Tag Archives: economy

Orderly Decline; Awaiting Plethora of Data

Today was light on economic data, although some will point to the Chicago Purchasing Managers Index as the reason for the decline in equities.  The index fell to 56.2; the lowest reading since September 2009.  A reading above 50 indicates … Continue reading

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Anecdotal Evidence of Economic Expansion

Land surveying is one of the foremost leading indicators of economic activity. It is a required procedure for most every form of construction. If Target wants to create a new island in their parking lot, it requires a survey. If … Continue reading

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The Year of Reconciliation, Part I

Last year was a very difficult year in terms of investment management; very rarely will I speak in extremes, but 2011 could have been the most challenging year ever. There was, and still is, a confluence of factors too divergent to properly quantify. This created an environment of high volatility; so high that tactical strategies had trouble achieving, and subsequently maintaining, investment gains. “Buy and Hold” has its own issues involving behavioral risk.

This industry is marred with contradictions. Our timeframes are too long and, simultaneously, too short. Investors seek to maximize growth and moderate risk. Our focus is divided between the macroeconomic situation and microeconomic considerations, both of which drive portfolio decisions. Returns are benchmarked variably; on an absolute basis or relative basis depending on the particular day and/or perspective. Continue reading

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Of Course We Won’t Have QE3

The Fed has done its job; and monetary policy has run its course. However, the economy is still soft and requires additional support–that is, more fiscal stimulus. The budget proposal in which every dollar the debt ceiling is raised, there will be as much or more cut from future spending, seems rather appropriate. It allows for the continued near-term support the economy needs, yet addresses the long-term structural issues. This is the only measure that will be helpful to today’s economy. But depending on the resolution of this issue, the Federal Reserve, in an act of desperation, may attempt to replace the lack of fiscal response. This may include an extended-extended Fed Funds Rate or some other plan that has not yet been laid out. It is very unlikely additional monetary measures will be effective. The economy requires an extremely long time to heal and tough choices need to be made at inopportune times. Continue reading

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