Blogs

  • US Worker Productivity In Serious Decline -- The Reasons Why

    The Labor Department reported earlier this month that US worker productivity, which measures hourly worker output, declined for the third consecutive quarter at the end of June, the worst showing since the late 1970s. The productivity rate also declined for the 12 months ended June. This news came as a surprise to most forecasters who were sure that the productivity rate would have snapped back strongly in the 2Q.

    There is near-universal agreement among economists that worker productivity is the most important determinant in whether our incomes and living standards rise or fall over the years. If productivity continues to fall, the economy will be hamstrung, incomes will stagnate and our living standards will deteriorate in the years ahead.

    Interestingly, there is not near-universal agreement on what is causing the current extended period of falling productivity, nor what should be done to reverse this critical trend. Today I will devote this space to explaining why productivity is moving in the wrong direction and what should, and should not, be done about it.

    Given the enormous impact productivity has on our economy, our incomes and our living standards, I would hope that more Americans understand this issue better before they head to the polls in what will be the most critical presidential election in many years. Therefore, feel free to forward today’s E-Letter to as many people as you see fit.

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    Posted to Forecasts & Trends by Gary D. Halbert on 08-23-2016
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  • The Globalization Disconnect

    In today’s Outside the Box, Stephen Roach, former chairman and chief economist of Morgan Stanley Asia and now a senior fellow at Yale University's Jackson Institute of Global Affairs, tackles the issue of widespread and growing public dissatisfaction – and not just in the US – with globalization.

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    Posted to John Mauldin's Outside the Box by John Mauldin on 08-18-2016
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  • Clinton & Trump Unveil Very Different Economic Plans

    Former Secretary of State Hillary Clinton and New York billionaire Donald Trump both announced their major plans for the economy last week, if elected president in November. As you might expect, the two plans are very different. I will summarize both as we go along today, and you can draw your own conclusions.

    Before we get to that discussion, I want to bring to your attention the fact that the Atlanta Fed is forecasting a significant improvement in the US economy for the current 3Q. As you may recall, the Atlanta Fed produces a real-time estimate of the US economy which is called “GDPNow.” As of last Friday, the GDPNow is forecasting a jump to 3.5% in GDP in the 3Q.

    Keep in mind that US GDP was only 0.8% in the 1Q and 1.2% in the 2Q. A strong jump to 3.5% in the 3Q would be almost triple the anemic 1.2% in the 2Q. The obvious question is, what is the Fed seeing so far in this July to September quarter that is making it so confident? That’s what we’ll talk about just below.

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    Posted to Forecasts & Trends by Gary D. Halbert on 08-17-2016
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  • Another Strong Jobs Report, But Economy Remains Weak

    Last Friday’s unemployment report for July was significantly better than expected for the second month in a row. This has led many analysts to upgrade their forecasts for growth in the second half of this year. Yet as I will argue below, forecasters often put far too much weight on one or two monthly economic reports that can be revised significantly in subsequent months.

    While new jobs were substantially above the pre-report consensus in June and July, let us not forget that job creation in May was almost non-existent, the lowest in several years. The fact is, the US economy continues to limp along at less than 2% growth.

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    Posted to Forecasts & Trends by Gary D. Halbert on 08-09-2016
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  • World Gone Backwards

    This week Patrick discusses another aspect of globalization, one that has a direct bearing on questions of equity. He explores the technologies that allowed globalization to take hold and the new technologies that are actually allowing production to “re-shore.” I mentioned that topic in passing last week, and it turned out that one of my readers heads an organization that is focused on assisting companies in re-shoring their production back to the US. He tells me that 250,000 jobs have already returned to the US. Patrick tells us an interesting story about how this trend will continue to unfold.

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    Posted to Thoughts From The Frontline by John Mauldin on 08-08-2016
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  • GDP Stunner: 2Q Growth Was Less Than Half of Forecast

    The Commerce Department reported last Friday that gross domestic product, the broadest measure of goods and services produced across the US, rose only 1.2% (annual rate) in the second quarter. That was less than half the pre-report consensus of 2.6%. This was one of the largest misses by forecasters in quite some time. I'll break down the report as we go along today. I will also discuss what the Fed's reaction to the disappointing GDP report is likely to be.

    At the end of today's letter, I will give you a link to a WALL STREET JOURNAL article on Sunday which claims that while Secretary of State, Hillary Clinton compromised national security by urging US technology companies to fund Russian research for military purposes. Assuming it’s true as the Journal claims, it will easily be the most serious scandal ever for Ms. Clinton. And it couldn't come at a better time!

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    Posted to Forecasts & Trends by Gary D. Halbert on 08-02-2016
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  • The Bond Market: Beware of Junkyard Dogs

    It should come as no surprise that credit spreads are shrinking between what in theory are risk-free investments and other investments. Retirees and other investors are reaching farther and farther for yield, piling into all sorts of increasingly risky investments.

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    Posted to John Mauldin's Outside the Box by John Mauldin on 07-25-2016
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  • "How America Lost Its Mojo" - Some Troubling Trends

    In my business, I read a lot more than the average American, in large part due to my “speed-reading” training in college. Most of what I read is about the economy, markets, financial matters, world events and yes, politics among other topics.

    I especially enjoy reading well-written articles on shifting demographic trends in the US and around the globe, which give us insights regarding what the country and the world might look like in 10-20 years. I recently read just such an article on the rapidly changing demographics in America and their long-term implications.

