&P 500 will soon reach 4,500.
Positioning Health Care as Part of Your Service Offering
Whether your planning approach involves three, five or seven pillars, it is likely you are missing the top financial concern for Americans: health care.
Full-time and Part-time Employment: A Deeper Look
Let's take a closer look at Friday's employment report numbers on Full and Part-Time Employment.
Multiple Jobholders are 4.6% of All Employed
At present, multiple jobholders account for 4.6 percent of civilian employment. The survey captures data for four subcategories of the multi-job workforce, the current relative sizes of which we've illustrated in a pie chart.
April Employment: Services Vs. Goods Producing Jobs
The latest monthly employment report showed a gain of 266K nonfarm jobs, which consists of a gain of 282K service-providing jobs and a loss of 16K goods-producing jobs.
The Civilian Labor Force, Unemployment Claims and the Business Cycle
What does the ratio of unemployment claims tell us about where we are in the business cycle and recession risk?
Mind the (rate expectation) gap
Markets are pricing in a liftoff from near-zero policy rates as early as next year, even though the Fed through its new framework has committed to stay behind the curve on inflation. We caution against extrapolating too much from strong near-term activity data amid a powerful restart. We see a high bar for the Fed to change its policy stance and believe this may be underappreciated by markets.
Breaking Down the Employment Report and the Market’s Reaction
Today the US employment report for April was released and it took the markets by surprise. Estimates were for net job gains of 1 million. Instead, the US economy added 218K private sector jobs. This compares to 708K private sector jobs in March.
The Recovery will be Positive for Commodities
It is a particularly good time to invest in the commodities markets.
Jim Bianco – We Will Face “Non-Transitory” Inflation
We are about to see “non-transitory inflation,” according to Bianco. His words were chosen carefully to oppose Fed Chair Jay Powell’s statement on April 28 that the U.S. would face only “transitory” inflation.
No Country Has Ever Taxed Itself into Prosperity
One of my all-time favorite quotes comes from Winston Churchill, who was just as witty as he was a great leader: “We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
This Kind of Duality
I've developed this kind of duality. It's hard to think of the next 20 years or indeed the last 20 years without being very optimistic about the future of humanity.
The Big Four Economic Indicators: April Employment
This commentary has been updated to include this morning's release of Nonfarm Employment. April's 266K increase in total nonfarm payrolls had revisions that resulted in 78K fewer jobs than previously reported. ("Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.") The Investing.com consensus was for 978K jobs gained and the unemployment rate to fall to 5.8%.
Strong Earnings and Stimulus Push Stocks Higher
The markets continue their upward trend, supported by accommodative fiscal policy from the Federal Reserve, strong gross domestic product (GDP) numbers and solid earnings reports.
Boom Boom Pow: Have Stocks Already Priced in Economic Boom?
Economic and earnings data are in boom territory, with more momentum likely near-term.
Don’t Underestimate the U.S. Consumer
Markets have massively recovered from panic-driven lows last spring, and investors are now rightly contemplating if we have come too far too fast.
ECRI Weekly Leading Index Update
This morning's release of the publicly available data from ECRI puts the WLI at 158.7, up 1.8 from the previous week's revised figure and an all-time high. The WLIg is at 24.8, up fractionally from last week and the WLI YoY is at 37.14% down from last week.
‘Job Paradox’ Baffles Economists as U.S. Employers See Shortage
As the U.S. job market comes roaring back, there’s a growing debate about whether there are enough workers to power faster economic growth.
Ark Slammed Again as Riskiest Tech Bets Blow Past Lifelines
The highest-flying tech names are getting no help from one of the sector’s usual lifelines amid a fierce selloff that’s showing few signs of slowing.
April Jobs Report: 266K New Jobs, Unemployment Rate at 6.1%
This morning's employment report for April showed a 266K increase in total nonfarm payrolls, which was well below the Investing.com forecast of 978K jobs added.
David Rosenberg – The Consensus is Wrong about Stocks, Bonds and Inflation
The consensus is that U.S. equities will deliver strong performance as the economy recovers, and that higher inflation will drive rising interest rates. All of that is wrong, according to David Rosenberg.
The Latest Look at the Total Return Roller Coaster
Here's an interesting set of charts that will especially resonate with those of us who follow economic and market cycles. Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation? The purchasing power of your investment has increased to $20,554 for an annualized real return of 14.5%.
The S&P 500, Dow and Nasdaq Since Their 2000 Highs
Take a look at real (inflation-adjusted) charts of the S&P 500, Dow 30, and Nasdaq Composite since 2000. We've updated this through the April 30, 2020 close
Reasons We Remain Bullish on Gold
While gold is valued for a variety of reasons, the uncertainty and economic fallout tied to the COVID-19 pandemic saw investment drive the price of the yellow metal to record highs in 2020.
When Will Powell’s Fed Have To Blink On Policy?
It was ever so tempting to devote today’s letter to a discussion of President Biden’s latest massive government spending, which he proposed Wednesday night in his “First Hundred Days” speech before Congress.
Rising Inflation: What It Means for TIPS and Other Investments
Inflation is likely to rise in 2021—but will the rise be sustained? That seems to be the million-dollar question lately.
Is the Market Still Overvalued?
Here is a summary of the four market valuation indicators we update on a monthly basis.
April 2020: Market Valuation, Inflation and Treasury Yields
Our monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations on investment returns.
Q2 Equity Outlook: Equities Continue on Recovery Rally
Just over a year since the COVID-19 virus began spreading around the globe and significant portions of our economy shut down, today the U.S. is solidly on the road to recovery.
