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Tag Archives: Economic growth

Weekly Market Pulse: Nothing To See Here. No, Really. Nothing.

The answer to the question, “What should I do to my portfolio today (this week, this month)? is almost always nothing. Humans, and especially portfolio managers, have a hard time believing that doing nothing is the right response….to anything…or nothing. We are programmed to believe that success comes from doing things, not not doing things. And so, often we look at markets on a day-to-day or week-to-week basis and think something of significance happened and we ought to...

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Weekly Market Pulse: Perception is Reality

It is said that there are two types of people in this world. Those who see the glass as half full and those who see it as half empty. On Wall Street, we call them bulls and bears. A bull can see an economic report and perceive it in a way that seems wholly illogical, misguided, and downright stupid to a bear. And vice versa for the bears who see every report as a harbinger of doom. What’s really strange about this is that, at times, they are both right, bull and bear. They just see...

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Weekly Market Pulse: How High Can Rates Go?

I’ve been getting that question a lot these days. How high can rates go? It is asked in a way that seems to imply that the answer is obvious – not much. Why? The answer is almost always the same; the Fed can’t and won’t let rates go up. If they did, it would kill the economy and raise the interest cost of the government. They can’t let that happen so they’ll implement yield curve control and keep long-term rates from rising. The Fed is believed so powerful...

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Weekly Market Pulse – The Message Of The Market

I was told many years ago when I started in this business that it wasn’t my job to predict the future. Our job as investors is to properly and accurately interpret the present. I was also told that wasn’t as easy as it sounded and the current consensus about the state of the world was probably, almost certainly, almost always, wrong. Last week I thought about that as I listened to guest after guest, talking head after talking head tell me that the bond market was selling off on...

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Weekly Market Pulse – Real Rates Finally Make A Move

Last week was only four days due to the President’s day holiday but it was eventful. The big news of the week was the spike in interest rates, which according to the press reports I read, “came out of nowhere”. In other words, the writers couldn’t find an obvious cause for a 14-basis point rise in the 10-year Treasury note yield so they just chalked it up to mystery. Of course, anyone who’s been paying attention knows that rates have been rising for almost a year...

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Consumer Price Index: Jump in Gas Prices Pushes Overall CPI up 0.3 Percent in January

(This is a compilation of Dean Baker’s quick-take analysis over Twitter. Follow @DeanBaker13 on Twitter to get his quick-take analysis of government data immediately upon release.) The overall inflation picture looks good. Inflation in the problem areas (rent, medical care, and education) continues to be under control. We will see a bounce back in hard hit sectors like airfares and hotels.  var divElement = document.getElementById('viz1612965718009');...

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PREVIEW: What to Look for in the January Consumer Price Index

(The monthly Consumer Price Index (CPI) is scheduled for release by the Bureau of Labor Statistics on Wednesday, February 10th at 8:30 AM Eastern Time.) There has been a sharp slowing of inflation in the main problem sectors of education, medical costs, and rent. In the last four decades, education and medical cost inflation has hugely outpaced the overall CPI. In addition, inflation in rent had been running more than a full percentage point higher than the overall CPI since 2014. Inflation...

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Four Percent Fourth Quarter Growth Leaves GDP 2.5 Percent Below Year-Ago Level

Consumption spending has been contracting over the course of the fourth quarter The economy grew at a 4.0 percent annual rate in the fourth quarter, driven largely by strong growth in housing and investment in equipment. This growth, following the extraordinary 33.4 percent post-shutdown growth in the third quarter, still leaves the GDP 2.5 percent below its year-ago level. The growth reported for consumption is entirely due to strong third-quarter growth. There is an important timing issue...

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Conventional Wisdom Is Nothing of The Sort

If you had known in October all that would transpire over the next 2 ½ months, how would you have positioned your portfolio? The conventional wisdom before the election was that a Biden win would be negative for stocks because he has promised to raise taxes and specifically corporate taxes. In 2016, conventional wisdom was that a Trump victory would be bad for stocks because of his protectionism. In both cases, conventional wisdom turned out to be nothing of the sort. After the November...

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The DeFazio Bill: Reducing the Financial Industry’s Tax on Retirement Savings

Representative Peter DeFazio, along with seven House co-sponsors, introduced the “Wall Street Tax Act” today. This bill would impose a tax of 0.1 percent of sales of stocks, bonds, options, and other derivatives. According to the Congressional Budget Office, it would raise almost $800 billion over the course of the next decade. This would be more than enough to cover the entire food stamp budget over this period. It would be almost enough to fully replace the annual research spending of the...

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