Most seers believe the US labor market is overly strong.
We know that the US economy is currently weak, but the real economy is really weak, and the Federal Reserve’s commitment to precipitate a recession to curb high inflation will make this reality obvious to seemingly oblivious investors.
The Federal Reserve’s forward guidance program has been a disaster, so much so that it has strained the central bank’s credibility.
We didn’t need the reported two consecutive quarters of declining real gross domestic product —the unofficial determination of a recession—to tell us the US economy is already in, or at least close to, a business downturn.
The good news is that yields in US Treasury securities may be near their peak. The bad news is that makes the recession I’ve been forecasting since February more likely.
In 1995, Treasury Secretary Robert Rubin asserted that a strong dollar is in the US national interest, a mantra repeated by each of his successors. They’re partially correct since the effects of the robust buck, which has soared this year, help some while harming others.
The U.S. stock market is very likely in a bear market that anticipates a recession will start later this year. This means the time is now to shift portfolios from risk-on mode to risk-off before the losses get even worse. But what worked in the past when hedging against a bear market may not work now, given the ever-changing economic dynamics. It’s also important not to fall for some old myths.
My column yesterday outlined six categories of winners and losers spawned by the current disruptive global economic environment as it transfers incomes and assets. Here are five more that result from the repricing of goods and assets.
Covid-19, global supply-chain disruptions, frictions in reopening economies worldwide and now Russia’s invasion of Ukraine are spawning many winners and losers in economies, financial markets and political structures. Six of them are driven by transfers of incomes and assets. Five more are fundamentally the result of repricing goods and assets that I’ll cover in a separate column.
The U.S. Commerce Department announced on Thursday that consumer spending fell 0.4% in February from January after adjusting for inflation. This may not seem like much, but real spending has dropped in three of the last four months. Without strength in household outlays, the economic expansion is doomed.
In Congressional testimony on March 2, Federal Reserve Chair Jerome Powell said that “it is more likely than not” that the central bank “can achieve what we call a soft landing” in the economy. In other words, he believes that the Fed can raise interest rates enough to get raging inflation under control without forcing the economy into a recession. The odds that Powell can pull that off are getting longer by the day.
When it comes to the Federal Reserve and monetary policy, there are no shortages of talking heads who say the central bank can’t raise interest rates too much or else it would trigger a “debt bomb.”
With demand waning and supplies increasing, the housing market is in for a lot of pain. Low interest rates have been a boon to housing, making mortgages more affordable and allowing consumers to refinance existing loans, with many of them tapping the equity in their homes for extra cash.
Don’t be fooled by the Commerce Department report Thursday showing the U.S. economy grew at a faster-than-expected annualized rate of 6.9% in the fourth quarter. Look under the hood of the gross domestic product report and it’s clear that there’s a big inventory cycle unfolding in the economy as consumer demand wanes following a large buildup in the supply of goods.
Wall Street seers expect the benchmark S&P 500 Index to generate earnings per share that are up 46% this year from 2020’s depressed level, with growth decelerating to 8% in 2022, according to data compiled by Bloomberg. Even that lower number for the coming year may be too rosy.
The breadth of the stock market is a measure of its health, and the wider the better. So, a narrowing of its focus, as we’ve seen recently, is often a red flag, both for the overall market and the darlings of the moment.
A big inventory cycle may soon unfold as early holiday gift-buying by U.S. consumers reverses and supplies of goods start to leap.
Most of the dire forecasts of the effects of rising carbon emissions and global warming assume no significant human response.
The goal of net-zero carbon by 2050 is almost certain to be drastically curtailed by its costs and lack of feasibility.
I explored the first four of 12 lasting effects of the Covid-19 pandemic on the economy and financial markets in my previous column. Here are four more: greater use of telecommunications, a shift in preferred residences, more employee independence and an increased emphasis on online shopping.
The global Covid-19 pandemic will have lasting effects on the U.S. economy and financial markets that investors should separate from ephemeral noise.
The Federal Reserve is planning to tighten credit even as forecasts call for U.S. economic growth to slow and the recent high inflation rates to recede.
The recent Treasury bond rally fits with our forecast that the recession has a second, more serious leg that will extend well into 2021, despite massive monetary and fiscal stimulus.
Projections and analyses don't reflect the potential effects of the Covid-19 pandemic on Social Security. Without swift action by the government, a new crisis may be at hand.
The investment scene is beginning to resemble the 1929 market crash and the early 1930s Great Depression. This pandemic is likely to be the most disruptive financial and social event since World War II with equally long-lasting consequences.
Please join us on April 2 at 2pm ET for a 45-minute Q&A with the renowned economist Gary Shilling. This is your opportunity to get answers to your questions about the impact the coronavirus will have on the economy and the markets. Please submit your questions in advance when you register for the webinar.