Let’s start today with a look back at the major world market indexes’ performance since October 2007 (the last bull market peak) and also the performance since March 2009 panic low. A tale of two different stories. The first was expensive, leveraged and featured a Fed raising rates. The second was relatively inexpensive and the beginning of unprecedented central bank liquidity.
GMO Quarterly Letter
In a new quarterly letter to GMO's institutional clients, head of asset allocation Ben Inker discusses why investors should be thinking about the risks of surging inflation, even if such a surge may not be inevitable or even probable. Chief investment strategist Jeremy Grantham considers the current market environment and how to most rationally take risk with the ultimate stakes on the line.
NewsLetter – December 2017
Harold Evensky's most recent Newsletter.
The Big Four Economic Indicators: November Real Retail Sales
Note: With today's release of November's Retail Sales and Consumer Price Index, we've updated this commentary to include the latest Real Retail Sales. Month-over-month nominal sales in November increased by 0.8% (0.79% to two decimals). Real Retail Sales, calculated with the seasonally adjusted Consumer Price Index, increased by 0.23. The chart gives us a close look at the monthly data points in this series since the end of the last recession in mid-2009. The linear regression helps us identify variance from the trend.
Weekly Heating Oil Prices
The latest price of home heating oil nationwide is $2.88, up a penny from last week and up twenty-one cents since the beginning of the season.
Political Noise, Market Poise
A review of last month’s market-moving events across countries and asset classes.
Consumer Price Index: November Headline at 2.2%, Core Remains Below 2%
The Bureau of Labor Statistics released the November Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 2.20%, up from 2.04% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 1.71%, down from the previous month's 1.77%.
Treasury Yields: A Long-Term Perspective
Let's have a look at a long-term perspective on Treasury yields. The chart here shows the 10-Year Constant Maturity yield since 1962 along with the Federal Funds Rate (FFR) and inflation. The range has been astonishing. The stagflation that set in after the 1973 Oil Embargo was finally ended after Paul Volcker raised the FFR to 20.06%.
Some Thoughts on 2018
2017 turned out to be a better year for the stock market than most investors surmised. For 2018, we yet again see investors avoiding one of the longest post-war bull markets in history and continuing to ignore the fundamentals driving markets higher.
Gold Rush to Tech Rush
Over the weekend I stopped to watch the last part of a James Stewart Western called, The Far Country. It was the story of two cattle drivers who took their cattle all the way to the Yukon to get a piece of the late 1890’s Klondike gold rush.
Reflecting on The Seven Samurai* - This is no time for complacency.
With equity markets in the U.S. hovering around all-time highs and volatility remaining low it is important to remember the words of the Samurai from the movie The Seven Samurai -- just when you think that you are safe, you are most vulnerable.
Merk 2018 Outlook
With the stock market and Bitcoin reaching all-time highs, what can possibly go wrong? In offering my thoughts on 2018, I see my role in reminding investors to stress test their portfolios. Is your portfolio built of straw, sticks or brick?
NFIB Small Business Survey: Index Near All-Time High
The latest issue of the NFIB Small Business Economic Trends came out this morning. The headline number for November came in at 107.5, up 3.7 from the previous month and near its all-time high reached in July 1983. The index is at the 99th percentile in this series. Today's number came in above the Investing.com forecast of 104.6.
Weekly Gasoline Price Update: Regular and Premium Down
It's time again for our weekly gasoline update based on data from the Energy Information Administration (EIA). The price of Regular and Premium were down two and one cent(s), respectively, from last week. According to GasBuddy.com, Hawaii has the highest average price for Regular at $3.23 and Santa Barbara, CA is the most expensive city, averaging $3.32. Oklahoma has the cheapest at $2.14. The WTIC end of day spot price closed at 57.99, a 0.9% increase from this time last week.
The Fallacy of Weak Productivity
Models of the economy are pretty useful tools. And simple models are some of the most useful. They help people envision how the world works. They help organize thinking.
We have used the aforementioned quip from our departed friend Jerry Goodman (aka Adam Smith) a number of times over the past 47 years because of the wisdom it imparts. We dredged it up this morning after reading an article in Barron’s over the weekend titled, “Man and Machine,” which was an interview with Omar Selim, the CEO of Arabesque Asset Management, a quantitative and sustainable investment management firm.