201712.04
1
1

Three Years Ago QE, Last Year It Was China, Now It’s Taxes

China’s National Bureau of Statistics reported last week that the official manufacturing PMI for that country rose from 51.6 in October to 51.8 in November. Since “analysts” were expecting 51.4 (Reuters poll of Economists) it was taken as a positive sign. The same was largely true for the official non-manufacturing PMI, rising like its counterpart…

201712.04
6
2

Just When You’ve Thought You’ve Seen It All

I could understand it if its track record was spotty, or partially mixed. But the level of denial runs deep and wide with the yield curve. There is a growing chorus of nonsense, really, which is attempting to spin the flattening as some kind of benign technical rotation that through illogical convolution equals the opposite…

201711.21
4
2

Bi-Weekly Economic Review: A Whirlwind of Data

The economic data of the last two weeks was generally better than expected, the Citigroup Economic Surprise index near the highs of the year. Still, as I’ve warned repeatedly over the last few years, better than expected should not be confused with good. We go through mini-cycles all the time, the economy ebbing and flowing…

201711.07
9
2

Bi-Weekly Economic Review: Gridlock & The Status Quo

The good news is that the economy just printed its second consecutive quarter of 3% growth, a feat not accomplished since Q2 and Q3 2014. The bad news is that the growth spurt in 2014 was better, quantitatively and qualitatively. Those two quarters produced gains of 4.6% and 5.2% (annualized) in GDP, much better than…

201710.30
1
3

The (Economic) Difference Between Stocks and Bonds

Real Personal Consumption Expenditures (PCE) rose 0.6% in September 2017 above August. That was the largest monthly increase (SAAR) in almost three years. Given that Real PCE declined month-over-month in August, it is reasonable to assume hurricane effects for both. Across the two months, Real PCE rose by a far more modest 0.5% total, or…

201710.26
5
5

Global Asset Allocation Update

The risk budget this month shifts slightly as we add cash to the portfolio. For the moderate risk investor the allocation to bonds is unchanged at 50%, risk assets are reduced to 45% and cash is raised to 5%. The changes this month are modest and may prove temporary but I felt a move to…

201710.23
3
1

Bi-Weekly Economic Review: Yawn

When I wrote the update two weeks ago I said that we might be nearing the point of maximum optimism. Apparently, there is another gear for optimism in this market as stocks have just continued to slowly but surely reach for the sky. Which is fine I suppose since we own the devils (although not…

201710.06
7
2

Bi-Weekly Economic Review: Maximum Optimism?

The economic reports of the last two weeks were generally of a more positive tone. The majority of reports were better than expected although it must be noted that many of those reports were of the sentiment variety, reflecting optimism about the future that may or may not prove warranted. Markets have certainly responded to…

201709.22
1
1

Global Asset Allocation Update: Step Away From The Portfolio

There is no change to the risk budget this month. For the moderate risk investor, the allocation between risk assets and bonds is unchanged at 50/50. There are no changes to the portfolios this month. The post Fed meeting market reaction was a bit surprising in its intensity. The actions of the Fed were, to…

201708.30
Off
3

A Small Place To Start

Alice M. Rivlin was Vice Chairman of the Federal Reserve during its absolute apex. Nominated to that position in 1996, she stayed as number two to Alan Greenspan until 1999. During those years the central bank, and its central bankers, would become greatly admired for what was widely perceived as pure technocratic skill. The extended…