Fun word to say out loud
Consumer holiday spending intentions (and by proxy consumer confidence?) at highest since 2007, pre-crash
A duo of charts – Hedge Funds not commanding the same premium they once did
“Small Stock Premium” – the idea that small stocks outperform large stocks, over time. Reason why? the additional premium compensates you for decreased liquidity & additional volatility.
But the out-performance isn’t as dramatic as some data/charts would lead you to believe. The reason is that the NYSE only recorded a small sample of small stocks before 1972. The sample was small and stocks chosen were beaten down large stocks, one which were more likely to outperform during a bounce back. The data is skewed.
Having said that, Small Cap portfolios (e.g., Dimensional Funds US Small Cap Portfolio) still out-perform large ones in more recent years:
Huge new gov’t budget deal extends the debt ceiling through 2017. After previous partisan fighting and showdowns over the budget, does this smooth-sailing signal the end of austerity? Is the tea party party and their influence waning?
[Or is this simply because Boehner is leaving office and he is conducting business in FU mode?]
Economic recession/downturn is now unlikely. Why? Periods of recession follows periods of excesses, but in the current economy, no such excesses exist (except in the federal gov’t).
- Bullish indicators:
- Housing is improving. Both real estate prices and Housing Starts have both risen moderately.
- Businesses have lots of cash. [But is this because they don’t have anywhere attractive to spend/invest in?]
- State & local gov’ts are doing well. Their finances are improving, have ceased laying off employees, and are hiring again.
- Households are doing better. Mortgage debt has been shed, net worth is up, average factory work week is up.
But, economic acceleration is also unlikely.
- Bearish factors:
- People are still scarred from the 2007-2009 crash.
- Federal Gov’t has passed sweeping laws that are confusing and disruptive. Including Obamacare & Dodd-Frank Financial Reform.