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Pursuit of Truth in Finance & Economics
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A Recession Warning In Industrial Production & Housing?
The industrial production report signaled a recession could be coming. The two things that can save the economy are that it is well-diversified and that this report may have been week because of a calendar quirk.
Are These Red Flags In Retail Sales & Consumer Debt?
The April retail sales report was bad as it missed estimates across the board.
Are These Red Flags In Retail Sales And Consumer Debt?
The April retail sales report was bad as it missed estimates across the board. However, it was hurt by the seasonal adjustment which was made because of the timing of Easter.
Global Economy Slowing: Trade War Isn’t The Only Risk
If the stock market declines, the Fed will be more likely to cut rates, but the market already expects a cut anyway because the American economy is in a slowdown. However, a rate cut won’t save the economy or the stock market.
Can Tariffs Bankrupt Americans?
China officially retaliated against America’s 25% tariff on $200 billion in goods with its own tariff on $60 billion of American goods. Over 5,000 goods will be taxed at a 25% rate.
Shelter Inflation Stays High Despite Decline In Home Price Growth
The fact that housing is the most important component of inflation and is above overall inflation makes it the number one category to follow.
Lower Nominal Wage Growth Than Usual
The labor market is full according to the U6 rate minus the U3 rate. However, the prime age labor force participation rate disagrees.
Job Openings Outpace Hiring Growth
Job openings were strong in March, but hiring growth was weak. The non-manufacturing ISM PMI was the weakest since July 2017. The Markit services report stated business optimism was the weakest since mid-2016.
US Earnings Season Was Above Average
Sometimes investors get confused about how earnings affect stocks. Stocks trade based on future earnings expectations. The latest earnings report gives us the best clue as to how that future will turn out.
How Much Would Stock Market Crash Without Stock Buybacks?
One big misapprehension is that stock buybacks have caused a massive bubble in stocks. The supposed support for this argument is buybacks reached a record high before the last recession; now they are at a high again.
Home Price Growth Falls To The Lowest In 6.5 Years
If the housing market weakens further, there isn’t much room for it to fall. Luckily, that is unlikely.
US Fiscal Stimulus Declines While Stocks Rally
The forward PE multiple is getting elevated which signals stocks might soon run out of room to rally. On the positive side, Q2 earnings estimates have declined at a more gradual pace than last quarter.
Why Value Stocks Might Not Be Good Value
Stocks have rallied quickly since the Christmas Eve bottom, but this recovery is far from unprecedented. It’s only 2.5 months quicker than the average recovery after non-recessionary bear markets.
Are Economic Depressions A Thing Of Past?
Since the Great Depression, the economy has been placid compared to the 1800s. The housing market has been weak, but starts could spike in the next few months; the overall trend could reverse because housing has gotten more affordable recently.
Is Deflation Dead?
Where is the slowdown? It might not be prominent in Q1’s initial GDP reading if it hits the median consensus of 2.1% growth. The economy might have become more stable because of the transition to services away from manufacturing.
No More Recessions Ever Again?
The business cycle still exists. It’s not good for the bulls that investors are so optimistic that they don’t see a recession happening ever again. It’s also not good to see fund managers buying equity and lowering their cash position.
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