The Economic Insights Channel

Trump and Asia: Now the Good News

With Donald Trump about to be sworn in as US president, markets in Asia are nervous about some of his policies, especially on trade. Investors who are alert to these policies’ likely limitations could find attractive opportunities.

The Great Rotation

By now, you have likely heard something, either directly or indirectly, about “The Great Rotation” from bonds into stocks.

Empire State Manufacturing Survey: Continued Modest Growth

This morning we got the latest Empire State Manufacturing Survey, which shows continued modest growth. The diffusion index for General Business Conditions at 6.5 was little changed from the previous month's 7.6, which was a downward revision from 9.0. The forecast was for a reading of 8.5.

Media Headlines Will Lead You To Ruin

Since investors are mostly individuals that have a “day job,” the majority of their “research” comes from a daily dose of media headlines. Therefore, since the media tends to “focus” their attention on “market moving headlines,” either bullish or bearish, investors tend to “react” accordingly.

Will Q4 Earnings Confirm Recent Economic Strength?

My scorecard for earnings season will look for the following company characteristics: Confidence. I expect most to have a murky outlook, with no reason to set the future bar very high. Important trade relationships – imports or exports. Comments on these fears may create some buying opportunities. Concern about a stronger dollar. Everyone is teed up to watch for this, and we should as well.

Are Investors in Denial?

You’re in denial if you believe that U.S. stocks are fairly valued, the Eurozone does not face a crisis or a strong dollar will support stability in the global economy. Those themes were presented by Albert Edwards and his fellow speakers at annual investment conference sponsored by Societe Generale.

New Research on Forecasting Returns with the CAPE Ratio

I developed a methodology that uses valuations based on a 35-year moving-average of the CAPE ratio instead of its long-term mean. It predicts a 10-year annualized real return of 5.8%, similar to the long-term market trend value of 5.4%.

Forecasting with Friends

I gave you my own thoughts last week (see “Skeptically Optimistic”). Today we’ll review several other forecasts from people who deserve your attention. Of necessity, I must leave out some good ones, but I think the ones I cover will give you plenty of useful information.

A Perfect Mix?

U.S. stocks have been consolidating gains seen in the aftermath of the November presidential election, a healthy process following such strong gains. Further appreciation should be supported by improving U.S. and global economic and earnings growth. Disappointments are likely on the U.S. policy front but we would view those as buying opportunities for now.

Playing Chess With China

China suffered the twin indignities of a currency correction and an equity correction on the first trading day of last year. Fortunately, order was restored and investor attention turned to other global developments.

American Small Businesses Party Like It’s 2004

Look at what President-elect Donald Trump’s pledge to lower taxes and slash regulations is doing to business optimism here in the U.S. Last month, the Index of Small Business Optimism soared a phenomenal 7.4 points to 105.8, its highest reading since 2004. The National Federation of Independent Business (NFIB), which conducts the survey, reported that attitudes toward capital spending and job creation in particular surprised to the upside. Research firm Evercore ISI called it a “blowout report,” and I have to agree.

Treasury Snapshot: Yields Down Since Rally

Let's take a closer look at the recent rally in US Treasuries . The yield on the 10-year note ended the day at 2.40% and the 30-year bond closed at 2.99%.

S&P 500 Snapshot: Up 0.18% for the Day, Down 0.10% for the Week

The S&P 500 rose at the open, hitting its 0.36% intraday high about 15 minutes into the session on strong bank earnings. The index then traded in a narrow range through the morning, dipped during the lunch hour, and then sold off to its 0.05% mid-afternoon low. It then recovered to trimmed gain of 0.18%.

Form 5500 Gets a Makeover: What Does This Mean for Plan Sponsors?

On July 21, 2016, the Department of Labor (DOL) issued proposed amendments to the 5500 series forms in a “Notice of Proposed Forms Revisions,” prepared jointly by three agencies: the DOL, the Internal Revenue Service and the Pension Benefit Guaranty Corporation, collectively referred to as “the agencies.”

2 Reasons the U.S. Economy Should Fare Better in 2017

Rick explains why there's a good chance U.S. growth will pick up from 2016.