Weekly Market Summary
The major US indices all recorded new all-time highs (ATH) this week. The very broad NYSE, covering 2800 stocks, also made a new ATH, suggesting the rally is supported by adequate breadth. Longer-term studies and the fundamental macro data continue to indicate that further upside into year-end is odds-on. On a short-term basis, there are several reasons to be on alert for weakness over the next week or two. An important FOMC meeting is on deck for Wednesday.
A Long/Short Bridge Between Stocks and Bonds
Frothy stocks and well bid bonds can undercut portfolio performance if rates move higher, though long/short equity strategies can support long-run returns.
NFIB Small Business Survey: Index Maintains Momentum in August
The latest issue of the NFIB Small Business Economic Trends came out this morning. The headline number for August came in at 105.3, up 0.1 from the previous month. The index is at the 97th percentile in this series. Today's number came in above the Investing.com forecast of 105.0.
Long-Term Trends in Employment by Age Group
The Labor Force Participation Rate (LFPR) is a simple computation: You take the Civilian Labor Force (people age 16 and over employed or seeking employment) and divide it by the Civilian Noninstitutional Population (those 16 and over not in the military and or committed to an institution). The result is the participation rate expressed as a percent.
The Ratio of Part-Time Employed: August 2017
Let's take a close look at Friday's employment report numbers on Full and Part-Time Employment. Buried near the bottom of Table A-9 of the government's Employment Situation Summary are the numbers for Full- and Part-Time Workers, with 35-or-more hours as the arbitrary divide between the two categories. The source is the monthly Current Population Survey (CPS) of households. The focus is on total hours worked regardless of whether the hours are from a single or multiple jobs.
Two Sides of the Same Coin
Rarely have equity bulls and bears disagreed more than they do at present. We look at both the bull case and the bear case, and then we introduce a longer-term structural angle, which is largely ignored by both bulls and bears. This third side of the coin is based on the fact that inflation is structurally low, and that central banks may be committing a serious policy error by targeting 2% inflation, when it is almost impossible to drive inflation to those levels. Enjoy the read!
Visualizing GDP: An Inside Look at the Q2 Second Estimate
The accompanying chart is a way to visualize real GDP change since 2007. It uses a stacked column chart to segment the four major components of GDP with a dashed line overlay to show the sum of the four, which is real GDP itself. Here is the latest overview from the Bureau of Labor Statistics.
How to Play the Gold Break-Out in Fixed Income Markets
Today gold is trading over $1,305, for the first time since November 4, 2016. The breakdown in the USD Index last week was a good signal telegraphing the short-term breakout in gold. Gold is notoriously difficult to value, but we have found one relationship that seems to consistently work.
The Value Proposition that Negates the Robo Threat
What is it worth to have a financial services coordinator who understands your clients’ needs and the language spoken by the specialized service providers they use? Today’s robo-advisors cannot provide the depth or breadth of coordination clients need. But you can, at least for your best clients. This should be a core of your value proposition.
July New Home Sales Down 9.4% from June
This morning's release of the July New Home Sales from the Census Bureau came in at 571K, down 9.4% month-over-month from a revised 630K in June. Seasonally adjusted estimates for back to April were also revised. The Investing.com forecast was for 612K.
A Mini-Correction, but No Capitulation (Yet): Three Internal Indicators that Should Point to the Nex
The last week has witnessed the return of multi-directional volatility in the equity markets for the first time since just before the election in the United States last November. At this point we have little reason to suspect the 2% mini correction in the S&P 500 will turn into a major downside swoon.
Imaginary Growth Assumptions and the Steep Adjustment Ahead
Within a small number of years, investors are likely to discover that they have allowed their assumptions about growth in U.S. GDP, corporate revenues, earnings, and their own investment returns to become radically misaligned with reality, and that Wall Street’s justifications for the present, offensive level of equity market valuations are illusory. Based on outcomes that have systematically followed prior valuation extremes, the accompanying adjustment in expectations is likely to be associated with one of the most violent market declines in U.S. history, even if interest rates remain persistently depressed.
Second Quarter 2017 Economic & Capital Market Summary
The early optimism that President Trump would be able to reinvigorate domestic economic growth has faded as Congress struggled to pass health care legislation and confusion exists around Trump’s political agenda.
Trends in the Teenage Workforce Update
In July of 2015, CNN Money featured an article with the optimistic and intriguing title "More American teens are getting jobs. That's good for everyone." After reading the article, we revised one of our monthly charts on Labor Force Participation to include the age 16-19 cohort -- one we elsewhere combine with the 20-24 year-olds. We've updated this article to include the latest employment data.
Baby Boomer Employment Across Time
The 20th century Baby Boom was one of the most powerful demographic events in the history of the United States. We've created a series of charts to show seven age cohorts of the employed population from 1948 to the present. What we see is essentially the "Boomer Bulge" in employment across time. Those born between 1946 and 1964 continue to grow the employment of the two oldest cohorts. It will be interesting to see how long those two trends continue.