• 2 Trillion Dollhairs

    Bailouts  Another big week. Over the weekend, the coronavirus stimulus bill failed to pass in the Senate and the news sent futures to “limit down.” But before the market opened on Monday morning, the Fed announced limitless quantitate easing, which gave markets a little room to breathe while Congress continued working toward a resolution. Several states ordered “stay at home” ordinances, shutting down more and more of the US economy. But Congress finally passed a the much-awaited $2t coronavirus relief bill and stocks surged 18% over three days through Thursday. Moral of the story: The stimulus package contains carve-outs targeting individuals, small businesses, unemployment, and hospitals, to name a few. The full economic benefit, however,…

  • Winter is Coming

    What happened this week  Market volatility continued for the large part this week after the Fed cut interest rates to basically zero on Sunday and launched a $700 billion quantitative easing program. Here’s the breakdown of the week’s main events –  Monday: Stocks fell precipitously at the beginning of trading and triggered the circuit breakers again. Government-mandated shutdowns were announced in NY, NJ, CT, and San Fran. The US airlines asked for over $50 billion in government aid. Canada closed it borders to non-citizens. US cases were at 4,643 and deaths were at 85. Stocks closed down 12% in the third worst day ever.  Tuesday: The Fed launched a short-term funding program for businesses. The EU closed its borders. The Trump administration…

  • A different kind of March Madness

    Roller-coaster central  If you’re a basketball fan and looking for something else to fill your NBA and NCAA entertainment void, I highly recommend watching business TV (CNBC, Bloomberg, etc.) because WOW unending madness happening in the stock market right now. Here’s a summary of the week that took ~10 years off my life expectancy: Monday: Over the weekend, a conflict between Saudi Arabia and Russia on market share for oil led to plummeting oil prices (over -20% type of plummeting), which added another major blow to the already coronavirus-plagued stock markets. US stocks tumbled so much as soon as the market opened on Monday morning that trading was halted for 15 minutes. Stocks closed down…

  • Oops, I did it again

    Circus  Coronavirus worries dominated headlines but two other major events rocked the boat. First, the Fed announced an emergency 0.50% interest rate cut to provide support to the economy through coronavirus impacts. The last time the Fed did something like this was in the last recession, so while the actions may have been to support the business environment, it was reminiscent of unhappy times. Second, Super Tuesday proved to be a massive comeback for Joe Biden. After the events of the week, the last two standing in the Democratic race are Sanders and Biden. Given the moderate vote is no longer divided between multiple candidates, the market reacted well to…

  • Viral Takedown

    The worst week since 2008 What a bloodbath. US stocks lost over $3 trillion in market value in the worst week the stock market has seen since 2008 (aka the Global Financial Crisis). The phenomenon wasn’t just felt for US stocks – commodities, currencies, and global stock markets all tumbled this week. The damage collectively is sickening.  What happened? The coronavirus. I think I referred to it as corona lite virus at one point and I want to confirm that was a joke, it’s not actually related to the beer – apparently searches for “corona beer virus” and “beer coronavirus” have become quite widespread (**insert face palm emoji**). And to some extent Bernie Sanders leading the…

  • What Happens in Vegas…

    The Great Inflection  We’ve been waiting on a manufacturing recovery after trade war resolutions and it might finally be happening. The Philly Fed’s manufacturing index jumped to the highest level in three years this month with new orders seemingly driving a big part of the improvement. The six-month outlook measured by this index also increased for the fifth straight month.  Moral of the story: The New York Fed’s manufacturing survey showed similar optimism. These two reports put together are usually considered to be an indication of the broader US national ISM manufacturing index, which showed early signs of improvement in January and I’d expect incremental strength again for February.  Building Optimism  The FOMC seems…

  • You Gotta Feel It (It’s Electric!)

    Tale of two cities  Inflation is remaining in check – consumer prices only increased by 0.1% in January. On an annualized basis, that’s a 2.5% increase over the last 12 months, which is the biggest increase we’ve seen the fall of 2018. Price increases were mainly driven by the cost of living (rent), medical care, clothing, eating out, and flight tickets. The core inflation number that’s more closely followed, increased 0.2% for January but remained flat for its annual reading at 2.3% (it’s been at 2.3% for five months now). Moral of the story: Inflation has been running low for years and I can’t foresee anything causing it to really ramp…

  • To Be or Not To Be – Coronavirus Edition

    Light at the end of the tunnel? After being under pressure for months because of trade tensions, the manufacturing sector is finally showing signs of recovery after trade deals with China, Mexico and Canada were signed last month. The ISM manufacturing index came in over 50 for the first time in six months (a reading over 50 indicates expansion, while a reading below 50 indicates a contraction). New orders and production both increased in January, but employment still remains muted due to a lack of skilled labor.  Moral of the story: While a trade resolution might have helped the manufacturing sector’s contraction find some sort of a bottom, I’m not…

  • Super Bowl Snacks

    The one where you realize the chips are not scoops…what a letdown  GDP growth came in at 2.1% for the fourth quarter, bringing 2019 GDP growth to 2.3% (slowing from 2.9% in 2018). Consumer spending, which is the main engine of growth in the US, increased only 1.8% (slowing from 3.2% and 4.6% earlier in the year). As anticipated, the plummeting trade deficit due to the tariffs on Chinese imports was a boost but is expected to reverse within the next quarter given the ongoing trade negotiations between the two nations. The other big lift in the quarter came from housing outlays that increased 5.8% as mortgage rates dropped. On the other hand, however, business…

  • What Happens in Davos…

    Snowy with a chance of melting ice caps  Davos was the place to be this week – the “who’s who” of the financial and political world gathered at the World Economic Forum in Switzerland to discuss prominent economic issues at hand. The themes for this year’s conversation included healthcare challenges and fair access, sustainability, technological disruptions, inequality, diversity and inclusion, global collaboration, and the ethics around many technological possibilities of the future. Trump compared Elon Musk to Thomas Edison, Al Gore compared the climate crisis to 9/11, and Paul Tudor Jones (along with others) warned of the overheated stock market.  Moral of the story: The World Economic Forum tends to…