On this chart you can see what has come to be known as the “Trump Effect.” In dark grey and light blue you can see the performance of the Dow Jones Industrial Average and the Conference Board’s Leading Economic Index after November 2016 when Trump was elected. In red and dark blue you can see the performance of each of those indicators in the ten months leading up to the election. All the series have been rebased to 100 for comparison. Originally posted on Youngsworldmoneyforecast.com … [Read more...]
Can Businesses Turn Millennial “Willie Wannabes” into “Eddie Experts?”
Millennials are now the dominant generation in American demographics. Those Millennials aged 26 this year are the largest group of any age cohort today. That makes them the most sought after customer group by businesses. But it turns out, some businesses are having to educate Millennials on how to use their products, because unlike the previously dominant Baby Boomer marketing cohort, Millennials haven't spent much of their time doing the things their forebears did. Gardening? Nope. Fixing things around the house? Not really. Assembling furniture? No. Millennials, it turns out, have spent more … [Read more...]
Thank You President Trump for Record Breaking Stock Market Streak
You can thank President Trump, a pro business and pro economy president, for the stock market's longest streak in 20-years. The S&P 500 closed at its sixth consecutive record Thursday, its longest streak of highs since 1997. The market hates uncertainty and wishy washy leaders--President Trump is neither. … [Read more...]
Today’s Biggest Risks
Nice piece from Stephen Roach at Project Syndicate. Little deep in the weeds on monetary policy, but worth your time. Normalization is all about a long-overdue unwinding of those distortions. Fully ten years after the onset of the Great Financial Crisis, it seems more than appropriate to move the levers of monetary policy off their emergency settings. A world in recovery – no matter how anemic that recovery may be – does not require a crisis-like approach to monetary policy. Monetary authorities have only grudgingly accepted this. Today’s generation of central bankers is almost religious … [Read more...]
Yellen Still Can’t Understand What the BIS has Known for Years About Inflation
Janet Yellen & Co. are puzzled by low inflation and low unemployment. The proper measurement of inflation is part of the Fed’s conundrum, but here the Bank for International Settlements points to another powerful factor dragging down inflation—globalization. Greater globalization creates greater supply and hurts pricing power. As the BIS points out, these are structural factors. Any aggressive effort to fight against structural factors holding down inflation is likely to do more harm than good in the long-run. Paul Hannon reports: Globalization is the most likely explanation for … [Read more...]
Unemployment is so Low There is a Battle Raging for Seasonal Workers
Companies are being forced to roll out the red carpet for seasonal employees this year. As retailers and shipping companies gear up to feed the holiday frenzy of purchases and deliveries, they are running into a problem hiring because unemployment is very low. Jennifer Smith explains the measures retailers are going to in order to attract the necessary workforce: “It’s the tightest labor market we’ve ever seen,” said Sean McCartney, executive vice president of operation services at Radial, which handles online orders for e-commerce companies and national chains such as Dick’s Sporting … [Read more...]
Can Macron Start Unwinding France’s Arcane Labor Laws?
Today France's president, Emmanuel Macron, proposed new labor laws for his country. The French have traditionally protected labor with strict laws about hiring, firing, hours worked and remuneration. Those laws have worked to hold back France's productivity, and part of Macron's election platform was to reform them. Reuters reports that Macron has a plan to do just that. Here's an outline of what Macron proposes for various problems facing France's labor market. RULES IN SMALL COMPANIES Employers of less than 20 people will be able to negotiate directly with employees on workplace … [Read more...]
Janet Yellen & the Origin of the Populist Backlash
No surprise here. The FT points out what most of the American public already knew. Years of low rates and trillions of dollars blown on quantitative easing did little for ordinary Americans. The biggest beneficiaries were the wealthiest 20% of the public. And among those it was the traders and speculators who benefited the most. Ultra-low interest rates have made a rough go of it for conservative investors and income investors. Sadly, the populist backlash that Yellen & Co.’s regressive stimulus helped engineer may be more harmful for long-term economic growth than the recession the Fed … [Read more...]
El-Erian Warns Against Unleashing New Demons to Fight ‘Lowflation’
Rather than take drastic measures to fight what market participants are calling 'lowflation,' Mohamed El-Erian says that it may be better for central banks to stick with the plan they have. He writes at Bloomberg: Having failed to meet the 2 percent target despite aggressive monetary policy, it is far from obvious that central banks would be able to meet a higher objective. And no one is quite sure how the political system would respond to a central bank that pursues much higher inflation as it tries to offset the shortfalls of prior years. Indeed, until we have a better understanding of how … [Read more...]
Can China’s Stop-and-Go Market Reforms Work Forever?
It's two steps forward and one step back in China. As the country allows more market liberalization, companies find ways to exploit the system. Inevitably they run afoul of Chinese state interests, and the government adds new restrictions to remedy the situation. Thus is the ebbing and flowing of market reform in China. But how long can that dynamic persist? Today the New York Times reports that China is cracking down on overseas real estate purchases by its corporations. The businesses are using more debt than the state would like, and to limit "systemic risk" it is cracking … [Read more...]
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