• Troubling Tariffs

    Existing tariffs on Chinese imports and Chinese retaliatory tariffs reduce US GDP by 0.15 of a point. Last week’s tariff increase from 10% to 25% on $200 billion of Chinese goods will decrease GDP by another 0.15. A further 25% tariff on another $325 billion of Chinese imports would lower GDP by … [Read More...]

  • Goldilocks Gains

    There were 263,000 new jobs created in April, with all sectors but retail gaining. This strong growth is more proof of a solid economic rebound after a tough start to 2019. While pay rose 3.2% Y-o-Y, wage increases have been steady at 3.2% since 8/18, dampening inflation fears despite unemployment … [Read More...]

  • Data Drama

    During the brief economic downturn late last year, bond yields fell along with equities because there was fear the economy was slowing, corporate profits were weakening, and inflation was expected to fade. Now, the stock market is at a record high while bond yields remain very low. This divergence … [Read More...]

  • Growing GDP

    GDP 19Q1 GDP came in at a remarkably strong 3.2%; don’t be deceived. Growth was pushed up by an unsustainable surge in inventories, a huge one-time jump in state and local government spending, and a drop in imports precipitated by a rise in 18Q4 imports in advance of Chinese tariffs that never … [Read More...]

  • Poor Pickings

    In 2018, a volatile year for markets, just 38% of actively managed US stock funds outperformed their passively managed (indexed) counterparts, down from 46% in 2017, a placid year. Over the past decade, just 26% of actively managed funds beat their index benchmarks. Unsurprisingly, managed funds are … [Read More...]

May
21

Infinitesimal Infants

In 2018, there were 3.79 million births, a 2% decline from 2017, the fourth straight year of declines, and the lowest level since 1986! Births have fallen in 10 of the last 11 years! Reasons include a decline in unplanned pregnancies, lower Hispanic fertility rates, and more women earning college … [Read more...]

May
20

Inflationary Impacts

The imposition of added tariffs on some Chinese goods and new tariffs on others will boost inflation by 0.1% to 0.3% depending on the inflation measure, with goods inflation and core inflation being pushed up more than services inflation or headline inflation. More importantly, the Fed is very … [Read more...]

May
17

Amazing Art

The Friday File: This past Tuesday, a Claude Monet painting titled Haystacks (of which there are 25, most of which are in one of 15 museums) sold for $110.7 million, a record price for a Monet and for an Impressionist work. Separately, on Wednesday, the sculpture Rabbit by Jeff Koons sold for $91.1 … [Read more...]

May
16

Inversion Impetus

The yield curve inverts if the short end rises above the long end, or if the long end declines below the short end. In the former, the Fed is raising rates to reduce inflation and accidentally drives us into recession. The latter, which we are increasingly experiencing, occurs when growth and … [Read more...]

May
15

Working Women

The share of Americans aged 25-54 in the labor force hit 82.6% in 1/19, the best level since 8/09. The main reason is rising labor force participation of young women. Since the end of the recession on 6/30/09, the only demographic group with a higher rate now than then is women aged 25-34. Men … [Read more...]

May
14

Troubling Tariffs

Existing tariffs on Chinese imports and Chinese retaliatory tariffs reduce US GDP by 0.15 of a point. Last week’s tariff increase from 10% to 25% on $200 billion of Chinese goods will decrease GDP by another 0.15. A further 25% tariff on another $325 billion of Chinese imports would lower GDP by … [Read more...]

May
13

Nominee Numbers

There are 62 weeks to go until the Democratic convention in Milwaukee. Based on public polling dating back to 1980, polls taken this early have the eventual nominee in first place just 35% of the time. However, these early polls do have the eventual winner ranked in the top three 85% of the time. A … [Read more...]

May
10

Super Sharona

The Friday File: The top single of 1979, forty years ago, was My Sharona by the Knack; written by band lead Doug Fieger. The single sold 500,000 copies and went gold within weeks of its 6/79 release. It reached #1 on the Billboard Hot 100 by August and stayed there for six weeks. Get The Knack was … [Read more...]

May
09

Education Excess

From 2009 through mid-2012, weekly earnings for those with less than a high school diploma declined. From then through late-2017, their wages improved and grew at the same rate as the wages of all others. Since late-2017, their wages have been growing faster than all others. Maybe it’s because since … [Read more...]

May
08

Lousy Lumber

In 5/18, lumber futures hit $640/1,000 board feet. By 10/18, they were half and have largely remained there; mills are closing. New home construction has reduced GDP for five straight quarters and is 3.76% of GDP. At the peak of the boom, it was 6.67%. Moreover, YTD starts are down 9.7%, permits are … [Read more...]