Yield Curve Inversion

 Economy, General Interest  Comments Off on Yield Curve Inversion
Mar 272019
 

There has been quite the conversation regarding the inversion of the Yield Curve between the short term US Treasury Bills versus the 10 year US Treasury Note. In essence, it appears to strongly suggest that a recession is eminent.

However this morning, Axios had a blurb regarding the 2 year US Treasury note yield versus the 10 year US Treasury Note. This spread has not [at least yet] inverted.

The Axios article suggests the Fed’s actions are more likely the cause of the rise in shorter term rates even though they have indicated they will not push up the fed funds rate this year. The level of uncertainty related to Fed policy and the level of government borrowing necessary to fund the deficit may be the key culprits in the inversion.

You can find the full article here https://www.axios.com/newsletters/axios-markets-3f94efc3-d5e2-433c-8d43-b0d6267d0a78.html?chunk=4#story4

Clearly the ‘market’ is concerned about the economy going forward. Whether that is the result of Fed Policy, US Government Deficits, Trade Policy, or whatever, Mr. Market is nervous.

Prime Age to Employment Ratio

 Retirement Planning  Comments Off on Prime Age to Employment Ratio
Mar 112019
 

This looks like a really solid recover since the “Great Recession”!

It looks like this employment ratio is back to its 2009 peak, but it still has a way to go to get back to its late 1990s level. To me, it just seems unlikely that wage growth acceleration won’t be coming soon. The real question; will be whether inflation follows shortly thereafter.

Wage Growth versus S&P 500 Profit Growth

 General Interest  Comments Off on Wage Growth versus S&P 500 Profit Growth
Mar 082019
 

This chart was on Axios earlier this week. I think this is could be one of the reasons for the ongoing challenge between capital and labor since the ‘Great Recession’.

Clearly the recovery in Profits of 10.1% versus Wages of 3.3% is significant. However, this is part of a much longer term trend. Whether it is due to technology or some other factor, it has made it difficult for the middle class to get ahead economically.

I gather this may at least be a partial explanation for an uptick in the idea that Socialism may be desirable versus Capitalism. This appears to be especially so for younger workers.

Gross Domestic Product Update

 Economy, General Interest  Comments Off on Gross Domestic Product Update
Mar 012019
 

The following Wall Street Journal Chart shows the US GDP through year end 2018.

It appears that Tariff related Import and Export activity in Mid-2018 was responsible for the 2nd and 3rd Quarter bumps.

Emerging Markets

 Economy, Investing  Comments Off on Emerging Markets
Mar 012019
 

The MSCI Emerging Markets Index has increased its allocation to China. Per Axios:

“MSCI said Thursday it would quadruple the percentage of access foreign investors can get to stocks from mainland China in its widely tracked emerging-markets index, which is tracked by nearly $2 trillion of funds.”

Investment in Emerging Markets maybe on the rise and the change in the MSCI Index may help start a trend.

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