Based on the 5 May 2019 close the S&P 500 PE on trailing operating earnings is 18.25. That places it at the bottom of my fair value band that is based largely on long term treasury bond yields. We can each have out own theories, but it appears to be that the market is correcting on fears of what Trump’s trade war will have on earnings growth. Figure one
Read More »U.S. Consumers Have Borne the Brunt of the Current Trade War
The National Bureau of Economic Research has highlighted two studies. (hat tip Spencer England) U.S. Consumers Have Borne the Brunt of the Current Trade War Recent tariff increases are unprecedented in the post-World War II era in terms of breadth, magnitude, and the sizes of the countries involved. In 2018, the United States imposed tariffs on a variety of imported goods, and other countries responded with tariffs on imports from America. Two new...
Read More »Scenes from the April jobs report
Scenes from the April jobs report The headline news in Friday’s employment report was excellent. But underneath those headlines, all is not well. Let’s celebrate the excellent headlines first. Adding 263,000 jobs in April was one of the dozen best reports of this entire expansion: Next, here is the YoY% change in nonfarm payrolls, showing an uptick after the deceleration in the prior two months: The total number of unemployed was at the lowest...
Read More »Open thread May 7, 2019
G and GDP update
(Dan here…lifted from Robert’s Stochastic Thoughts) by Robert Waldmann G and GDP update I think it might be time for an update on the crudest of tiny sample reduced form analysis of fiscal policy and the current recovery. One reason for my continued interest is that there was a rather large tax cut enacted in 2017. Trump critics tend to argue that it failed to encourage investment, but did affect aggregate demand. I wonder if the noticeable increase in...
Read More »Sunday Night Humor
[embedded content]viaFarLeftSide.com, Stan Fill, “And that is the story of Noah’s Ark”
Read More »Weekly Indicators for April 29 – May 3 at Seeking Alpha
by New Deal democrat Weekly Indicators for April 29 – May 3 at Seeking Alpha My Weekly Indicators post is up at Seeking Alpha. The trend in the past couple of months across all timeframes has been very much to the positive. It is either a signal of a renewed boom, or else a countertrend bounce back from the December-January government shutdown + residual seasonality due to a late Easter. Because I do not think that the tail wags the dog, my vote is for...
Read More »Energy’s Share of Consumer Spending
One important factor to keep in mind when thinking about the economy is that energy’s share of personal consumption expenditure is now 4%, or about half of what it was in the late 1970s-early 1980s.
Read More »Fiscal Policy and GDP 2019 update
I think it might be time for an update on the crudest of tiny sample reduced form analysis of fiscal policy and the current recovery. One reason for my continued interest is that there was a rather large tax cut enacted in 2017. Trump critics tend to argue that it failed to encourage investment, but did affect aggregate demand. I wonder if the noticeable increase in GDP growth is due to the tax cut or the spending increase from the 2017 omnibus spending...
Read More »April jobs report: great headlines, signs of fraying around the edges
April jobs report: great headlines, signs of fraying around the edges HEADLINES: +263,000 jobs added U3 unemployment rate declined -0.2% to 3.6% (new expansion low) U6 underemployment rate unchanged at 7.3% Leading employment indicators of a slowdown or recession I am highlighting these because many leading indicators overall strongly suggest that an employment slowdown is coming. The following more leading numbers in the report tell us about where...
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