Category: Economy

The U.S. Unemployment Rate has moved down to 3.9%, its lowest level since December 2000. If you ask the average person on the street what that means for the stock market, they would likely say it’s a bullish sign. What does it actually mean? Let’s take a look… Data Source for all charts/tables herein: FRED, […]

Interest rates are on the rise, at their highest levels in over 4 years. What is that telling us, if anything, about growth and inflation? Let’s take a look… While you often hear commentators suggesting there is a strong relationship between bond yields and the real economy, the evidence seems to be lacking. Since 1930, […]

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The Stock Market Is Not the Economy

U.S. economic growth in the 1st quarter came in at 2.3%, right in line with the average level of the expansion that began in June 2009. As you can see in the chart below, this has been the slowest growth expansion in history. Data Sources for all charts/tables herein: NBER, FRED, Bloomberg, NYU.EDU Has that […]

Inverted Yield Curves and Recessions

Any way you look at it, the US yield curve is flattening: The spread between 30-year and 10-year yields has moved down to 0.18%, the narrowest since July 2007. The spread between 10-year and 5-year yields has moved down to 0.14%, also the narrowest since July 2007. The spread between 10-year and 2-year yields has […]

When Mean Reversion Fails

Are equities overvalued? Is the economic expansion long in the tooth? — In attempting to answer these questions, we often look to averages: -What is the average valuation? -What is the average length of an expansion? We then take the present environment and compare that to the average past to make definitive statements about the […]