US Economy

  • 14 Jul
    As The S&P 500 Reaches New Highs, Asset Inflation Continues

    As The S&P 500 Reaches New Highs, Asset Inflation Continues

    • All factors are indicating an artificially created asset inflation.
    • Earnings are expected to decline with economic outlook being constantly revised downwards.
    • Gold is gaining alongside stocks which confirms that all assets are inflated.

    Introduction

    Amidst all the turmoil from BREXIT, negative interest rates and global downward economic growth forecasts, the S&P 500 has reached a new high. On Monday it closed at 2,137.16 points, overtaking the previous high of 2,130.82 from May 21, 2015. The Monday record was surpassed again on Tuesday and Wednesday, with Wednesday closing at 2,152.43. More →

  • 13 Jul
    Negative Yielding Debt: A Party for Investors or Pure Stupidity?

    Negative Yielding Debt: A Party for Investors or Pure Stupidity?

    • Almost 30% of global sovereign debt comes with a negative yield.
    • The situation is much worse in Japan and Europe than it is in the U.S.
    • Investors should enjoy the asset inflation party while it lasts but also be prepared for the worst.

    Introduction

    Negative yielding debt seemed impossible and illogical for a long time, but it suddenly became a reality a few years ago and now we are seeing it slowly become the new normal.

    This isn’t just strange, it’s dangerous as risk averse investors—like pension funds and insurance companies—are forced to invest in assets that have traditionally been considered safe but that have now become risky, and their returns minimal. Those low returns will result in lower pensions and lower savings which will create new troubles in the future. More →

  • 12 Jul
    Could the Economic Climate in Europe Be Contagious?

    Could the Economic Climate in Europe Be Contagious?

    • The first hard data after the BREXIT won’t be available until October, but property funds are already frozen.
    • The decline of the pound will lower UK GDP and will spill over into Europe.
    • Italian banks are in trouble as 25% of GDP are nonperforming loans.

    Introduction

    As two weeks have passed since the BREXIT debacle, most heads have cooled off and we can calmly look at the current situation in Europe, the repercussions of BREXIT and contagion risks. It is important to analyze the full potential impact of the BREXIT by analyzing the stability of the European financial system, business investments, hiring and the political risk premium. More →

  • 11 Jul
    Watch Out: The FOMC’s Current Stance Could Impact Your Portfolio in the Long Term

    Watch Out: The FOMC’s Current Stance Could Impact Your Portfolio in the Long Term

    • Bonds are becoming riskier as yields are falling.
    • Inflation is at 1.2% and very likely to get higher as full employment is approached.
    • The FOMC predicts stability which could create a great environment for traders.

    Introduction

    On July 6 the Federal Open Market Committee (FOMC) June meeting minutes were released. As they give clear insight into how the controllers of our monetary policy think, it is very important to analyze the minutes in order to better position one’s portfolio and also execute short- and medium-term trades. The FOMC gave a clear indication of their expectations in relation to future GDP growth, unemployment, inflation and its federal funds rate. All of the mentioned indicators will have different effects on various investments. More →

  • 07 Jul
    Major Indicators Are All Positive, But Is It Time To Get Fearful?

    Major Indicators Are All Positive, But Is It Time To Get Fearful?

    • Economic data is strong and positive.
    • Neither jobless claims nor consumer spending show signs of weakness.
    • The issues remain in valuations, optimism and low yields.

    Introduction

    In the post-BREXIT world, there is a lot of speculation but no one knows what will happen. This article is going to provide a general outlook on how the economy is doing and try to extrapolate trends while ignoring the noise provided by the media. More →

  • 29 Jun
    BREXIT Aftermath: Where to Look for Returns & What to Avoid Now

    BREXIT Aftermath: Where to Look for Returns & What to Avoid Now

    • U.S. and Europe are overvalued, especially seeing the current political situation and economic fragility.
    • What’s about to hit Europe and the U.S. already hit emerging markets in 2015. There are opportunities in emerging markets now, but where?
    • Bonds seem the riskiest asset of all with no yield and huge potential downside.

    Introduction

    After last week’s BREXIT vote the markets have been in a free fall with a slight recovery yesterday. But savvy investors have been expecting this and it has been a recurring theme at Investiv Daily that stocks are overvalued. In such an overvalued environment it is normal that inflated asset prices take a beating at any sign of future uncertainty. More →

  • 24 Jun
    How to Prepare Your Portfolio For The Next Recession or Stock Market Crash

    How to Prepare Your Portfolio For The Next Recession or Stock Market Crash

    • The risks of a slowdown are higher than the upside.
    • Fundamental trends are negative in advanced economies while emerging markets show higher growth rates and are cheaper.
    • It is important to create a diversified portfolio with uncorrelated assets.

    Introduction

    In an environment where it seems maximum potential for the U.S. economy has been reached, the St. Louis FED chief, James Bullard, has said in his most recent report that he favors only one interest rate increase through 2018, which would at best keep things stable. His view is further supported by the fact that the unemployment rate is sitting at below 5%, and the Personal Consumption Expenditures PCE inflation—measured by the Dallas FED—is at 1.84%, both of which signal that the economy has reached its maximum potential. More →

  • 23 Jun
    Will There Be A Long Term Impact To The Fed’s Shift In Rhetoric?

    Will There Be A Long Term Impact To The Fed’s Shift In Rhetoric?

    • A positive outlook seems more political than realistic as the FED is out of maneuvering power.
    • Keeping interest rates unchanged is the best and the only thing the FED can currently do.
    • Low interest rates will weaken the dollar, boost exports and increase corporate earnings in the upcoming earnings season.

    Introduction

    In FED’s Chairwoman Yellen semiannual policy report, the rhetoric has significantly changed since the last report in February. In short, the full employment target is almost reached but the inflation rate is still below the targeted 2% and the expectations for the reaching of that target have been changed from short term to medium term. Further, the latest job reports show a slowdown in jobs increases which creates a bit of a scare. The FED estimates the slowdown to be transitory. More →

  • 13 Jun
    Do You Feel 50% Richer than 7 Years Ago?

    Do You Feel 50% Richer than 7 Years Ago?

    • US net worth has been increasing due to asset price inflation.
    • Asset price inflation has been influenced more by cheap money and less by GDP that has been growing on debt based consumer spending.
    • As the FED is out of firepower to protect the markets and the economy from any shocks they have no downside cushion.

    Introduction

    On June 9 the FED released its quarterly Financial Accounts of the United States. The report shows the total of accounts for various things, from net household worth, debt per segment, consumer spending to the general flow of funds. Unlike the usual newspaper that focuses on easy to reproduce single pieces of information, this 196-page report gives a clear picture of what is going on in the US economy, the developing trends and therefore has to be well understood by anyone who has an interest in the US economy. More →

    By Sven Carlin FED Investiv Daily US Economy
  • 09 Jun
    Forget About The November Elections – This Will Impact Your Investments Even More

    Forget About The November Elections – This Will Impact Your Investments Even More

    • Slower global growth will have a much stronger impact on corporate earnings than interest rate increases.
    • US productivity is declining and GDP growth is based on increased consumption amidst cheap financing.
    • Corporate earnings are the source of your investment returns, and the picture is not one of growth.

    Introduction

    Amid all the fuss around interest rates, Yellen, jobs, Clinton and Trump there is one piece of information that is very significant for investors but is often disregarded. More →

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