Economy
September 28, 2020
The dominance of large growth companies these past 10 years is no secret. Every day we listen to reports about Facebook, Amazon, Apple, NVIDIA, Netflix, Google, and Microsoft. But to truly appreciate their dominance in the stock market, one needs only to look at the graph below that illustrates the outperformance of Growth vs Value. The higher up on the graph, the more the outperformance of large growth companies. Today’s outperformance dwarfs the early 2000s and the 2008/9 Great Financial Crisis. Since 1995, the outperformance of growth over value has never been higher. S&P 500 Growth Value < Source: Bloomberrg Now that […]
September 25, 2020
Everyone knows that the coronavirus has changed how we live, work, and play. As a result, people are spending more money and time on the internet than ever before. In fact, some experts estimate that Americans are spending 30% more money online1. Meanwhile, social media, teleconferencing, telehealth, and mobile payment services are playing an increasingly important role in our daily lives. Many of us are even doing our grocery shopping online! The internet makes it easier to do more things from home than we ever thought possible. But with this added convenience comes an added risk: The risk of exposing your identity and financial information […]
July 16, 2020
A report from First Trust Advisors, L.P.: It’s time to think about something other than COVID, statues, the election, and defunding the police. How about higher education? Specifically, student loans and grants. Just like the bipartisan efforts to making housing more affordable, these programs were well-intentioned. But, also like the housing market, they have led to serious problems. The US has about $1.5 trillion in student debt outstanding, more than subprime mortgage loans in 2007. We’re not worried these loans will cause a collapse in the economy, but they are a major burden that must be dealt with at some […]
June 25, 2020
A report from First Trust Advisors, L.P.: Turning off the global economic light-switch, and then turning it partially back on, has sent shockwaves through economic data that, while anticipated, have been jaw-dropping in both directions. For example, US retail sales plunged a combined 21.8% in March and April, before rising 17.7% in May. Manufacturing production fell 20.0% in March and April, before gaining 3.8% in May. Non-farm payrolls shrank 22.1 million in March and April, followed by a gain of 2.5 million in May. The savings rate surged to 33% in April, the highest rate ever recorded with current metrics. […]
June 18, 2020
The one key takeaway from last week’s Fed meeting is that monetary policymakers are set to keep short-term interest rates near zero for as far as the eye can see. Not forever, but at least until 2023. Keep this in mind in the week ahead, as we get more reports confirming the economic recovery started back in May. The Federal Reserve conveyed that commitment in a few different ways. First, and most important, was the quote from Wednesday’s post-meeting press conference with Fed Chairman Jay Powell that the Fed is not even “thinking about thinking about raising rates.” In other […]
June 12, 2020
The most important takeaway from today’s Fed meeting is that policymakers don’t expect to raise short-term interest rates until at least 2023. The Federal Reserve’s “dot plot” shows where policymakers think short-term interest rates will be at the end of this year, 2021, and 2022 and these show that no members of the rate setting committee – literally, none – think rates will go up this year or in 2021 and that only a small minority thinks they’ll rise in 2022. Moreover, the median estimate among policymakers is that the unemployment rate will finish 2022 at 5.5%. In the aftermath […]