We’re thankful for this year’s economic growth in the U.S., which has exceeded most expectations. A soft first quarter has been followed by two quarters in which real activity expanded at an annual pace exceeding 3%.
Turbulence in market internals, in the face of record market highs, is often a symptom of increasing risk-aversion and skittishness among investors.
This week’s letter will take a look at the growing number of ridiculous, inane, and otherwise nonsensical absurdities that fill the daily economic headlines. I have gone from the occasional smile to scratching my head now and then to “WTF” moments several times a week.
Last week, the uniformity of market internals shifted to an unfavorable condition. During the advancing half-cycle since 2009, zero interest rates encouraged speculation (and maintained favorable market internals) long after extreme overvalued, overbought, overbullish conditions emerged. But distinctions matter. Once the uniformity of market internals - the most reliable measure of speculation itself - is knocked away, those extremes are still likely to matter with a vengeance.
John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, explains his top-down view of markets, the economy and asset allocation.
The elimination of personal exemptions is one of many features of the tax reform proposal presently being debated in Washington. If passed, the new regime would realign the finances of industries, households and even countries.
When you write about economics, you learn very quickly that the economy doesn’t care what you say about it. The forces that drive it are beyond any one person’s comprehension, much less control. But at the same time, the economy doesn’t work like a law of nature. Unlike gravity, for instance, the economy responds to human choices and preferences. We influence it, even if we don’t understand exactly how.
This month's forecast follows a wave of generally positive economic data that appeared to shake off the weather-related disruptions seen throughout the summer and early fall.
Encouraged by the novelty of zero-interest rates, not even the most extreme “overvalued, overbought, overbullish” conditions have been enough to derail the speculative inclinations of investors. Yet in every other way, this speculative episode is simply a more extreme variant of others that have come before it.