1010 B Street
September 20, 2021
In Recent Weeks, Bullish Sentiment Has Drifted Lower Like Sediment Settling After A Storm
Every month, Bank of America (BofA) surveys global asset managers. The most recent survey, which was conducted in early September, showed that fewer managers remain optimistic about prospects for global economic growth (13 percent) or corporate profitability (12 percent). That’s half the number in the previous survey and the lowest percent since April 2020, reported Katie Martin of Financial Times.
September 13, 2021
The Delta variant could take a toll on economic growth.
There was some good news last week. The 7-day moving average of COVID-19 cases in the United States declined. The bad news was that the rate of infection remained about 99 percent higher than it was one year ago.
September 7, 2021
Stagflation isn’t trending, but it was mentioned in quite a few headlines last week.
Stagflation is a portmanteau of ‘stagnation’ and ‘inflation.’ It occurs when a country experiences slow economic growth along with high inflation and high unemployment. In the United States:
August 30, 2021
“Raise Your Words, Not Your Voice. It Is Rain That Grows Flowers, Not Thunder,” Advised The Persian Poet Rumi.
Last week, Federal Reserve (Fed) Chair Jerome Powell’s words helped grow the week’s equity market returns. In his speech at the Economic Policy Symposium in Jackson Hole, Wyoming, Powell confirmed that the United States economy had made substantial progress toward the Fed’s maximum employment and price stability goals. Consequently, the Fed is likely to slow and eventually stop the bond purchases that have been ensuring smooth market functioning during the pandemic.
August 23, 2021
Markets were shaken last week by a potent cocktail of central bank tapering and economic growth concerns mixed with coronavirus and a splash of the new Chinese privacy law.
On Wednesday, the minutes of the United States Federal Reserve’s Open Market Committee Meeting were released. They confirmed the Fed could begin tapering – buying fewer Treasury and U.S. government agency bonds – sooner rather than later, reported Jack Denton and Jacob Sonenshine of Barron’s. While that wasn’t new information, investors startled like cats surprised by cucumbers, triggering a broad sell-off.
August 16, 2021
What Is the Most Important Driver Of Economic Growth In The United States?
The most common way to measure economic output is Gross Domestic Product or GDP. It’s the value of all goods and services produced in our country over a specific period of time. GDP is a combination of the following:
August 9, 2021
Are We There Yet?
For months, investors have wondered when the Federal Reserve (Fed) might begin to “normalize” its policies, a process that will eventually lead to higher interest rates. Last week, a better-than-expected unemployment report – showing a gain of almost a million jobs – sparked speculation about whether we’ve arrived at that point. It’s difficult to know.
August 2, 2021
The Chinese dragon cast a shadow over free trade and foreign investment last week.
For decades, investors have recognized the investment potential of China. Since the country opened to foreign trade and investment in 1979, its economy has grown rapidly. Through 2018, its gross domestic product (GDP), which is a measure of economic growth, increased by 9.5% a year, on average, according to the United States Congressional Research Service
July 26, 2021
Last week, the National Bureau of Economic Research (NBER) finally announced the official dates for the recession that occurred in 2020. Economic activity peaked in February 2020 and bottomed in April 2020. That makes the pandemic recession the shortest in American history.
July 19, 2021
The Term “Peak Growth” Has Become Almost As Popular As The Comedy Show Ted Lasso
Peak growth is a catchphrase with the potential to mislead. When the term is applied to the U.S. economy, it does not mean the United States economy has reached the pinnacle of growth and it’s all downhill from here. It simply means economic growth is likely to climb at a slower pace than it had previously.
July 12, 2021
There Was A Gapers’ Block In Financial Markets Last Week As Equity Investors Slowed To See What The United States Treasury Bond Market Was Up To.
U.S. Treasury bonds rallied last week. Yields on 10-year Treasuries dropped from 1.43 percent at the start of the week to 1.27 percent on Thursday. The rally was quite a surprise, reported Randall W. Forsyth of Barron’s. “After all, the economy has been booming, accompanied by rising inflation – exactly the opposite of what would be conducive to lower [bond] yields and higher [bond] prices.”
