According to the NFIB survey of small businesses out yesterday, small business optimism is losing upside momentum. The 3-month moving average of small business optimism turned sharply lower in recent months after peaking in February. Small business optimism is still off of the deeply depressed levels where it languished for much of this “recovery,” but the recent trend does not send an encouraging message. … [Read more...]
No More Excuses for the Fed
The jobs report was released this morning and number of new jobs created in August came in at 173,000, missing estimates by about 44,000 jobs or 0.02% of the total U.S. labor force, but last month’s number was revised up by 30,000 jobs. The unemployment rate fell to 5.1%, which is dead smack in the middle of the Fed’s full employment estimates that were released only two months ago. Wage growth also improved in August, rising 0.3% for the month compared to a 0.2% gain during the prior month. On balance the jobs report had more positives than negatives. There is now nothing in the … [Read more...]
Auto Sales Surge
Is this where all the money saved from low gasoline prices has been going? … [Read more...]
VIDEO: Central Bank Mispricing is Backdrop to Sellof
Great explanation on the folly of misguided monetary activism from Jim Grant. The video is a must watch for those still wondering why the most aggressive Fed policy in the history of the United States has been so ineffective. … [Read more...]
Market Correction: Is this the New Normal?
Over the last five trading days the market has cratered by almost 11%. An 11% decline in stocks is not an out of the ordinary correction. Stock market corrections, defined as a decline of 10% or more happen about once every year. The last 10% correction in the stock market was all the way back in 2011 so we were overdue. The suddenness of this correction and the speed of the uninterrupted decline is what is uncommon and rather disturbing. Over the last seven decades, there have only been seven other occasions when stocks fell by as much as they did over the last five trading days. We … [Read more...]
Beware Bio-tech risk in ETFs
Barrons’s had a nice piece over the weekend on the hidden exposures that may be lurking in your small-cap fund. Bio-tech stocks have been on a tear over the last few years, rising to what can only be described as bubble levels. The bubble is so big that that the Fed even spotted it. Surprising considering their recent track record on bubbles. But that was over a year ago. Since then, the SPDR Bio-tech index has risen another 50%. So what, you may ask, why should I care about the bubble in small-cap bio-tech stocks if I don’t own a bio-tech fund? Because your “diversified” small-cap ETF … [Read more...]
The $18 billion Name
Here’s a head-scratcher. Google announced on Monday that it was changing its name to Alphabet and redoing its organization chart. Seriously, Alphabet? Yup, Larry Page, the company’s CEO said they chose Alphabet because “it means a collection of letters that represent language, one of humanity’s most important innovations.” Mr. Trump might say that name is weak and stupid—I’d say it’s a bit corny too. Alphabet will be the holding company for all of old Google’s businesses. The Google name will now be used for Google’s main business lines (you know the only ones that make money like Search … [Read more...]
The Biggest Losers
We covered some of the biggest winners in the S&P 500 YTD in a prior post. Which companies are the biggest losers YTD? Below is a list of the 10 worst performing stocks in the S&P 500 so far this year. At the top of the list is Keurig Green Mountain Coffee. Apparently single serve coffee has had its best days? Also on the list are five companies in the commodity production or services business. That’s no surprise considering the bear market in commodity stocks. For the contrarian minded this is where you want to be looking for future opportunities. Also on the list are Michael Kors … [Read more...]
Services Sector Booming
The ISM Non-manufacturing report on business shows that the services sector of the economy is booming. In July, the ISM services index hit its highest level since 2005 and its 4th highest level on record. Among the sub-components, business activity, new orders, and employment were all strong. About 80% of U.S. economic output comes from the services sector. … [Read more...]
The 2% Economy
The latest GDP report came out yesterday and it showed economic growth of 2.3% in the second quarter. First quarter GDP was revised up from a drop of .2% to a gain of .6%. Yesterday’s release also included the BEA’s (Bureau of Economic Analysis) annual revisions to GDP. The annual revisions incorporate newly available, more accurate, and more complete source data. What did the revisions show? This won’t come as a surprise to Mom and Pop on Main Street, but economic growth over the last few years was weaker than originally reported. The compounded annual growth rate of GDP from 2011-2014 was … [Read more...]
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