Archive for November 2017

Neither the House or Senate tax plans will meaningfully boost long-run economic growth, but both will substantially boost future deficits and debt. Despite lower corporate taxes, growth will be stymied by a full employment economy, resulting in higher inflation and interest rates. At the macroeconomic level, higher equity prices should compensate for lower house prices.…

The yield spread between 10-yr and 1-yr Treasuries has shrunk from a post-recession peak of 3.4 percentage points to just 0.70 percentage points. The problem is in prior Fed rate rising cycles, the yield on the 10-yr rose as faster growth was expected; now the 10-yr yield is trendless. Moreover, Treasury is exacerbating this by…

The personal savings rate fell to just 3.1% in September, its lowest level since 12/07, the start of the Great Recession. The decline is undoubtedly being caused by record gains in household net worth. As a percent of disposable income, it’s 670%, well above the Housing Boom high of 650%. Ever higher bond, equity, housing,…

By all indications, Mexico just recently entered a recession. Business activity, sales growth, business confidence and industrial production are not only all declining but are in contractionary territory. Worse, equities are down 8% after peaking three months ago and GDP declined in Q3 for the first time in years. A NAFTA breakdown is feeding this…

The Friday File: After tweeting/retweeting about 200 times/month in January and February, President Trump’s tweeting fell to a low of 150 in April. Since then, he has upped his game. In July, President Trump’s tweets hit 400 for the first time, where they have remained since. November is on pace to break 700. Trump’s most…

This year, the average cost of a full Thanksgiving dinner for 10 persons is $49.12; 75 cents or 1.5% lower than last year, 3% lower inflation-adjusted, and the lowest inflation-adjusted price since 2010. The priciest inflation-adjusted Thanksgiving repast was $62.40 in 1986; the lowest, $44.73 in 2000. Based on the average hourly wage, this year’s…

Last year, 2.6 million Americans died. Of those, 5,219 had estates large enough, greater than $5.49 million/person, to pay estate tax. Doubling the exempted amount to $11 million/person, which the Senate proposes, would reduce the number of taxable estates to 2,204. If the estate tax is eliminated, as the House proposes doing in 2024 after…

While housing starts in October rose 13.7% compared to September, they remain 2.9% below the level of 10/16, and are up just 5.8% YTD. Technically, it’s because multifamily activity is down roughly 10% YTD. That’s because multifamily activity has returned to its pre-recession level of roughly 400,000 units/year and is very volatile from month-to-month. The…

The Friday File: Earlier this week, the “Salvator Mundi” by Da Vinci sold at auction for $400 million, $450 million including fees. This shatters the prior auction price high of $179 million set in 2015 for Picaso’s “Les Femmes d’Alger”, and the all-time high of $300 million for works by Cezanne at private sales. In…

With the median house value in the US at $205,000, capping the mortgage interest deduction on loan principal eligible for the deduction to $500,000 from the current $1,000,000 would impact just 5% of home owners. Moreover, just 6.7% of the benefits of the MID go to the middle 20% of households, compared to 72.6% that…