Sonu Varghese
The Economy is Normalizing, and That’s a Good Thing
The economy created 187,000 jobs in July, slightly softer than the 200,000 that economists expected. The last couple of months were revised lower, and so it’s always helpful to take a 3-month average, which is now running at 218,000. That’s stronger than the pre-pandemic average of 183,000. In short, job growth remains strong. You will …
Sonu Varghese
August 4, 2023
Three Reasons Why US Consumers Are Feeling Better
Consumer confidence has been rising since last summer, and over the last couple of months, it has jumped even more. Both the University of Michigan and the Conference Board’s measures of consumer confidence have risen 22 points since last summer. A simple reason is… gas prices. Confidence hit a bottom right around the time gas …
Sonu Varghese
August 2, 2023
The Fed Still Believes in a Soft Landing. Here’s Why That’s Important.
The Federal Reserve (Fed) raised the federal funds rates by 0.25% at their July meeting, taking rates to the 5.25 – 5.0% range — the highest in 22 years. This was widely expected. In fact, the Fed’s statement behind the decision was mostly unchanged relative to June, except for a subtle, but important change. Instead …
Sonu Varghese
July 27, 2023
Dividends, Buybacks, and Tax-Efficient Investing
Ryan and I recently hosted Meb Faber of Cambria Investments on our Facts vs Feelings podcast. We covered a lot in that episode, but I want to pick out one thread in particular, i.e. dividends vs buybacks. As we discussed, dividends are one way corporation can return excess cash to shareholders. However, they can also …
Sonu Varghese
July 25, 2023
It’s a Bird. It’s A Plane! It’s … the US Economy!
We just got a bunch of data to round out the economic picture in the second quarter (Q2). Long story short: Not only do we see no sign of recession, but it also doesn’t even look like the economy is looking for a “landing” at this point. I realize this could change, but so far …
Sonu Varghese
July 20, 2023
The Dollar is Weakening – Why That’s Good for US Investors
At the beginning of the year, we wrote in our 2023 Outlook that the US dollar was poised to weaken, creating tailwinds for Americans who invest in International stocks and S&P 500 earnings. We reiterated that this is starting to happen in our Mid-Year Outlook, “Edging Closer to Normal.” The chart below shows the recent …
Sonu Varghese
July 18, 2023
The Path to Lower Inflation is Now Clear
The June CPI report was a positive surprise, both in terms of the headline numbers as well as the underlying details. Headline inflation rose 0.2% in June, which translates to a 2.2% annual pace. Over the past three months, inflation’s averaged about 2.7%, and over the last year it’s up 3.0%. That’s well off the …
Sonu Varghese
July 13, 2023
Big Picture: The Economy is Normalizing
We started this year discussing how the economy has been at the “edge of normal” in our 2023 outlook. The good news is that we have slowly but surely moved towards normal since then, even in the face of a banking crisis and debt ceiling drama. The “soft” economic data from sentiment surveys have been …
Sonu Varghese
July 6, 2023
This is a Big Deal: Business Investment is Rising Again
We’ve been getting a string of “economic surprises” from the consumer side for several months now. Employment data is a prime example, with monthly payroll gains coming in above expectations for 14 straight months. For a change, we just got some good news from the business side, particularly business investment. The Census Bureau collects data …
Sonu Varghese
June 29, 2023
A Tribute to Dr. Harry Markowitz, and Diversification
Rest in Peace, Dr./Professor Harry Markowitz, who passed last week at age 95. The picture shows him accepting the Nobel in Economics in 1990. Markowitz is known as the father of “Modern Portfolio Theory”, which for all practical purposes, told us that you should diversify your portfolio. Of course, it wasn’t like investors didn’t know …
Sonu Varghese
June 27, 2023