July 6, 2021
The World Is About Halfway Back to Normal
The Economist developed the Global Normalcy Index (GNI) to measure the post-pandemic return to normal. In March 2020, the GNI was 35 overall, with 100 being the normal pre-pandemic level. At the end of the second quarter, the worldwide GNI was 66, or about halfway back to normal.
June 28, 2021
What Begins with The Letter “I”?
Infrastructure is essential and sometimes taken for granted. Pipes carry drinking water to our homes, offices, and healthcare facilities, and carry away sewage and wastewater. Highways, airports, railroads, waterways, roads, and bridges make efficient transportation of goods and safe travel possible. Energy systems and transmission lines keep the lights on and the stove cooking. Broadband data transmissions systems assure high speed internet access.
June 21, 2021
Is that a hawk?
The Federal Reserve Open Market Committee (FOMC) met last week. They get together eight times a year to review current economic and financial conditions, assess risks to price stability and economic growth, and adjust monetary policy accordingly.
June 14, 2021
It’s transitory. It’s not transitory. It’s transitory. It’s not transitory.
Media analysts were plucking the inflation daisy petals last week. On Thursday, the Bureau of Labor Statistics released the Consumer Price Index Summary, which showed prices were up 5 percent year-to-year.
June 7, 2021
Pulling The Economy Out Of The Shed.
If you’ve ever stored tools or machinery in a shed or garage for an extended period of time, you know they often need some care and repair to function properly. The same appears to be true of the pandemic economy.
June 1, 2021
Are We at A Tipping Point?
One side effect of the pandemic was a collapse in demand for oil, which led to “the largest revision to the value of the oil industry’s assets in at least a decade,” reported Collin Eaton and Sarah McFarlane of The Wall Street Journal.
May 24, 2021
What Do Markets Hate?
They hate uncertainty, and recently there has been plenty of it. Some of the questions plaguing economists and pundits include:
May 17, 2021
Uncle Inflation is here. Will he overstay his welcome?
Ever since the financial crisis, central banks have pursued expansionary monetary policies to encourage reflation and avoid deflation. Well, it’s taken some time, but inflation is finally here.
May 10, 2021
Like A Gender Reveal Gone Wrong, Last Week’s Employment Report Delivered An Unexpected Surprise
Economists estimated 975,000 new jobs would be created in April. The United States Bureau of Labor Statistics (BLS) reported there were just 266,000. That’s a big miss.
May 3, 2021
It’s Spring And Economic Recovery Is In The Air
Last week, the Bureau of Economic Analysis reported the U.S. economy grew at a 6.4 percent annualized rate for the first three months of 2021. While that’s good news for companies and workers, asset managers are checking their expectations.
April 26, 2021
It Wasn’t Just The Price Of Pork Chops
Last week, as investors weighed the news, strong corporate earnings were offset by higher grocery prices and rising numbers of global coronavirus cases.
April 19, 2021
Where Are Treasury Bonds Going?
The direction of bond yields is influenced by investors’ expectations for economic growth, among other factors. When economic growth is expected to weaken, bond yields tend to move lower. When economic growth is expected to strengthen, bond yields tend to move higher.
April 12, 2021
Investors Didn’t Stumble Over Inflation Last Week. Why Not?
Inflation – rising prices of goods and services – can be measured in a variety of ways. For example, the Consumer Price Index considers changes in the amount consumers pay for goods and services – a bag of carrots, a gallon of gas, or a doctor’s appointment. The Producer Price Index (PPI), on the other hand, considers changes in the amount producers – such as farmers, manufacturers, or physicians – charge for goods and services.
April 5, 2021
Zoom, Zoom, Zoom
Big economies tend to recover from recessions about as quickly as semi-trucks accelerate from stop lights. In other words, recovery tends to be slow. That may not be the case this time.
March 29, 2021
Last Week, Unemployment Claims Were Looking Good And Consumers Were Feeling Good
The number of Americans applying for first-time unemployment benefits declined. Just 684,000 people filed claims during the week of March 20, down 97,000 from the week before, according to last week’s report from the Labor Department.
