Articles authored by Sonu Varghese

While the Carson Investment Research team’s economic views for 2024 are more aligned with the consensus than in 2023, we take a different view on what the drivers of economic growth will be, emphasizing the upside from productivity growth that may differentiate the current central bank-tightening cycle from typical cases in the past. That view …

We’re releasing our 2024 outlook this week, and a big part of our investment process involves understanding the economic backdrop. To that end, Carson Investment Research produces a Leading Economic Indicator (LEI) for the US and 29 other countries, each one custom built to capture the dynamics of those economies. The individual country LEIs are …

The December payroll was strong on the surface, with 216,000 jobs created last month and the unemployment rate staying at 3.7%. That’s the 23rd straight month in which the unemployment rate has remained below 4%, the longest stretch since the late 1960s – which should tell you that the economy is in a healthy place. …

We’re just days away from closing out 2023, and from an economy and markets perspective, the year really couldn’t have gone better: Stocks have gained more than 25%. The unemployment rate is at 3.7% despite an aggressive Federal Reserve. The economy is on track to have grown more than 2.5% after adjusting for inflation, which …

It’s been a puzzle as to why Americans seem to be in a funk, despite strong economic growth, low unemployment, rising incomes (even after adjusting for inflation), and even strong consumption trends. In other words, Americans were out and about spending, on the back of strong incomes, but confidence was plunging. The University of Michigan …

Wednesday, December 13th, was important for two reasons: The Federal Reserve (Fed) acknowledged that inflation is easing quite rapidly, and they plan to respond with rate cuts. The November producer price index (PPI) indicated that core inflation is back at the Fed’s target. Let’s start with the Fed meeting. A Data Dependent Fed Bows to …

If you’re wondering what the investment is, I’m referring to stocks. More specifically, US stocks. At Carson Investment Research, we just moved our longer-term strategic asset allocations to their maximum equity overweight. Stocks may very likely gain 75-100% cumulatively over the next 5 years, which is 12-15% annualized. If you look back at history, the …

Last month we were talking about a potential deterioration in the labor market, as the unemployment rate rose to 3.9%. It was as low as 3.4% in the Spring. That increase was definitely something to worry about, as a rising unemployment rate usually signals that there’s more to come – which is the essence of …

I was recently asked whether I was worried about rising debt delinquencies. It is true that transitions into serious delinquencies (90+ days of late payments, capturing borrowers who have missed three or more payments) have been rising for auto loans and credit cards. For auto loans, transitions to serious delinquencies are at 5.8% as of …

All year we’ve been in the camp that the Federal Reserve is unlikely to cut rates, and we have positioned our portfolios accordingly – overweighting cash over longer-term bonds. This was based on our view that there would be no recession in 2023, even as inflation moves lower and unemployment remains low. This was in …