The Dow dropped more than 3% on Tuesday and Wednesday on fears of a recession, making it the worst start to a quarter since 2008. A more optimistic view prevailed by the end of the week.
— Read on www.barrons.com/articles/dow-jones-industrial-average-battles-back-as-recession-fears-recede-51570238255
Category Archives: Economy
Talking the Economy into Recession
In the past four to six weeks, the financial forecasters and entertainment media hosts have been stoking fears of recession occurring in the next twelve to eighteen months. Additionally, numerous financial TV hosts and commentators have performed a Paul Revere like “recession is coming” warning (e.g., “Recession Countdown Clock) despite existing strong fundamentals of the U.S. economy. Essentially, they’re following the standard news media mantra that “if it bleeds (economy perceived to be falling into recession), it leads”.
Whether recession becomes the top trending financial search engine topic or fanned by the hysterical coverage by the financial entertainment media, Americans are succumbing to worry about recession. As a result, they are behaving and taking action that may be detrimental to their long term financial goals and health. Several reports indicated that investors have been moving from equities to less riskier asset classes of bonds, cash and cash equivalents.
Recently, a financial pundit commented that we’re in a peculiar environment of increased U.S. recession fears in the midst of a fundamentally strong economy. Anecdotally, the growing recession fears are due to the near constant media coverage about recession. This recession talk persist despite the strong economic fundamentals, an economy that is still growing, and a strong labor market and consumer spending. The pundit also commented when such dichotomous conditions are present, there are always opportunities present for the savvy and patient investor.
Bottom line, the U.S. economy remains strong and is still growing, but the rate of economic growth is slowing (decelerating growth). Labor market remains healthy and the consumer is spending. The uncertainty of the trade turmoil has caused a slowdown in capital expenditures and business investment. One question disturbing economists is whether businesses have slowdown on hiring due to economic uncertainty. And, finally, Americans are working and Americans are getting paid, according to the August 2019 Payroll numbers.
Guide to the Markets Viewer – J.P. Morgan Asset Management
J.P Morgan’s Guide to the Markets, illustrating compressive market & economic histories, trends & statistics
— Read on am.jpmorgan.com/us/en/asset-management/gim/adv/insights/guide-to-the-markets/viewer
Recessions and bear markets
Stock market since 1900
The Hype: CNBC Recession Countdown
According to one CNBC strategist speaking on the CNBC show Fast Money, he implied that the “recession countdown” clock has started, but the market will rally before the downturn begins.
This coverage of the “recession countdown” clock is the epitome of financial entertainment media hype. It brings to minds a quote from Warren Buffett…
“WE HAVE LONG FELT THAT THE ONLY VALUE OF STOCK FORECASTERS IS TO MAKE FORTUNE-TELLERS LOOK GOOD. ”
Warren Buffett is skeptical of the predictions of economic and financial forecasters, and we should be, too.
Understanding Bonds: Riding the Yield Curve
Rates on bonds of different maturities behave independently of each other with short-term rates and long-term rates often moving in opposite directions. By comparing long- and short-term bond yields, the yield curve describes future trends in bond returns.
— Read on www.kiplinger.com/article/investing/T052-C000-S001-riding-the-yield-curve.html
Equity Volatility Does Not Spell Recession – TheStreet
A Recession Is Not Imminent.
Equities and bonds are worried about a recession.
With the escalating trade war with China, the odds of a U.S. recession have risen a little, to say a one-in-three chance. Still, we are hard pressed to see an actual U.S. recession.
— Read on www.thestreet.com/markets/equity-volatility-does-not-spell-recession-15065765
Consumer Spending and Confidence
U.S. Consumers remain confident, strong and spending.
Consumers haven’t cut back spending even as their worries grow. Consumer spending represents about 70% of U.S. economic activity. Nevertheless, U.S. Consumer cannot save rest of world economically, but they can insulate the U.S. economy from the slowing global economic growth particularly in Asia and Europe. The U.S. economy is relatively self contained, but it’s not an isolated island and it can be affected by what’s happening in the rest of the world.
U.S. consumer is in a good place because the labor market remain strong. Despite the silly talk from financial entertainment media pundits about U.S. economy going into recession during calendar year 2019, the main risk for consumers are the alarmist recession headlines which may create a self-fulfilling prophecy.
But waning confidence could cause them to cut back their spending in the months ahead, potentially weakening the economy. A measure of consumer confidence fell in August to the lowest level since the start of the year. Additionally, a gauge that measures what consumers think about their own financial situation and the current health of the economy fell to a nearly two-year low. Monetary and trade policies have heightened consumer uncertainty—but not pessimism—about their future financial prospects.
The main takeaway for consumers from the first cut in interest rates in a decade and from a brief inverted yield curve was to increase apprehensions about a possible recession. Consumers concluded, following the Fed’s lead, that they may need to reduce spending in anticipation of a potential recession. Falling interest rates and am inversion of the U.S. Treasury yield curve have long been associated with the start of recessions.
Source: Surveys of Consumers. University of Michigan, http://www.sca.isr.umich.edu/.
How grim is the future of retirement? – MarketWatch
Dire jeremiads about America’s looming retirement crisis are so common that it seems “retirementcrisis” is one word. The doom-and-gloom narrative goes something like this: Spendthrift Americans aren’t saving enough, so their living standards will plunge in retirement, and Social Security will buckle from the financial strain of too few workers supporting too many retirees.
Dark visions about retirement in America may be somewhat understandable considering the following: the nation’s deeply flawed retirement savings system; the forecast that Social Security’s reserves will run out in 2035 and the fact that local government retirement systems’ obligations to public sector retirees are increasing faster than the assets set aside to pay for them.
Depressed? Then take a moment to learn about a new report by the nonpartisan Urban Institute think tank: “Nine Charts about the Future of Retirement.”
— Read on www.marketwatch.com/story/how-grim-is-the-future-of-retirement-2019-08-06
PulteGroup Built to Honor™
PulteGroup is saying THANK YOU to military veterans by doing what they do best
PulteGroup Built to Honor™
Since 2001, more than two million soldiers have valiantly served our country in Iraq and Afghanistan. More than 6,500 have made the ultimate sacrifice defending our freedom, while many more have suffered the serious wounds of war. And often when these heroes return home, their fight is not over. Instead, many continue to face unbearable challenges related to their injuries, as well as joblessness and homelessness.
All of us at PulteGroup are forever grateful to our nation’s veterans for their commitment to defending our country and the freedoms we hold so dear. And we wanted to say thank you by doing what we do best. In living our promise to “make lives better,” the PulteGroup Built to Honor™ program provides mortgage-free homes to deserving wounded veterans across the country.
Launched in 2013, PulteGroup operations across the nation have banded together with our dedicated and generous suppliers and contractors to support this effort, having built more than 50 new homes worth upwards of $17 million for deserving wounded veterans. From Michigan to Texas and Washington D.C. to California, our hope is that together we can make a difference assisting our veterans and their families as they rebuild their lives here at home.