The key gauge to measure inflation is the PCE price index or PCEPI which stands for Personal Consumption Expenditures Price Index. Different equations are used to calculate the PCE price index: Based on GDP data from manufacturers, the BEA calculates how much is consumed. Manufacturer orders, utility sales, service receipts, and securities brokerage commissions are … Continue reading Inflation?
Increasing public sector debt can be misleading because it can still rise during deflation. Private sector debt is where the real focus should be and private sector debt, it is true, has also expanded this year as corporates have sought to shore up balance sheets and extend debt maturities in an effort to survive the … Continue reading Debt deflation?
The U.S. has low inflation combined with monetary and fiscal stimulus which has led to a bubble in stocks. This occurred in December of 2017, followed by a near 20% decline just two months later. We saw it again in February of this year. With overly confident investors, the risk of a decline is extreme..As … Continue reading Market Highs and Herding
The U.S. lost 21.2 million jobs in March and April and has now gained bacl< 12.3 million or 58% of the total lost. One item that rose was average weeks unemployed which rose to 21.2 weeks from 20.7 weeks. The total number unemployed for 27 weeks or more rose to 3,556 thousand, up from 2,405 … Continue reading Demand and Deflation Watch
Commonly, a security or a market gets costly because of sound fundamentals promoting a positive mood and a definite upswing. The valuation inevitably becomes overextended, estimation turns out to be excessively bullish, and momentum starts to melt away. The pattern reverses. Sentiment will begin to turn as the pattern rotates down. Momentum will generally top … Continue reading Losing Steam
What if we were to forget the annualized GDP numbers for a moment and compare yesterday's numbers against another tough time, by looking at the actual GDP numbers in the trillions. We get a fairly clear figure that in absolute and relative terms we may be at the start of a 6 to 9 mos … Continue reading Back to Normal
In his paper, Portfolio Selection, Markowitz led with: “The process of selecting a portfolio may be divided into two stages. The first stage starts with observation and experience and ends with beliefs about the future performances of available securities. The second stage starts with the relevant beliefs about future performances and ends with the choice … Continue reading Gazing At The Future
To avoid fiduciary breach claims due to costs, there are several things an investment committee can do to avoid being dragged into court by their participants. 1) Make certain your investment committee is proactive and members either have the expertise to perform or engage those that do. The reality is all fiduciaries have potential liability … Continue reading Staying out of trouble as a fiduciary
Assume for a moment that you must pick one of two investment portfolios. The first one is a buy and hold approach, 100% stocks. The second portfolio gets 50% of the upside and 50% of the downside. Which would you pick? For the 2nd approach, the initial investment of $1,000 declined to $764 in less … Continue reading 50/50