US Economy

  • 20 May
    An Analysis of and the Implication of the FOMC Minutes

    An Analysis of and the Implication of the FOMC Minutes

    • An interest rate increase is hanging in the air but no one seems to find enough reasons to pull the trigger.
    • The FOMC expects inflation to be at 2% and interest rates at 2.6% by 2018.
    • Holders of long-term bonds might rethink their positions as interest rate increases could have severe negative repercussions on bond prices.

    Introduction 

    On May 18 the FED released the minutes of the Federal Open Market Committee (FOMC) meeting held in April. The FOMC decided not to increase interest rates in April which gave a short relief to the markets, but an analysis of the FOMC meeting minutes reveals interesting things because it gives indications on the way of thinking FOMC participants have and hints on potential future interest rate increases. While the goal of the FED is to maintain financial stability and increase the resilience of the financial system to shocks, for an investor it is important to look at the economic trends related to the FOMC’s decisions in order to better assess the risks of their portfolio. More →

  • 13 May
    The Odds for a US Recession

    The Odds for a US Recession

    • The current is the fourth-longest US economic expansion period with 84 months of growth.
    • Investment spending has been declining for the last 4 quarters.
    • Recession forecasts indicate increased chances in the medium term.

    Introduction 

    The scariest word for any investor is the word recession. A recession arises when there is negative economic growth for two consecutive quarters. No economic growth makes it difficult for businesses to grow as people tend to spend less and save until better times come around. This creates a spiral as less spending forces companies to lay off employees and further cuts investments. If prolonged economic hardships persist, governments intervene with quantitative easing or with other projects to get the economy going again. A recession has an immediate negative impact on financial markets as investors become more risk averse and seek security above all. More →

    By Sven Carlin Investiv Daily US Economy
  • 09 May
    How the Jobs Report Affects Stocks

    How the Jobs Report Affects Stocks

    • The April jobs report shows two sides: slower hiring and increased working times and wages.
    • The long term outlook is pessimistic due to the constant decline in the labor participation rate.

    Introduction

    On May 6, the Bureau of Labor and Statistics (BLS) released its monthly employment situation summary.

    The report is released on the first Friday of the month for the previous month. It consists of two parts: one presents non-farm payrolls, hours worked and hourly earnings, and the other is created by surveying more than 60,000 households in order to extract the unemployment rate. More →

  • 25 Apr
    A Broader Perspective on the Global Economy

    A Broader Perspective on the Global Economy

    • Easing monetary policies go on globally but do not seem to fuel sustainable growth.
    • China is slowing, Japan is looking toward another recession, and the global outlook is adjusted downwards.
    • Bad news might be around the corner, but good news is as well.

    Introduction

    News is usually focused on the latest happenings. The fact that the human brain is set up in a way that it always tries to focus and eliminate marginal information brings to the consequence that most people do not objectively analyze the world around them. An example: How many blue cars have you seen today? Probably none because you were not looking for them, but as soon as you focus on them you will be surprised by how many you will see. The same applies to finance. More →

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