To The Moon

The US economy remains on track to end the year with a moderate increase in output, according to the median Q4 GDP estimate based on a set of nowcasts published by several sources. Real (inflation-adjusted) growth is projected to increase 2.0% in Q4 for the annualized comparison, based on the median. Beyond Q4, there’s renewed uncertainty about how the Trump 2.0 economic agenda will reshuffle macro conditions for the US and beyond. Richard Drury The US economy remains on track to end the year with a moderate increase in output, according to the median Q4 GDP estimate based on a set of nowcasts published by several sources. Recession risk, as a result, is still a

American shares remain the odds-on favorite to dominate 2024 performance for the major asset classes. Vanguard Total US Stock Market ETF is up more than 26% year to date. Several varieties of foreign bonds are this year’s losers, led by inflation-indexed government securities ex-US via WIP, which has shed 6.8% in 2024. Markets may take comfort in the Trump’s pick for Treasury Secretary, reasons Kit Juckes, chief FX strategist at Societe Generale. cemagraphics As the final weeks of the trading year come into focus, American shares remain the odds-on favorite to dominate 2024 performance for the major asset classes. Using a set of ETF proxies through Friday’s close (Nov. 22) highlights

The ongoing rise in continuing claims looks worrisome, but initial claims are telling a considerably more upbeat story. The positive spin via initial claims is probably the superior metric for assessing the near-term outlook for payrolls and, by extension, the economy. Continuing claims carry less weight for looking forward. The gap between the diverging trends in continuing vs. initial claims will probably close soon, in favor of the relatively upbeat claims data. SDI Productions The ongoing rise in continuing claims looks worrisome, but initial claims are telling a considerably more upbeat story. Which one’s the better measure? The positive spin via initial claims is probably the s

Hiring and firing by companies, in short, is the critical factor from a business cycle perspective vs. the minor role for government payrolls. The private/total spread has been negative for 19 straight months. If the spread doesn’t soon rebound into positive terrain, it could be an early warning sign for 2025. Flashpop If you could only track one economic indicator to monitor the economy, the trend in payrolls would be a solid choice. Think of it as the fuel that powers consumer spending engine, which accounts for nearly 70% of economic activity. The good news

After two rounds of rate cuts that have trimmed the Fed funds target rate by 75 basis points to the current 4.50%-to-4.75% range, policy still appears to be moderately tight as of October 2024. The dilemma for the Fed is that the latest consumer inflation data suggest pricing pressure has turned sticky and so it's premature to cut rates again. Several nowcasts for US economic growth in the fourth quarter point to an ongoing if gradual slowdown. Richard Drury The next round of central bank decisions could rank among the most challenging in recent history, perhaps in decades. Policy hawks and doves can cite a fair amount of evidence for supporting their respective views. The deciding factor, as usual, will be

The appetite for US equity risk has wobbled in recent months, but on the first trading day after Trump’s election victory the bullish signaling revived on several fronts. A sentiment proxy for global asset allocation jumped to a record high yesterday. The ratio for safe-haven utilities vs. the broad stock market fell sharply on Wednesday. cemagraphics The appetite for US equity risk has wobbled in recent months, but on the first trading day after Trump’s election victory the bullish signaling revived on several fronts, based on numerous sets of ETF pairs through Wednesday’s close (Nov. 6). The main exception: bonds, which

The US budget deficit is plumbing depths unseen - by wide margins - relative to the pre-pandemic era. The current level of red ink for fiscal 2024 is $1.832 trillion. Budget forecasters see the deficit deepening in the years ahead without sizeable policy changes. A key factor for the budget outlook is how, or if, the government responds to the expiring tax cuts passed during Trump’s first administration that are due in 2025. The combination of a sharp reduction in the workforce - resulting from deportation of millions of immigrants - and a surge in tariffs on imported goods strikes some economists as a recipe for higher inflation. Douglas Rissing Elections have consequences, and so, Donald Trump’s return to the White House as the 47th president will surely change the calculus. The policy d

In past decades, a simple two-factor model was relatively robust for estimating gold’s “fair value”: the US dollar and real interest rates. For several decades, this relationship was relatively robust. But recent history has upended this relationship. What’s driving gold these days? Two factors deserve to be on the short list of likely candidates: central bank purchases of the metal, and hedging strategies designed to offset blowback in a dangerous world. mathieukor Prior to the last several years, modeling the gold market was relatively straightforward. But a lot has changed in recent history, and so has the mix of factors that are front and center in gold’s price trend. In

Today’s revised forecast marks the first higher estimate in the past four months for GMI. US shares are expected to earn noticeably softer results in the years ahead vs. the market’s realized return over the past decade. The case for a globally diversified portfolio looks more attractive compared to the past decade. tadamichi The long-run performance outlook for the Global Market Index (GMI) ticked higher in October. Today’s revised forecast marks the first higher estimate in the past four months for GMI, an unmanaged benchmark that holds all the major asset

A majority of the major asset classes posted monthly losses, based on a set of ETF proxies. Foreign real estate led the losers last month. Stocks in the US and in developed and emerging markets took a hit, too. Richard Drury Global markets suffered a broad-based downturn in October. For the first time since April, a majority of the major asset classes posted monthly losses, based on a set of ETF proxies. The upside outliers: cash and commodities.