Economy

Consequences of an Inflection in the Chinese Yuan November 21, 2019

Posted by Steven Vannelli, CFA in Economy, Markets, Portfolio Management

As hopes for a trade deal fade, similar to May and August, the CNY is devaluing against the USD again. In our work there are a handful of fairly mechanical relationships that should follow if the CNY continues to devalue. First, in the US, stocks…

4Q Growth Expectations Crashing: A Tailwind for Bonds November 15, 2019

Posted by Steven Vannelli, CFA in Economy

Today’s US economic data releases have sent growth expectations plunging for fourth quarter GDP. First, retail sales ex-autos and gasoline rose only .1% in October, well below the .3% expectation. Second, industrial production fell twice as much as expected in October, dropping -.8% compared to…

Confirmation of the Deterioration in Consumer Confidence September 25, 2019

Posted by Steven Vannelli, CFA in Economy

In our mid-quarter update, we highlighted the plunge in the University of Michigan’s consumer confidence indicator, suggesting that “good feelings” among consumers were starting to fade. Often surveys offer a leading glimpse into economic activity. A more confident consumer is more likely to make those…

A Deep Dive into Consumer Confidence September 04, 2019

Posted by Steven Vannelli, CFA in Economy

In this mid-quarter special report, we do a deep dive into the University of Michigan survey and discern what it may mean for the vigor of the consumer moving forward, prospects for a recession and consequences for asset allocation. Download the slides here: A Deep…

German Banks: Cutting Off Nose to Spite Face August 07, 2019

Posted by Steven Vannelli, CFA in Economy

Today Germany’s second largest bank, Commerzbank, reported a fourth straight quarter of falling revenue and projected lower profit for the year, suggesting clients have been impacted by trade tensions. Chief Executive Officer Martin Zielke describes the situation: “Despite all the successes we have made, challenges…

Mid-Quarter Update & Slides: Escalation June 04, 2019

Posted by Knowledge Leaders Team in Economy, Markets, Portfolio Management

In this mid-quarter update, entitled “Escalation,” we discuss the backdrop of escalating trade wars and our belief that the environment is more favorable for US Treasury bonds relative to stocks. The trade war is escalating at a time of weakening global growth, thereby weighing further…

Manufacturing Weakness Continues: A Review of US Economic Data April 16, 2019

Posted by Steven Vannelli, CFA in Economy, Markets

So far this week, we’ve received a few data points that reinforce the manufacturing slowdown taking place in the US. Below is a calendar of events for the last couple days. On Monday, we got the Empire State Survey, a survey of manufacturing in New…

A Precarious Environment, a Mid-Quarter Update (VIDEO/SLIDES) March 08, 2019

Posted by Knowledge Leaders Team in Economy, Markets

Stocks have been on a tear. Manufacturing has contracted, bringing down GDP and earnings estimates. Was the stock bounce real or just a short covering? Sentiment on stocks has shifted to bullish while sentiment on bonds has moved bearish. In this special video report, CIO Steve…

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…

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…

Mid-Quarter Update: The Fed is Tightening More than it Realizes November 30, 2018

Posted by Knowledge Leaders Team in Economy, Markets, Portfolio Management

The Federal Reserve is in the midst of an historic tightening cycle, and it has begun to impact the economy. The latest casualty is the decline in oil prices, which opens up a new set of possibilities in asset allocation. In this special report, we look at the…

Quarterly Strategy Update: The Investment Consequences of a Normalization in Long Rates October 25, 2018

Posted by Knowledge Leaders Team in Economy, Markets, Portfolio Management

On this quarter’s conference call, Steve and Bryce dissected US Treasury bonds, discussing the message of the rates market and how this is directing asset allocation. The following slide deck covers their discussion of the following: The bond market has enjoyed a 10-year tailwind from…

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…

Thoughts on the Term Premium September 07, 2018

Posted by Steven Vannelli, CFA in Economy, Markets

As many have documented, the main channel of transmission for the Fed’s quantitative easing policy was via the term premium component of US treasuries. As the Fed’s balance sheet doubled from 2010 to 2015, the term premium embedded in US treasuries fell from 2.5% to…

What We’re Reading August 21, 2018

Posted by Knowledge Leaders Team in Economy, News

Recently we were asked about the latest books and ideas contributing to our economic analysis. Here’s an incomplete list of what we’ve been reading this summer. Straight Talk on Trade: Ideas for a Sane World Economy By Dani Rodrik A discussion of free trade and…

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