Nonfarm payrolls give an overview of the overall employment outlook of the US economy; nonfarm payrolls do not include those employed in agriculture because of the seasonal nature of their work. This report obtains these numbers from 142,000 businesses and government agencies to track the new jobs added in non-farming sectors of the economy. The unemployment rate is at 3.5%, …
Existing Home Sales
Existing home sales provide the number of purchases made for homes, condominiums, and co-ops that have already been built. Existing home sales give an indication of the demand for housing. While home resales may not generate new construction jobs as housing starts do, they have a similar effect on consumer spending as people purchase items for their new home. Existing …
30-Year Fixed Mortgage
The 30-year fixed mortgage rate is very important to the home-buying market because it accounts for over 80% of financing. The 30-year fixed mortgage is influenced by the 10-year treasury rate of the Federal Reserve when the 10-year treasury rates fall the 30-year mortgage rate fall as well. The 30-year fixed mortgage increased to 3.65% in March, compared to 3.49% …
Architecture Billings Index
The Architecture Billings Index (ABI) is an indicator of commercial and industrial building activity. The Work-on-the-Boards survey is given to architecture firms each month to report how billing activity performed in the previous month. The ABI is a reliable tool for firms to track architectural movements in the market. Readings above 50 indicate rising levels of construction for non-residential buildings, …
Panic is not an investment strategy that works
Panic is not an investment strategy that works. The nice part about the market is that we have an incredible amount of data on historical events and how the markets have responded. Our current situation is no different. Since February, the markets have dropped around 30%. A bear market is when the markets are down 20% from their highs. Normally …
Chemical Activity Barometer
The Chemical Activity Barometer (CAB) is a composite index, which is comprised of indicators drawn from a range of chemicals and sectors, including chlorine, alkalis, pigments, plastic resins and other selected basic industrial chemicals. It has been shown to provide a lead of 2 to 14 months, with an average lead of 8 months at cycle peaks as determined by …
Federal Funds Rate
The Effective Federal Funds Rate is the interest rate at which banks trade federal funds with each other. This rate is determined by the Federal Open Market Committee. The Federal Funds Rate influences the interest rates at which banks and credit card companies charge customers. As of March 1st, Federal Funds were 1.6%, a decrease from last year’s rate of …
International Trade Balance
The US international trade balance is compiled by America’s Customs Agency and represents the value of all goods traded between the US and foreign nations. The balance is then calculated by subtracting total imports from total exports. A negative balance means that imports are more than exports, a positive trade balance means that exports are greater than imports. The international …
Producers Price Index
The Producer Price Index (PPI) looks at the average change in selling prices from the viewpoint of domestic producers of both goods and services. Three areas of production are observed: industry-based, commodity-based and commodity-based final demand-intermediate demand. Investors look to the producer price index, which is a more relevant way of gauging inflation than CPI because of the large basket …
Does this mean that our economy goes into recession?
I have included, at the end of this note, a few paragraphs of Liz Ann Sonders, Chief Investment Officer of Charles Schwab. Her advice is sound in times like these. From our side, the selloffs are overdone. This does not mean, however, that they will bounce back right away. In previous Market Updates, we have mentioned that there will be …
Industrial Production Index
The Industrial Production Index (IPI) measures the manufacturing, electric, mining, and gas industries output on a monthly basis. Total Industrial production has remained steady over the past twelve months. The TTM high occurred in January 2019 at 110.1 and reached its lowest points of the past 12 months in April and October of 2019 at 109.0. Mining gained 0.2%, while …
ISM Manufacturing Index
The ISM Manufacturing Index is derived from a survey of purchasing managers and their outlook on overall conditions by looking at factors such as orders for durable goods, industrial production and hiring. It gives a general direction rather than the specific strength of the factory sector and manufacturing activity in the U.S. A reading above 50 is an indicator that …
Retail Sales
Retail Sales are the total amount of merchandise and related services sold to consumers. It is considered a sign of strength of U.S. Consumer spending, which accounts for roughly two-thirds of the economy. This indicator also provides insight into which areas of the retail space are experiencing strong sales, such as auto sales. Food was excluded in the above charts …
S&P / Case-Shiller
The 20-city S&P/Case-Shiller index is a measure of existing home values across 20 metropolitan areas throughout the U.S. By comparing single family home prices in each district to the similar home prices over time, the index tracks how property values increase or decrease. Home values have a broad, significant impact on the economy, including the housing and consumer sectors. The …
Health Savings Accounts
The Health Savings Account (HSA) is one of the most powerful investment vehicles. Not only is it the only account that offers triple tax savings at the federal level (if funds are used for qualified medical expenses). HSA funds can be used as an additional source of retirement funds after the age of 65. However, there are several restrictions to …
Personal Income & Personal Expenditures
Consumer spending, measured by Personal Consumption Expenditures (PCE), makes up approximately two-thirds of the economy and is a direct measure of purchasing activity. PCE is a reliable indication of inflation because it is calculated from data acquired directly from the GDP report and businesses. We see where consumers are spending their dollars, whether it be durable and nondurable goods, or …
Consumer Price Index
The Consumer Price Index (CPI) tells us of any inflationary pressures in the economy. The CPI measures the average price levels of a basket of goods and services purchased by consumers. The index starts with a base time period (1982-1984, currently) and shows the overall increase since that time. As with many economic indicators, it can be volatile from month …
Gross Domestic Product
Gross Domestic Product (GDP) is the broadest measure of economic activity within a country and measures the market value of all final goods and services produced within a country over a certain period. There are four components GDP is created from: investment (including residential and nonresidential expenditures), consumption (including durable goods, non-durable goods, and services spending), government spending, and net …
Equity markets have taken a bit of a beating
The equity markets have taken a bit of a beating over the past week on the backs of the Coronavirus. Some of this is justified, some is not. As per our previous update, this virus continues to have a negative impact on supply chains. Anyone manufacturing in China will be impacted by the slowdown in the supply. The numbers behind …
What is the Coronavirus going to bring us?
