Expensive Valuations & Late Cycle Indicators

Investors are trying to figure out what it will take for the bull market to reach a new record high. Records have been set in the Russell 2000, the tech sector, and the S&P 400, but the most followed index, which is the S&P 500, hasn’t broken its January...

Are Equities Over-Owned By Households?

Let’s be clear, there are valuation metrics, principally the CAPE ratio, which show equity prices in June 2018 are expensive. However, that doesn’t mean you need to be mislead by other false bearish narratives. Stocks can have low long term returns and there can also be wrong bearish arguments....

Avoid Investing Based On False Premises

Surprisingly, there are popular bearish narratives even as the stock market is a few percentage points away from its all-time high and the economy is in one of the greatest quarters of this expansion. Since there are popular bearish narratives, there are myths for us to bust on the...

Is The Economy Overheating?

Near the end of the business cycle the most important factor to consider is whether inflation is getting out of control. The Fed’s goal is to have 2% year over year core PCE. The Fed likes to raise rates ahead of the goal being reached because once inflation accelerates,...

2020 Forecast Doesn’t Warrant Current Valuations

The U.S. economy continues to show signs that the Q2 GDP growth rate might be above 4% which would be one of the best quarters of this expansion. If this rate were to continue, what some consider impossible would be happening. The bears say this is just a late...

Is The ‘Gig Economy’ Real?

In an article from December 2017 we described the new ‘gig economy.’ For those unfamiliar, the gig economy is a reference to freelancers and short-term contract work becoming more prevalent in the economy. As we mentioned in the previous article, the results from surveys showed that independent contractors actually declined...

Small Banks Are Disappearing

There is a natural fear that if the economy isn’t regulated, risks will occur which can hurt bystanders. For example, people fear that if the banks aren’t regulated, then they will make risky loans and go bankrupt. However, if banks are allowed to operate in their best interest, many...

Strong Income & Consumer Spending Growth

This expansion has had slow real wage growth which has led many economists and investors to re-evaluate what drives wage growth. If you think supply and demand of labor drives wage growth, then recognize that the employment participation rate for prime age workers still signals there’s slack in the...

No Savings, Imprisoned, & Homeless

In this article, we will review some stats which describe the increase in intense poverty and despair in America. The upper class and the lower class are increasing as the middle class shrinks. This data isn’t necessarily meant to make you sell stocks and put your money in a...

Underlying Problems Of Italy’s Crisis

In previous articles, we’ve discussed how the European economy is seeing some weakness including Italy. That’s a short term issue. Although the U.S. stock market just started caring about the potential for an Italian political crisis again, this is a very long term issue which dates back to the...

M&A Activity Is On A Record Pace

Even though the economy should grow strongly in 2018, at least in the United States, there are some warning signs of a potential recession we will discuss. It’s always important to understand both the bullish and bearish case for equities and the economy. When the economy looked terrible and...

2018 Economy Is Much Different Than 2007

The US economy has changed since the period leading up to the 2008 financial crisis. There is much to learn about this cycle because it is soon to be the longest since 1854. That means the economy will look much different in the year before the next recession than...

Are Americans In Good Financial Shape?

One of the biggest stories in personal finance in May came from the 2017 Report on the Economic Well-Being of Households from the Fed. The report has over 60 pages of interesting data points which mostly includes stats on the personal finance of Americans, but also touches on the...

Myths & Facts: Fundamental Investing

In this article we will review a couple of dynamic changes in the market and one myth which needs to be busted. One of the most important questions on Wall Street is if correlated metrics have a causal relationship. Even when relationships have been correlated for years, that doesn’t...

US Economic Growth Pushes Yields Higher

The biggest trend in markets is the US economy’s outperformance over emerging markets and other developed economies. The data keeps adding up and expanding into a pervasive trend. Japan was added to the list of economies with tepid economic growth which fell to -0.2% in Q1, down from +0.6%...

Economy Not Working For Millennials

The economic expansion from 2009-2018 hasn’t been helping most millennials because the biggest benefits have been gained by those who own assets like stocks. Without asset price improvements, this recovery hasn’t been great as the employment to population ratio has improved, but wage growth has been mediocre. The catastrophe...

Home Renters Highest Since 1965

There are two ways to look at the charts from Pew Research which shows the percentage of household heads who rent their home. Source: Pew Research The first is to say the percentage is going back to historical norms so there’s not much of a reason to worry. The second is...

Myth Busting: C&I Lending Indicating A Recession

  Original article by UpFina Macroeconomic analysis is not about finding indicators and mindlessly listening to them. The game is difficult because the world is always changing. There might be a reason to discount (attribute less importance on) an indicator even after it has had a great track record of forecasting...

Recession In 2020 Is Consensus

In a previous article we showed that Guggenheim expects a recession in the 2nd half of 2019. Wall Street has the stigma that everything is always bullish, or as some managers say, “it’s always a good time to invest”, in order to receive more capital to manage even though they...

Growth & Inflation Are Not The Same Thing

Original article by UpFina Ever since the economy started weakening in 2007 all the way until the Fed’s first hike of this cycle in late 2014, the Fed’s main concern has been boosting economic growth and improving employment. There has been mediocre success on the growth front, primarily a function...

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