Treasury Quadruples Borrowing Estimates to Pay for Stimulus
The U.S. Treasury more than quadrupled its borrowing estimate for the quarter through June, and expects to need some $1.3 trillion over the second half of the fiscal year to help pay for a raft of fresh pandemic-relief spending.
Inflation Haunts Stock Traders in Blockbuster Earnings Season
Overflowing cargo ships, snarled production lines, copper above $10,000 and a start to earnings season that’s smashing records.
Chasing Red-Hot Profit Growth Is a Recipe for Stock-Market Pain
It came as a shock on Wall Street the last few days, how much better the world’s biggest companies were doing than anyone thought. Also unexpected was what the market made of those results. Despite big earnings beats, the share-price performance of the vaunted Faang cohort has been mediocre.
Yellen Clarifies Inflation Remark, Sees No Need for Fed to Hike
Treasury Secretary Janet Yellen said Tuesday afternoon she wasn’t forecasting interest-rate increases to rein in any inflation spurred by President Joe Biden’s proposed spending, clarifying comments that ruffled financial markets a few hours earlier.
ISM Services: 17 Industries Reported Growth in April
The Institute of Supply Management (ISM) has now released the April Services Purchasing Managers' Index (PMI). The headline Composite Index is at percent 62.7, down 1.0 from 63.7 last month (an all-time high). Today's number came in below the Investing.com forecast of 64.3 percent.
Is the Stock Market Cheap?
Here is the latest update of a popular market valuation method using the most recent Standard & Poor's "as reported" earnings and earnings estimates and the index monthly average of daily closes for the past month.
March Markit Services PMI: "Business activity expands at fastest pace on record amid marked uptick in client demand"
The April US Services Purchasing Managers' Index conducted by Markit came in at 64.7 percent, up 5.0 from the final March estimate of 59.7.
China Property Sector Remains Robust Despite Policy Headwind
Momentum in China’s property market remains strong so far in 2021, driven by healthy demand for housing.
First Look at April: ADP Says 742K New Nonfarm Private Jobs
This morning we have the ADP April estimate of 742K nonfarm private employment jobs gained, an increase over the ADP revised March figure of 565K.
Jim Grant: The Fed Cannot Control Inflation
The Fed is under the misconception that it controls events, according to James Grant. It is overconfident in its belief it can accurately calibrate and attain a 2% inflation target.
Treasury Yields: A Long-Term Perspective
As of April 30, the 10-year note was 113 basis points above its historic closing low of 0.52%, reached on August 4.
Helping the Other 66%
Addressing within-country inequality may be the political imperative of the moment.
Regression to Trend: Another Look at Long-Term Market Performance
Quick take: At the end of March the inflation-adjusted S&P 500 index price was 170% above its long-term trend, up from 158% above 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.
A Perspective on Secular Bull and Bear Markets
Was the March 2009 low the end of a secular bear market and the beginning of a secular bull?
Counting the Chickens Twice
There’s an old bit of advice that one shouldn’t count one’s chickens before they’re hatched.
Technically Speaking: Forward Returns Continue To Fall
One of the interesting aspects of “bull markets” is the further they go, the lower forward returns fall.
The Year of Living Dangerously
How to structure your portfolio when interest rates are rising.
Liquidity: Historic Gains Lead To Marginal Drains
We look at the myriad of liquidity measures and what the draining from gains does to asset prices and fiscal and monetary responses.
A Recap of Our Virtual Market Outlook Summit
On April 20, we hosted our first ever virtual Market Outlook Summit. Here is a recap of each session with a link to watch the replay.
Venerated Voices™ Q1 2021 Rankings
Advisor Perspectives has announced its Venerated Voices™ awards for commentaries published in Q1 2021.
Buffett: No Fish in the Barrel
The Berkshire Hathaway Annual Meeting was a mixture of caution, wisdom and honesty.
Crestmont Market Valuation Update: April 2021
Quick take: Based on the April S&P 500 average of daily closes, the Crestmont P/E is 179% above its arithmetic mean and at the 100th percentile of this fourteen-plus-decade monthly metric.
Economic Commentary: "Buy American," Economics of Sports, Tax Evasion
"Buy American:" easier said than done. Sports leagues are still struggling, and tax evasion is costly.
The Coming Disinflation
Supply chain disruptions may be a near-term challenge, but base effects will slow inflation next year.
April ISM Manufacturing Index: Continued Expansion Despite Decrease
This morning the Institute for Supply Management published its monthly Manufacturing Report for April. The latest headline Purchasing Managers Index (PMI) was 60.7, a decrease of 4.0 from 64.7 the previous month and in expansion territory. Today's headline number was below the Investing.com forecast of 65.0 percent.
April Markit Manufacturing: "Strongest improvement in operating conditions on record amid marked uptick in client demand"
The April US Manufacturing Purchasing Managers' Index conducted by Markit came in at 60.5, up 1.4 from the 59.1 final March figure. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
Moving Averages: Up 6% in April
Valid until the market close on May 310 2021.
The S&P 500 closed April with a monthly gain of 6% after a gain of 4.24% in March. 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) — unchanged from last month's quadruple "invested" signal.
Weekly Market Snapshot
Chief Economist Scott Brown discusses the latest market data.
Matthews Emerging Markets Small Companies Fund
We believe Asia is the core of growth and innovation within emerging markets, and companies domiciled in Asia comprise over 75% of the benchmark universe.
#MacroView: No, Bonds Aren’t Overvalued. They’re A Warning Sign.
There has been much commentary suggesting bonds have gotten overvalued due to historically low rates.