Economically Speaking

Common Cents & Higher Interest Rates on November 8, 2019

November 8, 2019, by John Norris

In school, you learn there is an inverse relationship between interest rates and bond prices. When rates go higher, bonds go lower and vice versa. It is a pretty easy concept to understand: assuming all other things being equal, would you pay the same amount for a security paying 3% as you would one paying 5%? Unless you are unique, probably not. Interest rates are nothing more than the cost of money in a financial...

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Quick Note on US GDP on October 30, 2019

October 30, 2019, by John Norris

The Bureau of Economic Analysis released its ‘first stab’ at calculating 3Q 2019 GDP (Gross Domestic Product) this morning (10/30/2019). It estimates/estimated the US economy grew at a 1.9% annualized rate last quarter. This was slightly higher than “Wall Street’s” 1.6% estimate. Key takeaways are: Personal Consumption Expenditures remained healthy at a 2.9% annualized clip. Expenditures on finished products grew at a 5.5% rate Expenditures on services grew at a 1.7% rate. Private Domestic Investment...

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3rd Quarter Economic Update 2019

October 18, 2019, by John Norris

The 3rd Quarter of 2019 was almost a copy of the 2nd, only slightly less so. Both had bad months (August and May) sandwiched in between a couple of good months. However, May was worse than August, and the sandwich months weren’t quite as strong in 3Q as they were in 2Q. For all the promise of volatility at the beginning of the year, 2019 has been surprisingly calm, or reasonably so. Why? Not much...

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Common Cents & Inflation on October 4, 2019

October 4, 2019, by John Norris

Last week, I discussed how the Federal Reserve is at risk of losing control of its monetary policy due to forces beyond its direct control, arguably. There is just too much debt and too few players with the wherewithal to finance it at the level(s) central bankers desire or mandate. In previous newsletters, I have written how negative interest rates are ironic, as they discourage risk taking rather than encourage it. This morning, in response,...

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Common Cents & Disruption on September 27, 2019

September 27, 2019, by John Norris

This week, I have had a number of people ask whether ‘we’ are concerned about the recent push to impeach the President, this time over a conversation he had with the Ukrainian President. In all honesty, our Investment Committee hasn’t convened over the matter, and I am not personally losing sleep. As Yogi Berra might have said: “It’s like déjà vu all over again.” To be sure, impeaching the President of the United States of...

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Common Sense & Scorching Temps on September 13, 2018

September 13, 2019, by John Norris

It has been blisteringly hot here in central Alabama, seemingly forever. You expect hot weather when you live here; however, recent high temperatures have been unusual even for those of us accustomed to them. So much so, climate change was a popular topic of discussion at a cocktail party I attended in Montgomery, Alabama, this past Thursday night. You read that right: climate change was a topic of discussion at a recent cocktail party in...

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Common Cents & US Negative Interest Rates? Common Sense? September 6, 2019

September 6, 2019, by John Norris

This week, a friend of mine sent me an article she felt I might find interesting. Actually, calling it an article might be a bit of a stretch, as it wasn’t much more than a few hundred words. However, it was enough of one to warrant its own headline, and what a headline it was: Alan Greenspan says it’s ‘only a matter of time’ before negative rates spread to US. That is exactly how it...

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Common Cents & “What In The [heck] Was That” on August 23, 2019

August 23, 2019, by John Norris

Up until about 10:00 CDT this morning, I struggled with a topic for today’s newsletter. Everything was variations on a theme or similar to something I had read elsewhere. I mean, how many different articles can you read about Fed Chairman Jay Powell’s comments on monetary policy after a meeting of academics? The answer is: as many as you would like, and there isn’t a nickel’s difference between the lot of them. At about that time,...

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Common Cents & Falling Interest Rates on August 16, 2019

August 16, 2019, by John Norris

What an awful week, I mean really. It is too hot to much of anything outside other than sweat. However, if you stay inside, you are probably going to watch the markets flummox about and the rest of the world try to tear itself apart at the seams. For some reason, as I was reading yet another depressing story on some news service this week, a song came into my head and become something of...

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Common Cents & Tragedies on August 9, 2019

August 9, 2019, by John Norris

Most people reading this will know the stock market fell apart this past Monday (8/5/19). At one point, it looked as though the Dow Jones Industrial Average (Dow) would close down in excess of 1,000 points. In fact, I would have bet on that at some points during the day. The vibe was that bad. Fortunately, if you want to call it that, the Dow ended the day only 767.27 points lower than where it...

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