Perspectives

As we approach the end of the ninth year of what may be the world's least loved economic recovery, we continue to hear one question repeated, "When do you think it will end?"  And with the media publishing articles like this: "There's more than a 60% chance of a global recession within the next 18 months, economist says."1 "This market indicator has predicted the past 7 recessions.  Here's where it may be headed next."2 "Next recession will hit during Trump's first 2 years."3 "The Stock Ma… View More

If the current economic expansion lasts another year and a half, it will be the longest on record, even surpassing the expansion of the 1990s that ended in early 2001. Notice how we didn't say it'll be the "best" expansion of all-time, just the longest; it's not the best by a long shot. From the recession bottom to the expansion peak, real GDP expanded 39% in the 1980s and 43% in the 1990s. So far, eight years in, this one is only up 19%. That's why we've been calling it the Plow Horse Economy.… View More

North Korea. Charlottesville. Harvey. Irma. Maria. Despite all of the Trials and Tribulation of the last quarter - alternatively scary and sad, the three months just passed was yet another example of just how comfortable investors have become with being uncomfortable. The S&P was up +4% in the quarter, notching its 8th quarterly advance. The index’s average daily change during the period was a mere 0.3%, its lowest since 1968. Perhaps it’s a coincidence, but it appears that both bond yie… View More

Markets were mixed last week; small cap stocks gained while large cap stocks were essentially unchanged. Sectors which respond to economic growth, such as Energy, Industrials, and Financials, outperformed; conservative areas of the market, including many consumer stocks and Utilities, lagged. The performance variance reflects a “risk on” sentiment as investors view positively the prospects for tax reform and improving global economic conditions. Congressional leaders have promised to release… View More

Markets rose last week as Hurricane Irma caused less damage than feared and tax reform efforts took center stage. Prices for both U.S. Treasuries and gold fell following steady increases since early July; an apparent easing of geopolitical tensions with North Korea (notwithstanding Friday’s early morning launch of a missile over Japan) relaxed demand for these “safe haven” assets. The price of West Texas Intermediate crude, the North American benchmark, briefly surpassed $50 per barrel for… View More

We saw this commentary from one of the research analysts we follow. Brian Wesbury is the Chief economist at First Trust and we thought you might find his commentary interesting. This dovetails with the update we sent out last weekend about not believing everything you see or hear in the media. What Brian is discussing is the need to be honest about how and why the Federal Reserve grew its balance sheet. The Federal Reserve will finally look to start reducing its balance sheet and as it does, the… View More

Stocks pulled back last week during the holiday-shortened week as investors paused to assess the potential impact of multiple hurricanes, legislative developments, and ongoing tensions with North Korea. On Sunday, Hurricane Irma made landfall in Florida barely ten days after Hurricane Harvey caused historic flooding in Texas; and, this week, Hurricane Jose is expected to follow Irma’s path through the Caribbean. The natural disasters will sap economic activity in the third quarter; over time, … View More

We recently ran across on article on wealthmanagement.com that we thought would be timely. They, as have we, observed and increase in concern over the stock market's value (we've also encountered this concern in relation to the bond market). "Lately, we have seen an uptick in investors who express concern that stock valuations are overheated and could soon spill into bubble territory. This is predictable, thanks to markets surpassing one benchmark after another in recent months—a surge that, … View More

August was a choppy, but essentially flat month for the markets. The price return of the S&P 500 was -0.19%, the Dow Jones Industrial Average was -0.07%, and the Nasdaq’s price return was 1.59%. The Barclays Aggregate Bond Index was up about 0.67%. As for volatility in the markets, the VIX hit its year-to-date high on August 11th, climbing nearly 70% higher than where it started the month. Much of the increase in the VIX can be attributed to the tensions with North Korea, and certainly som… View More

Our hearts go out to the families affected by the devastation of Hurricane Harvey. The American spirit is alive and well as was demonstrated to us in last week’s search and rescue of the flooded areas. We wish all of our neighbors in Texas and Louisiana a speedy recovery. Stocks rose last week on generally upbeat economic data and elevated expectations for tax reform, even as Hurricane Harvey inflicted major damage throughout Texas and Louisiana (more on this below). The September employment … View More