Snow Days?

By | 2017-07-17T12:21:29+00:00 February 13th, 2017|Uncategorized|

How do storms impact the markets? Source: NOAA We seem to be in a storm cycle. We just had a couple nor’easters, and it looks like more snow is on the way. At times like these, people wonder just how much weather can affect the economy. Last year was a great case-study. For the previous several years we’d had heavy weather disrupt the first quarter’s economic growth. Last year we had a mild winter, along with low energy prices. Economists were curious whether lower [...]

Motoring On

By | 2017-07-17T12:21:30+00:00 January 24th, 2017|Global Market Update|

Where is the economy headed? Photo: Thomas Nilsson. Source: Pixabay Market-watchers are always looking for insight into what’s happening in the economy. It’s important to separate the signal from the noise. We can easily get distracted by politics, headline news, and our personal perspective. If you have a friend who can’t seem to find a job, it’s easy to conclude that the economy isn’t creating many jobs – even though your sample size makes the observation statistically irrelevant. But one economic factor that has [...]

Rebooting Expectations

By | 2017-07-17T12:21:31+00:00 January 12th, 2017|Global Market Update|

What’s happening in the global economy? JP Morgan Global Manufacturing PMI. Source: Bloomberg It’s no secret that the US stock market is approaching record levels. Business news reports seem to be obsessed with the Dow’s flirtation with the 20,000 mark – which first neared about a month ago. But far more important than Disney or IBM’s price – stock prices, after all, determine the level of the Dow Jones Industrial Average – is the status of the global economy. And the world economy has [...]

Great Expectations

By | 2017-07-17T12:21:39+00:00 October 21st, 2016|Global Market Update|

Is the market suffering from a case of mistaken identity? Public Domain. Scene from “Great Expectations.” Source: Wikipedia In Charles Dickens’ novel “Great Expectations,” his main character Pip is a poor orphan who suddenly starts to receive money from an unknown source. He thinks his mysterious benefactor is the cold and eccentric Miss Havisham. Miss Havisham is wealthy but mysterious, and she had taken Pip on as a companion for herself and her adopted daughter, Estella. In reality, though, Pip’s money was coming from [...]

The Upside of Debt

By | 2017-07-17T12:21:46+00:00 August 19th, 2016|Global Market Update|

Is all this borrowing good for us? Source: St. Louis Fed A growing level of debt in an economy can be a good thing. By borrowing money to pay for capital, we can become more productive and everyone prospers. Think of the US borrowing massive amounts of money to build the interstate highway system in the ‘50s and ‘60s. The important thing to remember is that the return on investment has to be higher than the cost of the borrowing. That’s why today’s persistently [...]

Winter of (Dis)content?

By | 2017-07-17T12:22:07+00:00 March 8th, 2016|Global Market Update|

Is this winter the best ever, or the worst? Photo: Viktor Hanachek. Source: Picjumbo For most people, this has been a pretty mild winter. Apart from the massive snowfall that hit the east coast about a month ago, there have been relatively few winter storms. A year ago, Boston was buried under over 9 feet of the white stuff. The record cold and record snowfall seemed to never end. Now, the streets are clear and home buyers are getting an early start to 2016. [...]

Relatively Speaking

By | 2017-07-17T12:22:08+00:00 February 26th, 2016|Global Market Update|

If everything is so great, why does it feel lousy? Salvadore Dali: The Persistence of Memory. Source: MOMA There’s a disconnect in the economy: the statistics generally look pretty good. But if you ask people how they’re doing, you don’t get a lot of positive feedback. There aren’t a lot of layoffs, but people aren’t getting big raises, either. What’s going on? Part of the answer has to do with the time-lags inherent in the economy. The price of oil started falling almost two [...]

On The Lookout

By | 2017-07-17T12:22:09+00:00 February 5th, 2016|Global Market Update|

Are we headed for a recession? Photo: Dee Golden. Source: Morguefile The short answer is, nobody knows. Recessions happen with surprising regularity in an advanced economy, but predicting them is challenging. Stocks are down right now, and this has people worried that the economy will turn down and stocks will fall even further. After all, stocks lead profits which lead the economy. So the equity market is a leading indicator, but stocks have predicted 9 of the last 5 recessions. They fell dramatically in [...]

Gaining Perspective

By | 2017-07-17T12:22:19+00:00 December 9th, 2015|Global Market Update|

Are we all doomed? Source: NASA It’s easy to get worried about the economy. Alarmist news media tend to focus on the most negative trends. “If it bleeds, it leads” still sells papers—or page-views. And, to be fair, there’s a lot to worry about. Plunging oil prices may be just due to OPEC pumping more than expected—or they might indicate a lack of demand. Falling commodities could be due to China’s shift from a manufacturing to a service economy, or they could be part [...]

Asset Values and Valuation

By | 2017-07-17T12:22:22+00:00 November 2nd, 2015|Global Market Update|

What’s a stock worth? Photo: Honzik Fidler Source: Morguefile “The market is over-valued.” “No, it’s fair.” “No, you’re missing the point—the economy has changed.” “What? Are saying it’s different this time?” “It’s always different.” Arguments over stock-market valuation have been around ever since stocks have traded. In many ways, the purpose of an open stock market is to discover what the clearing price for a company should be—what price satisfies both the buyers and sellers of a company’s shares. But just knowing something’s price [...]