The current outbreak of the Coronavirus has brought me back to a book I read last summer called Get Well Soon, History’s Worst Plagues and the Heroes who Fought Them. What was fascinating about the book was not necessarily the disease, but how humanity reacted to them. The world has lived through the nastiness of leprosy, polio, syphilis, and even …
ISM Non-Manufacturing Index
The ISM Non-Manufacturing Index helps determine the overall economic strength of the services sector. Components evaluated are employment, business activity, new orders, and supplier deliveries; which are then compiled into an index. The non-manufacturing sector represents a much larger share of the overall U.S. economy when compared to the manufacturing sector, making up approximately 80%; the sector’s economic weight makes …
International Trade Balance
The US international trade balance is compiled by America’s Customs Agency and represents the value of all goods traded between the US and foreign nations. The balance is the calculated by subtracting total imports from total exports. A negative balance means that imports are more than exports, a positive trade balance means that exports are greater than imports. The international …
ISM Manufacturing Index
The ISM Manufacturing Index is derived from a survey of purchasing managers and their outlook on overall conditions by looking at factors such as orders for durable goods, industrial production and hiring. It gives a general direction rather than the specific strength of the factory sector and manufacturing activity in the U.S. A reading above 50 is an indicator that …
Retirement Account Contributions
The IRS announced that contribution limits on 401(k)s and other qualified retirement accounts will be increasing slightly in 2020. The new deferral limit for individuals under the age of 50 is $19,500, which is an increase of $500 from 2019. The catch-up for individuals over age 50 will be $6,500 ($6,000 / 2019). The total contribution limit (employee and employer …
Producer Price Index
The Producer Price Index (PPI) looks at the average change in selling prices from the viewpoint of domestic producers of both goods and services. Three areas of production are observed: industry-based, commodity-based and commodity-based final demand-intermediate demand. Investors look to the producer price index, which is a more relevant way of gauging inflation than CPI because of the large basket …
Change in Nonfarm Payrolls
Nonfarm payrolls give an overview of the overall employment outlook of the US economy; nonfarm payrolls do not include those employed in agriculture because of the seasonal nature of their work. This report obtains these numbers from 142,000 businesses and government agencies to track the new jobs added in non-farming sectors of the economy. In October, the unemployment rate is …
ISM Manufacturing Index
The ISM Manufacturing Index is derived from a survey of purchasing managers and their outlook on overall conditions by looking at factors such as orders for durable goods, industrial production and hiring. It gives a general direction rather than the specific strength of the factory sector and manufacturing activity in the U.S. A reading above 50 is an indicator that …
Retail Sales
Retail Sales are the total amount of merchandise and related services sold to consumers. It is considered a sign of strength of U.S. Consumer spending, which accounts for roughly two-thirds of the economy. This indicator also provides insight into which areas of the retail space are experiencing strong sales, such as auto sales. Retail sales excluding food fell by .3% …
Housing Starts
Housing starts track the number of new residential construction projects underway over the course of a month. This indicator has implications for demand in construction spending/jobs, consumer wages, and complimentary sectors such as durable household item sales. Along with building permits, housing starts is considered a leading economic indicator. Housing starts fell in September by 9.4% to an annualized rate …
Capital Utilization
Total capacity utilization measures the percentage of total economic output that is being utilized. It is compiled from physical data from trade and government sources, as well as from survey data from the census when physical data is not available. A high rate of total capacity utilization is an indicator of inflation as an economy nears its maximum level of output. Low capacity utilization makes …
Change in Nonfarm Payrolls
Nonfarm payrolls give an overview of the overall employment outlook of the US economy; nonfarm payrolls do not include those employed in agriculture because of the seasonal nature of their work. This report obtains these numbers from 142,000 businesses and government agencies to track the new jobs added in non-farming sectors of the economy. The unemployment rate is at 3.5%, …
ISM Non-Manufacturing Index
The ISM Non-Manufacturing Index helps determine the overall economic strength of the services sector. Components evaluated are employment, business activity, new orders, and supplier deliveries; which are then compiled into an index. The nonmanufacturing sector represents a much larger share of the overall U.S. economy when compared to the manufacturing sector, making up approximately 80%; the sector’s economic weight makes …
The SECURE Act
The Setting Every Community Up for Retirement Enhancement Act of 2019, better known as The SECURE Act, is a retirement security package under debate in Congress. Currently, the bill is stalled in the Senate after passing through the House of Representatives in May 2019. Among the changes to retirement plans and 529 plans, two of the more notable changes, if …
ISM Manufacturing Index
The ISM Manufacturing Index is derived from a survey of purchasing managers and their outlook on overall conditions by looking at factors such as orders for durable goods, industrial production and hiring. It gives a general direction rather than the specific strength of the factory sector and manufacturing activity in the U.S. A reading above 50 is an indicator that …
Borrowing on Margin
In the event of a large cash need, the decision to liquidate investments to raise cash to cover or the use of financing usually comes down to the cost of capital (expected rate of return from the investments vs. the cost of borrowing). There are, however, tax implications for some financing, such as the ability to deduct certain interest from …
The Market is Not Always Rational
When the market goes up, it is said, it takes the stairs; when the market goes down, it takes the elevator. Today’s market performance was a result of the President’s tweet indicating that he will add an additional 10% to $300 billion in imports from China. We quickly do the calculation and figure that adds up to $30 billion. (How …