Economic Conditions

  • Are the wealthy really in line to lose said wealth?

    The Demographic Cliff

    About 30 years ago, I was able to predict the U.S. would see a major generational spending peak in 2007, all from my demographic indicator, the Generational Spending Wave.  On a 46-year lag from the time they were born, that’s when the peak number of baby boomers would peak in spending for the average household.

    After that, they would slow in spending, ultimately sending the economy over a “demographic cliff.” Remember, 70% of the economy relies on consumer spending! When it slows, everything falls with it.

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  • Central banks may be exaggerating the deflation risk.

    The Deflation Sky May Not Be Falling

    Deflation is portrayed as the great economic scourge.  It exacerbates debt-servicing costs and encourages consumers to defer purchases.  Central banks in Japan and Europe have responded with aggressive, unorthodox measures, often combining asset purchase programs with negative interest rates. 

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  • A market recovery has a calming affect the begets greater recovery.

    Healing Wounds with a Recovery

    The angst that characterized the first several weeks of the year continues to dissipate.  Major equity markets are extending their two-week recovery into a third week. Immediate concerns about the US falling into a recession have eased.

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  • There is an argument for weak demand, but we may not be at peak capacity.

    Weak Demand Yes, but What of Capacity?

    Many economists argue that the key challenge is that of insufficient aggregate demand.  That is why world growth is slow.  Hobbled with debt, households have pulled back.  Business investment is weak.  Household and business savings have offset government dissavings.  The solution offered by some economists is a large public investment program.

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  • Flirting with disaster, the markets seem to have found a footing.

    Solid Ground, or So It Seems

    It could have been a disaster.  US faltered yesterday, with the S&P 500 again struggling in the 1945-1950 area, and China's PMIs were weaker than expected.  However, after initial weakness Asian shares turned higher.  The nearly 0.9% rise allowed the MSCI Asia Pacific Index to close at its best level in five sessions.

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  • Some are saying China won the G20 meeting, but others are disappointed.

    G20 Meeting Disappointment Trickles In

    It seemed that it was only after Asian equity markets fell did reports begin suggesting disappointment with the G20 meeting.  The narrative followed the price action rather than the other way around.  Before that, at least, one newswire claimed China was the winner of at the G20 meeting.

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  • The global economic event list is long, but all are very important.

    Global Economic Event Report: Inundation Version

    The year has begun on a tumultuous note.  The Nikkei, DAX and S&P 500 all gapped lower the first day of the year. However, heightened anxiety has calmed as the fire appears to have burnt itself out, and equities have moved higher over the past two week.  

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  • The markets are trying to end the week on a positive note.

    Can the Markets End the Week Glass Half Full?

    The US S&P 500 closed above 1950 for the first time since January 6.  Global equity markets are broadly higher in response.  At the same time, ahead of the G20 meeting, the world's second and third-largest economies have signaled additional stimulus will be forthcoming. 

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  • Oil output continues, Brexit talk persists, and the Fed talks rate hike.

    When Global Events Align, and not in a Good Way

    A confluence of factors is raising anxiety levels among investors, expressed in heightened volatility. The S&P 500 was turned back yesterday from the key 1945 level, and global equities are falling today.   The over-production of oil is set to continue.  Saudi Arabia denies intentions to cut output and the Iranians scoffed at suggestions of freezing output.

    API reported another large rise in US crude stocks.  This points to upside risks on the 2.4 mln barrel-build consensus estimate in today's official Department of Defense report.

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