The Economic Market Shout: Recent Episodes
Scott Murray
Scott Murray, CFA and DBA-Student provides a weekly analysis of key market and economic trends and their impact on global markets.
There was no place to hide in September. For the fifth time this year, bonds and equities moved in the same direction. Scott Murray, CFA discusses the challenges facing markets as the Fed battles inflation. Prospect for the economy are strong, but elevated inflation persists.
Over 40 million Americans owe roughly $1.5 trillion in student loan debt. College tuition is up more than six percent annually since 1976. Scott Murray, CFA notes rapid rise is tuition which lately has deceleration. The U.S. is facing a skills gap, not helped by the need to pay for already taken classes.
The midterm elections are coming. Same party controlling the Congress and in the White Houses is associated historically with higher spending. Scott Murray, CFA discusses the potential impact of the election on the U.S. budget and current trends in the budget. If a recession is ahead, dry power is an important assets for the U.S. government.
July's employment report was strong. Concerns about the economy may be overstated. Scott Murray, CFA reviews the "healthy internals" to last Friday's employment report. The expansion may last longer than many think.
The S&P 500 Index was down more 20% in the last half 2022. Better earnings erased almost half of the decline in July. Scott Murray, CFA discuss the implication of the market's strong rebound. Is the reduction in 3Q earnings a concern?
Temperatures are soaring in Europe. La Nina is gripping the U.S. Scott Murray, CFA links the two events and notes the double trouble for the energy markets. In addition, Europe faces a unsteady future with the war in Ukraine continuing.
Employment remains 500,000 under February 2020 levels as businesses struggle to find workers. The labor force is expanding at a robust rate in counties that offer low local income tax rates and higher internet connectivity. Scott Murray, CFA examines the labor force mitigation trends. The counties might be good targets for firms looking to expend their workforce.
The U.S. dollar has appreciated more than 10% so far this year. The rise in the price of oil and relatively high U.S. interest rates have contributed to this rally. Scott Murray, CFA discusses the impact of the strong dollar on the U.S. economy. The recent fall in the price of oil suggests the rally in the U.S. dollar has mostly run its course.
Markets are forecasting a recession. Still, the number of consumers who expect to buy a car or appliance is roughly unchanged. Scott Murray, CFA discusses the tension in the consumer over the impact of higher energy prices and optimism about jobs. The forecast of the recession, at this point, seems early.
Summer is here! The vacation driving season is greeted by high gas prices. Scott Murray, CFA discusses the intersection of the healthy oil demand and the surge to replenish inventories. A wild card is the ban on Russian imports that could lift the price at the pump even higher.
Housing is roughly 40% of the consumer's wallet. House prices are up 20% year-over-year and the cost of housing is 5% higher than the same time last year. Scott Murray, CFA discusses the causes of housing inflation. The worst of the spike in inflation may be over, but finding affordable housing is still a challenge.
Markets were flat in May. Still, equities lagged their expansion normal, and commodities were volatile. Scott Murray, CFA notes the early part of the Fed's tightening cycle general causes equities to underperform. Ahead, the expansion continues and commodity prices should moderate as supply chains stabilize.
Equity markets have been weak since the Fed started raising rates in March. In addition, global tensions and supply chain constraints have hurt corporate earnings. Scott Murray, CFA notes that equities underperformed when the Fed started hiking rates the last four times - 1983, 1994, 2004, and 2015. Overall, equities have achieved solid performance during hiking cycles (1.10% monthly since 1983).
Employers are most worried out retaining key employees, not supply chains nor consumer demand. Over 50% of small businesses cannot find qualified employees while there are over 11 million job openings. Scott Murray, CFA comments discusses the challenges to retain employees, a stark difference to the early part of the last expansion. Mobility was a key limitation in the 2010 to 2014 period, not today as the virtual labor market is robust.
Higher prices and lower economic activity suggest the U.S. economy maybe entering a period of stagflation. Still, jobs are plentiful, and the consumers continues to spend. Scott Murray, CFA describes the impact of this economic soft patch. Unlike the 1980s, technology innovation should provide new green shoots, pushing the economy forward.
In April, the S&P 500 index fell more than eight percent. Good news is that the 12-month forward price earnings is below the five year year. Scott Murray, CFA discusses what did the recent earnings season reveal about company performance and prospects. Among sectors, different multiples suggest a wide range of investor sentiment on the index's components.
The U.S. dollar continues to rally. Gold is often the currency of choice when there is international conflict and elevated inflation. Scott Murray, CFA discusses the drivers of the recent rise in the U.S. dollar. Bottom line, the healthy consumer makes the U.S. economy the rival of the world.
Consumers are confident, and markets are sacred. Household are eager to buy even though shelves are bare while equity and fixed income markets are waving the recession warning flag. Scott Murray, CFA provides insight into the mixed signals been seen in the economy. Good news today is that the expansion signal is showing a bright future despite the gathering clouds.
The dollar has surprisingly rallied during the Russian-Ukraine War. Bitcoin moved in the opposite directions. Scott Murray, CFA comments about the outlook for cryptocurrency particularly as the currency is not the safe haven once perceived. Looking ahead, what is the outlook for the dollar and Bitcoin as the expansion moves forward.
Used car prices rose more than 40% over the last year. Is another significant increase instore?
Scott Murray, CFA shows how fiscal stimulus generated strong demand while chip shortages and truckers' strike lowered supply. Good news for the consumer, the storages should be relieved soon keeping price in check in the near future.
More fiscal stimulus is being plan even as the previous checks continue to spur economic growth. Categories like home entertainments benefitted the most from the checks while consumer staples languished. Scott Murray, CFA discusses the impact the 2020-2021 fiscal stimulus that continues today. If more stimulus is approved, growth may accelerating, hurting supply chains.
Price of oil was above $130 per barrel, and some consumer paid more than $6 for a gallon of gasoline. In March 2020, the price of a barrel of oil was negative - what swing. Scott Murray, CFA and PhD-Student, addresses what these different prices tell us about consumer demand and producers willingness to supply. Often, high prices encourage different behavior incentivizing countries to seek the natural resources of their neighbors.
The war in Ukraine is a further disruption to the global supply chains. The world market will lose significant supply of oil and wheat. Scott Murray, CFA discusses how the global market place will adjust to this further supply stock. Beyond, the trend of globalization has hit a pothole and will this be a permanent change to the world order.
The was in Ukraine is the focus of the market. Uncertainty abounds with liquidity of the markets being challenged. Scott Murray, CFA looks backwards to the opportunities ahead. Over the long-term, the solid household financial position suggests a strong expansion ahead after the uncertainty eases.
The price of oil has moved above $100 per barrel. Businesses are facing more cost pressures, and customers will pay more to fill up their tanks. Scott Murray, CFA compares the expected oil supply shock from the dramatic increase in price to the 1970s supply constraints. Economic growth should persist, but there will be near term choppiness.
Even today with 80% of new cars selling over list, demand for cars remains high as jobs are plentiful. The economic shutdown in March 2020 caused a market failure, with goods sitting on the shelves of closed stores. Scott Murray, CFA highlights the power of the fiscal stimulus chiefly delivered through direct-to-consumer checks. The empty shelves show the persistent interest in spending, helping to push the economy into an expansion.
The lowest 20% of the U.S. population is the most vulnerable to higher inflation. Prices of food, shelter, and gas are all up significant. Scott Murray, CFA suggests skills is a powerful answer to the crisis. New opportunities to enhance skills over new opportunities to this low income group.