11 Feb 2011

Posted at 15:21h in The Friday Brief by
It was a light week for economic data, but the bulk of it was very encouraging. Yesterday, the Treasury announced that tax receipts are rising faster than government spending. It is a clear sign that the economy is gaining strength. The Treasury’s budget showed that tax receipts are up 9.4% while government outlays rose only 4.8%. Four months into the fiscal year, the deficit is at $418.8 billion, down from $430.7 billion a year ago. Any news that the economy is growing faster than the government is good news.

04 Feb 2011

Posted at 15:33h in The Friday Brief by
The flurry of economic data released this week was on balance surprisingly strong, with the notable and regrettable exceptions of jobs and housing. Fed Chair Ben Bernanke summed up the economic outlook yesterday. “Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established.” Yet almost every other metric is strong and getting stronger. Quarterly corporate profits are sharply ahead of a year ago, manufacturing is growing stronger, productivity continues to rise, and consumer spending as evidenced by retail sales is gaining strength.

28 Jan 2011

Posted at 15:36h in The Friday Brief by
Common sense as defined in the Encarta Dictionary is “sound practical judgment derived from experience rather than study.” In his 1776 treatise Common Sense, Thomas Paine used plain language to speak to the common man and woman in America challenging the authority of the royal monarchy over them. For the next few minutes, to the extent possible, try to suspend influences that pull you away from common sense thinking; such as politics, media, and persuasive speakers. 

12 Jan 2011

Posted at 15:38h in The Friday Brief by
Since stocks turned sharply up last September, they have been on a steady rise, with one notable 4% exception during the month of November. Economic news, both at home and abroad, has steadily improved, but not enough to explain the strength and duration of the rally. Likely much of the buying strength is coming as bondholders cash in profits and head for equities. About the same time stocks began rising, bonds began a steep descent on hyped up inflation worries with the 7-10 year Treasury index losing roughly 6%. More recently, domestic stocks have also benefitted from rising international, particularly emerging market inflation. As central bankers in the fast growing economies of China, Russia, and Brazil raise rates to control speculation, stocks in those countries look less favorable than in the US where rates are being held near zero by the Fed.