Economy

Currency Markets & Knightian Uncertainty February 08, 2019

Posted by Steven Vannelli, CFA in Economy, Markets

Knightian uncertainty is named after University of Chicago economist Frank Knight (1885–1972), who distinguished risk and uncertainty in his work Risk, Uncertainty, and Profit: “Uncertainty must be taken in a sense radically distinct from the familiar notion of Risk, from which it has never been properly separated…. The essential fact is that ‘risk’ means…

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The Employment Report is Not All It’s Cracked up to Be February 01, 2019

Posted by Bryce Coward, CFA in Economy

Today’s “blowout” employment report, while strong in some respects, should be taken with a grain of salt. It’s important to remember that employment is a lagging indicator. Payroll employment often peaks either at the beginning or middle of recessions, so it provides virtually no warning…

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Is 2019 Going to be the Year of the Profit Margin Problem? December 12, 2018

Posted by Bryce Coward, CFA in Economy

2018 has been kind to corporate profit margins. In fact, the margin expansion we’ve seen so far in 2018 is unprecedented in a late cycle economic environment when wages are rising briskly, at least looking back over the last thirty years. What has been different…

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Prognosis for Fourth Quarter Growth December 06, 2018

Posted by Steven Vannelli, CFA in Economy, Markets

One of the more well-recognized Now-Casting data series is the GDPNow series produced by the Federal Reserve of Atlanta. Every day they incorporate economic data releases and update their estimate for GDP growth in the current quarter. GDPNow is a great source of information on…

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A GDP Report That Screams Trade Wars and Government Spending October 26, 2018

Posted by Bryce Coward, CFA in Economy

Third quarter real GDP came in at a 3.5% QoQ annualized rate for the third quarter, above expectations for a 3.3% growth rate. The growth rate itself wasn’t much of a surprise, and frankly, neither were the drivers of growth. But, the report is reminder…

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Trade War is Boosting US Economic Activity … in the Short-Term October 10, 2018

Posted by Steven Vannelli, CFA in Economy, Markets

Overnight, new data released in China suggests businesses are having a tough time lately. Cheung Kong University produces an alternate PMI Business Conditions Index in association with the China Federation of Logistics and Purchasing. The latest data point plunged more than 10 points from its…

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Wages Are Rising and The Phillips Curve is Not Dead September 07, 2018

Posted by Bryce Coward, CFA in Economy, Markets, Portfolio Management

The Phillips Curve (the relationship between wages and the unemployment rate) finally awoke from its slumber with today’s unemployment report showing private sector wages rising 2.9% year-over-year and non-supervisory wages rising 2.8% year-over-year, the fastest growth rate since 2009. Even more important than that, though,…

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