Executive Summary Drawing upon Dr. Lacy Hunt’s Quarterly Review and Outlook for the third quarter 2021, this week’s commentary looks at the relationship between debt and economic growth. The amount of new debt needed to produce a new dollar of GDP currently is near an all-time high. [...]
Executive Summary In the past China’s fast-growing economy was driven by production of exports for the West. However, post the Great Recession exports waned, so China turned to infrastructure spending for growth. This resulted in the over-development of buildings and entire ghost cities (never occupied). Now the [...]
Executive Summary The longer a bubble in stock prices expands, the more the word “valuation” becomes considered irrelevant. Valuation means determining what price is reasonable for a particular stock or stock index such as the S&P 500. A few months ago, I shared a valuation calculation chart, [...]
Executive Summary Is $28 trillion in United States government debt not enough? The answer is “no”, as the Congressionally approved deficit spending will require an increase in the U.S. debt limit. The debt has grown no matter which political party controls the White House (see first graph). [...]
Executive Summary Last week the stock market took a roller coaster ride while bonds took a hit. The 10-year Treasury Note yield rose to 1.46% based mainly on two factors: the Fed’s announcement of tapering their monthly bond purchases beginning late this year and the second is [...]
Executive Summary Monday’s stock market move may have seemed a bit extreme. Many financial pundits will speculate as to the cause; however, sometimes they are correct and other times it is just speculation. This move appears to have been the contagion effect from China’s Evergrande Group, whose [...]
Executive Summary Despite massive stimulus and extreme monetary policy, the “expansion” period between the Great Recession and the Covid19 recession experienced the weakest post-WWII growth rate, at 2.3% average annual growth (see second graph), on record. While the Fed keeps “printing” money (3rd graph), the Federal deficits [...]
Executive Summary This week’s update is brief, so a summary may seem unnecessary. The two main points are the disappointing 235,000 new jobs reported on Friday of the holiday weekend, and the Atlanta Fed’s revision lower of the third quarter GDP forecast. The jobs number was a [...]
Executive Summary Last week all the economic focus was on what Fed Chairman Powell would say at the Jackson Hole meeting. It seems the Fed, as usual, allowed itself enough wiggle room with no real time commitment, and investors decided to opt for a bullish interpretation. The [...]
Executive Summary The bond market is often considered a better indicator of the economy than the stock market. Currently the 30-year Treasury yield has fallen to 1.87%, and the 10-year Treasury Note yield is down to around 1.25%. (See the second graph illustrating the 10-year Treasury rates [...]