    After thinking about it for several weeks, I decided to reprint it for you today. I think you will find it very interesting.

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    Posted to Forecasts & Trends by Gary D. Halbert on 07-19-2016
  • When the Future Becomes Today

    First, I want to express my shock and quiet despair over the events in Dallas this weekend. The shock comes from this actually happening in Dallas. If anything, Dallas police are accommodating and work with the community as well as any police force in the country. But this event is a reminder that tragedies don’t just happen somewhere else. All it takes is one or two lone actors, and the world of somewhere else lands on your doorstep. This sad spectacle is part and parcel of what we will be discussing today: a world where common sense and reasonable discourse are breaking down, leaving us with social outcomes that only a few years ago would have seemed impossible. As Buffalo Springfield sang, “There’s something happening here; what it is ain’t exactly clear.”

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    Posted to Thoughts From The Frontline by John Mauldin on 07-12-2016
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  • Bill Gross at His Best

    I normally read Bill Gross’s monthly letter the day of or shortly after when it comes out. For whatever reason, I didn’t get around to his early June letter until a few days ago. It has been a few years since I have sent his letter out as your Outside the Box for the week, but I thought this one was so good that I needed to send it on. As it turns out, I went this morning to get it from his website and found that his July letter is out, and it is just as good. Since he writes relatively short letters, I’m going to use both of them.

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    Posted to John Mauldin's Outside the Box by John Mauldin on 07-12-2016
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  • Big Ben Visits Japan!

    * LCMI prints negative for 6th consecutive month!

    * U.K. will have new PM by tomorrow.

    * BOA calls for higher prices in Gold & Silver!.

    * Route 66 to be repaved with solar panels!.

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    Posted to Daily Pfennig by Chuck Butler on 07-12-2016
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  • Treasury Yields Hit Record Lows – Global Flight To Safety

    It is so, so tempting to write about Hillary Clinton’s latest news today that I can hardly stand it. We had Bill Clinton’s “chance” meeting with Attorney General Loretta Lynch at the Phoenix airport last Thursday. Then the FBI...
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  • Stocks At Record High, Treasuries At Record Low - A Rarity

    Stocks as measured by the S&P 500 and the Dow have cruised to new record highs over the last week. Treasury yields on 10-year notes and 30-year bonds moved to all-time record lows last week. Historically, these two things rarely happen at the same time. In fact, the S&P 500 has hit a record high when the 10-year Treasury note yield was below 2% only once in the last 40 years.

    The fact that stocks are at new highs and Treasury yields are at new lows is largely due to red-hot foreign demand for US securities. There are continued worries about the UK and Europe in the wake of "Brexit" and rising concerns about China's economy. With negative interest rates spreading around the world, foreign investors are gobbling up Treasuries which still have positive yields and adding US equities as well. Some say this is the "New Normal." But is it?

    That's what we'll talk about today.

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    Posted to Forecasts & Trends by Gary D. Halbert on 07-12-2016
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  • Is "Brexit" The Beginning of the End For European Union?

    Just about everywhere I go lately people ask me what I think about “BREXIT” and the ramifications it will have for Great Britain, Europe and even the United States. My standard answer since the vote on June 23 is that I don’t think about it much.

    The reason is that, other than the vote itself wherein the “Leave” crowd won 52%-48% over the “Remain” crowd, nothing else has happened to make Brexit the law of the land, and may not happen for months to come. British Prime Minister David Cameron resigned the day after the vote didn’t go his way, but offered to stay on until October if need be to find a replacement.

    In order to officially initiate its withdrawal from the European Union, Britain must invoke “Article 50” of the 2007 Lisbon Treaty with the EU, and it now looks likely that such a notification won’t happen until after the new Prime Minister is in office. And then withdrawal from the EU is a two-year process after that.

    I last wrote about Brexit on Thursday, June 23, the day of the referendum, in my Blog. At that time, I noted that some of the final polls showed a slim lead for the Leave crowd. I also noted that the Leave crowd in Britain is part of a “global anti-establishment movement” that is growing around the world – which has brought us the likes of Donald Trump and Bernie Sanders.

    While the Brexit outcome roiled the global equity markets for the first couple of days following the vote, some of those losses have been recovered. Frankly, I expect Brexit will fall out of the headlines soon, if it hasn’t already, and the media attention for the rest of this month will be on the GOP convention on July 18-21 and the Democratic convention on July 25-28.

    Nevertheless, I will give you my thoughts and those from others I read on Brexit as we go along today. Just keep in mind that we don’t have any idea when Brexit will happen, under what terms it will happen or even if it will happen at all.

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    Posted to Forecasts & Trends by Gary D. Halbert on 07-06-2016
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  • Generational Chaos Ahead

    I had that thought in mind when I asked Neil Howe to be our kick-off speaker at the Strategic Investment Conference and invited Niall Ferguson to wrap it all up three days later. As historians, they both gaze back through time to identify patterns and draw lessons. They were the bookends who framed the wide-ranging discussions in between. They have both been very influential in helping me develop my understanding of the world.

    As I said two weeks ago, the experts I brought to the conference, even the ones I expected to be raging bulls, were mostly bearish. The surprise was Niall Ferguson, who has become the new raging bull. That’s pretty much the one thing you can count on at my conference: surprises! But you can see that even Niall is deeply concerned about much of what is happening in the world.

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    Posted to Thoughts From The Frontline by John Mauldin on 06-20-2016
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