The economic recovery that began in 2009 has proven its endurance many times and is now the longest expansion in history. Our base case forecast is that it will continue into 2020 and probably beyond.
The week ahead, like last week, will be crammed with important market-moving events and data points. The challenge for investors will not be in predicting instant market reactions to this new information but rather in understanding how it could change the investment landscape going forward.
The formula in Hollywood today lacks imagination. It's all about remakes and sequels. Financial markets, too, are seeing a series of sequels and a few are opening this week.
In the financial landscape of 2019, the Federal Government and Federal Reserve are playing the parts of over-indulgent grandparents, the markets are cast as the over-stimulated grandkids and investors are left with the role of responsible adults, having to make rational choices and knowing that they will eventually have to deal with the consequences of too much stimulus.
On Wednesday and Thursday of this week, Fed Chairman, Jay Powell, will deliver his semi-annual testimony to Congress on the outlook for the economy and monetary policy. As he prepares, while he will focus on the clarity of his message, he may well be distracted by the potential reaction of political and market audiences.
My wife, Sari, is an excellent cook and sometimes, when I return from a long day, I'm met at the front door by the delicious scent of freshly-baked chocolate-chip M&M cookies. The problem is, with a pair of cookies eaten but a big pile of them still smiling up at me, can I stop at just two? The Federal Reserve faces a similar dilemma when it comes to rate cuts.
I should state, at the outset, that I do not profess to have any deep understanding of quantum mechanics. However, the U.S. bond market and the U.S. stock market seem to coexist in alternative realities today.
On Wednesday, the Federal Open Market Committee (FOMC) of the Federal Reserve will hold its fourth meeting of the year. The Fed is not ready to change interest rates yet.
Following Friday's May jobs report, and in reaction to slower growth, lower inflation and trouble in the global economy, the Fed is clearly taking a more dovish stance, making at least two rate cuts likely by the end of 2019.
Commercial interests dictate that the public must always be shocked or scared out of their complacency and so the "worst case scenario" will always get top billing.
Despite a better than expected outcome from earnings season, the economy once again appears set for a slowdown with second quarter economic growth potentially coming in at less than 1% annualized. Numbers due out in the week ahead should help clarify whether the slowdown is for real this time.
I ran in a local 5K race over the weekend. As the assorted participants milled around at the start, I noticed just how many of them looked on the young side. But this happens more often these days –every year there are more runners younger than me and fewer that are older. And so I huffed and puffed my way around the course, breathing in the dust kicked up by the heels of some young teenager in front of me.
One of the great lessons of history is to avoid slavishly applying the lessons of history. A particularly tragic example of this relates to the First and Second Gulf Wars. The relative ease with which U.S. and Allied forces dislodged Saddam Hussein from Kuwait in 1991 emboldened the U.S. to undertake the far more difficult task of overthrowing Hussein altogether and occupying Iraq 12 years later. Apart from its terrible human toll, the negative results of that second conflict are still being fel...
The U.S. economy of 2019 is, for the most part, a very healthy one and this is fully reflected in the valuations of stocks and bonds. However, it is a complex environment for the implementation of monetary policy.
The week ahead will see a flood of data which will amount to an all-systems check on the investment environment. The numbers are likely to be positive. However, for investors this should not be seen as a "go for market launch" but rather as a cautious OK for a more pedestrian advance.
Just over eight years ago, HBO launched its very successful series, "Game of Thrones," set in the mythical medieval kingdom of Westeros. The first episode was entitled "Winter is Coming," and we were warned that winters in Westeros were particularly harsh and could last for years.
For most of the United States, April 15 is the day when annual tax returns are due and every year, at around this time, the Tax Foundation announces "Tax Freedom Day." The idea behind Tax Freedom Day is to recognize that every year a sizable chunk of Americans' income goes to pay federal, state and local taxes.
In a narrowing road, it is best to stick to the middle. And in the spring of 2019, the U.S. economy is moving steadily down the middle of a narrowing road.
After a downhill cascade in the fourth quarter, global risk assets have staged a steep assent in the first quarter of 2019 and, this being the case, as we move into the second quarter, it seems like a good time for investors to think about the outlook.
In the golden age of Hollywood, before the era of special effects, the success of a movie depended to a large extent on the storyline. One frequently used construct was the wrongful arrest of an innocent person.
All my life, I have been running against clock and calendar. I pretend to hate the frenzy and wish for more flexibility. But the truth is, I couldn't really work any other way. Deadlines force decisions. Deadlines require efficiency. Deadlines provide clarity.
Friday's Jobs report was essentially "wheels down for landing" on this long economic expansion, as the economy tries to navigate a smooth transition from 3% growth to a more sustainable 2%. However, given the volatility in the data, the passengers are understandably nervous.
Should an overweight man, with elevated cholesterol, eat a 32-ounch steak? Probably not, you might say. Provided he stays comfortably seated in his chair, no short-term problems may ensue. However, in the long run, it is clearly risky and, even in the short run, some obviously negative effects are being masked by the fact that he is sitting, rather than engaging in vigorous exercise.
One of Charles Dickens’s most lovable characters, Mr. Micawber, offered a young David Copperfield sage advice on personal financial management. Spending sixpence under your income causes no problems, but spending sixpence over can set you on the road to ruin.
In the last scene of Sydney Pollack's beautiful movie "Out of Africa," two lions gather on the hero's grave and look out at the cattle on the plain below. It is a princely scene — an assumption that the animals below are somehow the property of the lions, to consume whenever they feel hungry. For some reason, I was reminded of this scene this week, as politicians from both parties decried what they saw as corporate bad behavior and proposed measures to fix it.
It is possible, I am told, for a person to function perfectly adequately for an entire day without caffeine. For myself, however, I need a large cup of Joe first thing in the morning, followed soon after by a second. In 2018, the American economy received a very strong cup of coffee, extra-bold Colombian, in the form of a tax cut.
Last weekend, I installed a new microwave in our kitchen. Based on the directions, it was going to be easy -remove the old microwave from the wall plate, replace it with the new one, and then use two anchor bolts to secure the unit to the cabinet above.
In his Notes on the Week Ahead, Dr. David Kelly examines the economic implications of the government shutdown, the peak of the earnings season, the January employment report, Chinese trade talks, weakening global PMIs and the first Fed meeting of the year.
There is a famous old John Wayne movie, set in Ireland, called The Quiet Man. It is, to be honest, not a particularly authentic portrayal of my native land, but the plot is strong and includes a long drawn out brawl between Sean Thornton (played by Wayne) and his brother-in-law, Squire Danaher.
The week ahead will be dominated by fourth-quarter earnings reports and increasing concerns about the damage being inflicted upon the economy by the government shutdown.
