Savings Rate

What Keeps Bank of America Up At Night

"The last two weeks have further underpinned our belief that the market has had misplaced optimism in the new administration's reform agenda, while we find more and more evidence that suggests the macro environment echoes that of 2014 and 2015."

Crispin Odey: "Why Do I Remain Stubbornly Bearish?"

"When it comes to markets, we have to watch for ‘the Minsky moment’. Minsky argued that periods of low volatility, presaged crises because they encouraged excessive risk taking. Well, we are into the risk taking. But this fund truly does not demand that the end of the world comes tomorrow."

Financialization & The Erosion Of Growth

"As fees go up by half-a-percent, we reach into the client’s balance sheet, snatch the half-a-percent, and turn it into income; it’s almost magic - capital into income... but we lower the savings rate of our clients (savings and investment rate) by half-a-percent as our fees go up, so we get short term GDP kick from our income, at the expense of lower long-term growth on the part of the system."

Financial Insecurity

"...markets do not compound average returns over time. Most importantly, just as with “pension funds,” the issue of using above average rates of return into the future suggests one can “save less” today because the “growth” will make up for the difference. Unfortunately, it just doesn’t work that way."

Global Stocks, US Futures Rise On First Day Of Q2 As Trump-Xi Meeting Looms

After the best quarter for US stocks since 2015, global equities have started off Q2 on the right foot, despite caution about the upcoming meeting between President Trump and China's Xi Jinping later this week, and Fed Minutes which are expected to be more hawkish than the FOMC statement.

Real Personal Spending Crashes Most Since 2009

While the key number analysts were looking for in today's Personal Spending data was the PCE Price Index, both headline and core, which rose by 1.9% and 1.7% respectively, just shy of the Fed's 2.0% inflation target, the internals on US incomes and spending were just as notable. 

Consumer Confidence Is The Highest In 13 Years

The final UMichigan consumer confidence print is in, and it was even higher, printing at 98.5, up from 98.2 in December, and above the 98.1 consensus estimate. This was the highest print since January 2014, or as the survey emphatically notes, "consumers expressed a higher level of confidence January than any other time in the last dozen years."

Just 3 Things

Importantly, with economic growth anemic, consumers stretched and an economy heading into one of the longest post-recessionary expansions on record, there is little room for a policy misstep at this juncture. Maybe Trump will be wildly successful and the economy will come roaring back. That is a possibility. But there is also the risk it won’t. Optimism is one thing. Your personal capital and financial health is quite another.

3 Things: Policy Hopes, Consumer-Spending Puppies, & Tax-Cut Rainbows

"Will “Trumponomics” change the course of the U.S. economy? We certainly hope so as any improvement that filters down to the bottom 80% of the country will be beneficial. However, as investors, we must understand the difference between a “narrative-driven” advance and one driven by strengthening fundamentals. The first is short-term and leads to bad outcomes. The other isn’t, and doesn’t. "