Tag: Economy

Recession or Head Fake?

With the Federal Reserve’s action this week in cutting interests rates by one quarter of one percent, the word “recession” is back in the news as a possibility. There must be literally nothing else financially speaking to talk about. In the meantime, check out two really good slides.

The first slide (above) outlines the vast difference of:

  • when a recession really occurs in the economy
  • when markets anticipate the recession and react
  • versus when the government (the NBER, National Bureau of Economic Research) “declares” a recession.

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Recession or Not?

Check out two really good slides.

The first slide outlines the vast difference of when a recession really occurs and markets anticipate the recession and react, versus when the government (the NBER, National Bureau of Economic Research) “declares” a recession.

Continue reading “Recession or Not?”

Top of Mind Issues in US Presidential Transition

Today’s edition could be a risky one to write, as anything related to the recent US Presidential election can stir up division. BUT – there are a healthy handful of issues that unite all Americans. These issues, ironically, are similar to those facing the 2016 version of President-Elect Trump.

Below are excerpts (in italics) from a November 2016 edition of TGIF 2 Minutes with thoughts on updates for 2024 (in bold) –

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Kids Driving Cars & Inflation

Most kids (over the age of 20) of my friends and clients have cars, but a handful of the most resourceful ones do not. OR, by necessity and affordability of car insurance, certain kids – in discussions with parents – have made the smart decision to forego owning a car until a future date. This situation may continue to happen especially in families, even wealthier families, with multiple kids under the age of 25.

Car insurance is expensive and becoming more so. The number of uninsured drivers (why is that even legal?) ramps up the cost of car insurance for all – even drivers with impeccable driving records. In addition, lingering inflation is contributing to exorbitant increases in auto insurance premiums.

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Interest Rates, The Fed & Gray Hair

Time again for the “soft landing” airplane drawing. As in, will there be a soft landing for the US economy or a hard landing? How soon might the US Fed lower rates and how fast might the markets keep going up or falter down?

A certain amount of gray hair (read: wisdom and experience) helps in understanding the current interest rate and US Federal Reserve environment. Why? Because economies do not move as fast as Amazon delivering a package same-day, or even same-month. And “gray hairs” know this.

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Doritos in 2024

Looking for Doritos at the supermarket? That may be difficult at certain grocery chains where the chips are being pulled from shelves – so far only in several European countries.* The reasons? Partly, to protest possible “shrinkflation”, that annoying occurrence of a company lowering the amount of product in its packaging but charging the same price (which also could be called a “rip off”). Another reason the grocery chain is choosing not to stock Doritos and several other PepsiCo products is persistent and unreasonable price increases by PepsiCo.

Apparently, consumers and certain supermarket chains concerned with holding on to customers, have had enough with price increases, especially on discretionary items (are Doritos a staple or discretionary?). The move by the grocer Carrefour could be a positive development for consumers in early 2024. What else would consumers, investors and savers like to see in 2024?

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Two Notable Events of 2023

Taking a stab at listing the “Top 5″ or “Top 10” events of 2023 is challenging – and subjective. Less subjective is highlighting two events that got the attention of nearly all participants in US stock and bond markets in 2023:

  • The rise of interest rates to levels not seen in over 22 years
  • The collapse of Silicon Valley Bank and at least two other banks

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Deja Vu – Recession or Soft Landing?

Check out the TGIF 2 Minutes (cut & pasted below) from September 2022 when nearly everyone – especially the media – was saying the US was already in a recession. Today, the potential recession scenario seems even more compelling but somehow the US economy has crept along.

Currently in 2023 and in times like this, it pays to keep a sharp eye on spending and debt levels while maintaining a long-term outlook with savings and investments. If the US does creep or crash into an actual recession, emergency funds with calculated levels of cash can soften the blow. The following points are worth reiterating.

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Be on Lookout for Small Caps

A short and punchy note today. Recent data speaks to money flows and trends favorable to small company stocks. 

Taking a step back, at most basic, small companies (when successful) become large companies – a good thing. Also, small company stocks are bought much cheaper (lower ratios of price to book value) in the marketplace. The caveat is that small companies typically have less of a track record and can be more volatile.

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Inflation: Chicken or Egg? Or China?

Alert: “Getting into the weeds” here in a brief discussion on inflation and why it may not be easy to solve quickly. Bullet points below may help.

There is a bit of a “chicken or the egg” scenario when it comes to inflation.

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