March 22, 2021
What Are Professional Asset Managers Thinking?
Bank of America recently published the results of its March global asset managers’ survey, which polls 220 professional investors responsible for about $630 billion in assets, reported Julia La Roche of Yahoo! Finance.
March 15, 2021
Investors Had A Lot To Be Enthusiastic About Last Week
Major stock indices in the United States soared, finishing the week higher and setting new records along the way, reported Al Root of Barron’s. There was plenty of good news to fuel investor optimism:
March 8, 2021
Neanderthal DNA may make people more – or less – susceptible to COVID-19, reported The Economist. It all depends on whether you have the genes and, if you do, which DNA string you inherited.
No matter what your gene sequence looks like, vaccines can help fight the virus. So far, all of the vaccines available in the United States have proven to be effective in preventing hospitalization and death from coronavirus, according to the Centers for Disease Control (CDC).
March 1, 2021
Students of financial markets may have noted a historically unusual event last week.
On Thursday, the yield on 10-year U.S. Treasury notes briefly matched the dividend yield for the Standard & Poor’s (S&P) 500 Index. This type of convergence is uncommon. In normal times, the yield on 10-year Treasuries tends to be higher than the dividend yield of the S&P 500. Felix Salmon of Axios explained:
February 22, 2021
It’s A Contrarian’s Dream Come True
Contrarian investors like to buck the trend. They buy when other investors are selling and sell when others are buying.
Way Back, When Radio Disk Jockeys Played 45-Rpm Vinyl Singles, The A-Side Of A Disk Was The Song The Record Company Was Promoting And The Other Side – The Flip Side – Held A Song That Sometimes Had An Equal Or Greater Impact. For Instance, The Flip Side of Queen’s We Are The Champions Was We Will Rock You.
When it comes to the economy and financial markets, flip sides can have significant impact, too. For example:
It’s not a black diamond ski run yet, but the yield curve for U.S. Treasuries is steeper than it has been in a while.
A yield curve is the line on a graph showing yields for different maturities of bonds. Yield curves provide insight to bond investors’ perceptions about the economy. There are four basic types of yield curves:
They Say People Watching The Same Event Often See Different Things. That Seems To Have Been The Case Last Week When Share Prices Of A Few Companies Experienced Tremendous Volatility.
Some cast the events as a David vs. Goliath morality tale, however, Michael Mackenzie of Financial Times saw it differently. He wrote, “…a speculative surge from retail investors using borrowed money…has in the past signaled a frothy market top.” (In financial lingo, a market is ‘frothy’ when investors drive asset prices higher while ignoring underlying fundamentals.)
January 25, 2021
Last week, as COVID-19 vaccination efforts continued, there was speculation about stock market corrections and asset bubbles
On Sunday morning, Bloomberg reported 63 million doses of the coronavirus vaccine had been administered across 56 countries. In the United States, 21.1 million shots have been delivered – about 51 percent of the vaccinations that were sent to states. At that point, the pace of vaccination in the United States was just over one million doses a day.
January 19, 2021
The Event At The United States Capitol Building Had A Resounding Impact Around The World, But It Didn’t Deter Global Stock Markets
Last week, investors weighed the violent disruption of America’s 2020 presidential election process against the outcome of the Senate runoff in Georgia, and decided the latter was more significant.
January 11, 2021
Last week, investors weighed the violent disruption of America’s 2020 presidential election process against the outcome of the Senate runoff in Georgia, and decided the latter was more significant. Financial Times reported the Democratic party’s win in Georgia improves the possibility of additional government relief spending in 2021:
January 4, 2021
Last week was the cherry on top of a turbulent year for investors.
After the $900 billion fiscal stimulus bill was signed on Sunday, major U.S. stock indices moved higher. The Washington Post reported, “The S&P 500-stock index, the most widely watched gauge, is finishing the year up more than 16 percent. The Dow Jones Industrial Average and the tech-heavy Nasdaq gained 7.25 percent and 43.6 percent, respectively. The Dow and S&P 500 finished at record levels despite the public health and economic crises.”