Todays Charts – Cross Currents

 Economy, General Interest  Comments Off on Todays Charts – Cross Currents
Jan 222019
 

From Sesame Street – One of these Charts is not telling the same story!

So, capacity utilization is high – factories are busy.

Most manufacturing segments are not contracting, i.e. they are doing fine.

But, businesses are concerned!

What happens next?

China

 Economy, General Interest  Comments Off on China
Jan 192019
 

There are two ways to look at this chart from Northern Trust’s weekly Economic Commentary.

1- President Trump’s tariffs are working, and he’s winning the Trade War with China.

2- China’s economy is slowing down quite dramatically, and since it accounts for a significant portion of world trade, the world-wide economy may be facing a recession.

Personally, I’m not certain of the former and am concerned about the later.

What do you think?

GDP Update

 Economy, Investing, Retirement Planning  Comments Off on GDP Update
Jan 162019
 

This chart was part of today’s Wall Street Journal Daily Shot.

Looks like Oxford Economics is expecting at least somewhat of a slow down this year. They also had some information on the potential impact of the government shutdown. However for now, the year over year comparisons will be harder due to the impact of the tax cut impact in 2018

If I recall, they were suggesting that the shutdown might result in around a 0.4 tenths of a percent reduction per quarter.

Lets hope that gets resolved soon.

Hindsight is Wonderful!

 Economy, General Interest, Investing, Retirement Planning  Comments Off on Hindsight is Wonderful!
Jan 152019
 

Who knew at the start of 2018 that the stock market’s ride would be this wild? Although after a very lucrative 2017, it should have been reasonable to expect a change.

The challenge is always to try to determine which way to go – going forward. It turns out that hindsight is not very helpful looking forward. Looking backwards, I would say it was easy to see that a trade war with tariffs and the resulting business disruptions and uncertainty were going to be a problem. But, the timing, magnitude, and duration of the challenges were and actually still are hard to quantify.

If foresight was any good, we may have known when to make some changes, but I’m pretty sure art and fine wine would not have been my alternate investments.

Luxury Goods Outperform as Markets Swoon WSJ 12-31-2018

On the other hand, in spite of its lumps and bumps our democracy and capitalism based economy will almost certainly continue to work going forward. And, although Art and Fine Wine may be perfectly good asset classes, I think I’ll stick with Equity, Fixed Income, and Cash along with some real estate for my investment assets.

Have a Happy New Year!

Quite the Ride

 General Interest, Retirement Planning  Comments Off on Quite the Ride
Jan 152019
 

The last three months of 2018 would have been a great roller coaster ride. But, maybe not so much fun for investors.

S& P 500 WSJ Chart

Hopefully we are on the up hill climb for now. With a little luck the next slope won’t be near as exciting.

Volatility

 Economy, General Interest  Comments Off on Volatility
Jan 082019
 

At first glance, this chart suggests good news about volatility. But, it is of course still quite high.

CBOE Volatility Index Chart

It’s my understanding that just like the US Treasury Yield Curve, the various option maturity dates are showing at least somewhat of a pricing inversion. In other words, the premium for the options maturing relative soon are more expensive than the further out maturities. This is inconsistent with normal pricing expectations.

What does it mean? It could be a sign of a recession or another indication of the impact the various uncertainties are having on the market in the short term.

As usual, time will tell!