Sonu Varghese
3 Positive Manufacturing Stories to Take Into 2024
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 …
Sonu Varghese
December 29, 2023
Americans are Feeling More Jolly
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 …
Sonu Varghese
December 22, 2023
The Inflation Problem Is Easing, and the Fed Expects to Cut Rates
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 …
Sonu Varghese
December 14, 2023
This Is Likely the Best Investment Over the Next 5 Years
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 …
Sonu Varghese
December 13, 2023
If You’re Worried About a Rising Unemployment Rate, Rest Easy for Now
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 …
Sonu Varghese
December 8, 2023
10 Charts Showing Why We’re Not Yet Worried About the Consumer
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 …
Sonu Varghese
December 5, 2023
The Monetary Policy Pivot Is Coming, And That’s Good for Stocks
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 …
Sonu Varghese
December 1, 2023
Our Leading Economic Index Still Points to “No Recession”
We publicly started releasing our proprietary leading economic index (LEI) in our 2023 Mid-Year Outlook, which we use to give us an early warning signal about economic turning points. We produce an LEI for the US and 29 other countries, each one custom built to capture the dynamics of those economies. The individual country LEIs …
Sonu Varghese
November 15, 2023
Here’s Why We Think This Inflation Report Will Set Up Serious Rate Cut Expectations
The October Consumer Price Index (CPI) report was chockful of good news. Headline inflation was flat in October, below expectations for a 0.1% increase. The October “surprise” came on the back of lower gasoline prices, which fell 5%. But that counts, and even more so because it means households have more income – keeping consumption …
Sonu Varghese
November 14, 2023
This Could Be a Potential Game-Changer for the Economy
Lost in all the consternation over a weak payroll report last week was the fact that we got good productivity data a couple of days before that. Labor productivity rose at an annualized pace of 4.9% in Q3. This is not entirely surprising because we already knew output surged in Q3, and hours worked didn’t …
Sonu Varghese
November 7, 2023