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.

Axios 3 1 19

Banking – Savings Account Rates

 Economy, General Interest  Comments Off on Banking – Savings Account Rates
Feb 222019
 

The difference between bank savings account rates at Online Banks versus Brick and Mortar Banks is rather dramatic.

However, it would appear that a tightening of the Interest Rate Spread is not the issue!

Meanwhile, the Federal Deposit Insurance Corp. said the new tax law drove double-digit profit growth at U.S. banks last year. Banks collectively notched record annual profits of $236.7 billion, up 44% from 2017.

Two Charts – What do they Mean? Are they related?

 Economy, General Interest  Comments Off on Two Charts – What do they Mean? Are they related?
Feb 132019
 

I saw these two charts this morning one from the Wall Street Journal’s Daily Shot and the other Axios Markets.

This appears to highlight the quite remarkable economic recovery since the great recession. Increasing Job Openings is a very good way to address the needs of the Unemployed looking for jobs. On the other hand when the two numbers cross, we may be moving into interesting territory for wage growth / inflation.

Once upon a time, the US National Debt was supposedly not necessarily a good thing. I guess I was never overly concerned about the US Budget Deficit. But, it was always thought there were limits. Based on the very rapid growth in the deficits since the Great Recession, we may find out if there are in fact any ramifications to the level of US Government debt.

Trade War – Effective: Yeah or Nay

 Economy, General Interest  Comments Off on Trade War – Effective: Yeah or Nay
Feb 112019
 

I found this chart and blurb on Axios about the effect of the tariffs that the Trump Administration has imposed on imports from China on the bi-lateral trade deficit. At least at first glance, it would appear that the tariffs have had an impact albeit a somewhat smallish effect. On the other hand, the trade war has the potential to be very disruptive for the Ag Economy.

Data: U.S. Census Bureau; Chart: Naema Ahmed/Axios

“Tariffs reduce imports and, all else equal, reduce the U.S. bilateral trade deficit. The complication lies in the fact that China retaliates by reducing imports from the U.S., thus pushing up the bilateral deficit. In addition, the tax cut boosted domestic demand in the U.S. for imports from China and everywhere else. If tariffs hadn’t changed, the bilateral deficit would have likely widened anyway because of the tax cut. “If tariffs remain in place in some sort of ‘extended truce’ we would see a more apparent decline in U.S. imports from China as frontloading will soon be water under the bridge. If all tariffs are removed (the consensus is that this is unlikely) chances are imports would normalize, reversing most of the decline we’ve seen so far.”— Gene Ma, Head of China Research, Institute of International Finance

Recession Mentions

 Economy, General Interest  Comments Off on Recession Mentions
Feb 112019
 

It appears that we will measure almost anything nowadays! I have no idea regarding the validity of this metric, but here’s the chart from Axios.

The good news would be that whatever its validity may be, the number of mentions is lower than it has been.

On the other hand, you might notice that up until the economy was actually in a recession in 2009 -2010 there weren’t all that many mentions prior to that point either.

Inspite of Everthing Else going on – Here’s some Good January News!

 Economy, General Interest  Comments Off on Inspite of Everthing Else going on – Here’s some Good January News!
Feb 012019
 

It appears the S&P 500 had its best January in over 30 years.

Unfortunately, January might only look good compared to other Januarys. For the past twelve months, the performance is not all that inspiring. Even though the S&P 500 is only down marginally during that time period, it is still quite a bit lower than its mid October high.

Now I see that its performance is dependent on how the Patriots do in the Super Bowl?

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!