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EC The Fed’s Definition Of Price Stability Is Likely Different Than Yours
The Federal Reserve Act, as mandated by Congress, established a dual mandate of price stability and maximizing employment to guide the Federal Reserve (Fed) in setting monetary policy. Price stability, the topic of this article, allows investors, corporations, and consumers the ability to better predict future prices and optimally allocate their investments and spending. The benefits pay dividends not only to those directly involved but importantly to the health of the economy and prosperity of the populace as well. To consider why price stability is important, consider an oil producer deciding whether or not to invest in a new well. To simpl... -
Finance 0
Auto Potential For More Than Minor
According to Edmunds.com, in June 2017 the average length of a new vehicle loan has been stretched to a record 69.3 months. JD Power says that incentives last month were running at more than 10% of MSRP, the eleventh time over the past twelve months where manufacturers have so heavily discounted. And yet, the auto industry would have us believe that the problem is one of fleet sales rather than of consumers. “U.S. total sales are moderating due to an industry-wide pullback in daily rental sales, but key U.S. economic fundamentals clearly remain positive,” said GM chief economist Mustafa Mohatarem. “Under the current economic conditions... -
Finance 0
4 High Earnings Yield Stocks To Boost Your Portfolio
Earnings yield is an easy but useful ratio for investors putting their money into stocks or bonds. It is the reciprocal of the price-to-earnings (P/E) ratio and used to spot undervalued stocks. This ratio comes in handy for investors when they want to compare stocks with fixed income securities or the market. Earnings yield is derived as (Annual Earnings per Share/Market Price) x 100. It can be used to compare a stock with other stocks as well as with fixed income securities. While comparing similar stocks, the one with the higher earnings yield should provide better returns. This ratio can also be utilized for comparing the performance of a ... -
Finance 0
New Dow Theory Signal – What Does It Mean For Stocks?
Critics of technical analysis often mistakenly believe that using charts discounts the importance of fundamental data, such as earnings, employment, and economic growth. Charts allow investors to monitor the aggregate investor interpretation of all the fundamental data. Said another way, charts are efficient tools allowing us to monitor vast amounts of fundamental data, which is important since fundamentals ultimately determine the market’s long-term fate. When the economy is healthy, stocks tend to beat bonds. When economic fear dominates, bonds tend to beat stocks. In this article, we will cover the latest signal from the markets that cam... -
Finance 0
This Is Why The Stock Market Will Go Up From Here
The first half of the year has come and gone. The S&P 500 ground its way higher and finished the first half up 9.3%. Unsurprisingly it has been robust S&P earnings that drove the markets to new all-time highs. Reported earnings were up 18% year over year. Despite the new administration’s failure to pass new tax policy so far, analysts weren’t expecting much movement in 2017 so earnings estimates haven’t disappointed in the least. In fact, companies have continued to beat expectations on the top and bottom line and we expect more of the same in the second half. This has the Runnymede investment team optimistic headi... -
Finance 0
Exxon Mobil: Is This A Good Time To Buy This 3.8% Yielding Dividend Aristocrat?
Oil and gas is a cyclical industry, which is why there are only two energy stocks on the list of Dividend Aristocrats. One of them is Exxon Mobil (XOM). The Dividend Aristocrats are a group of 51 stocks in the S&P 500 Index, with 25+ years of consecutive dividend increases. Despite operating in a boom-and-bust industry, Exxon Mobil has raised its dividend each year, for more than 30 years. While so many other oil and gas companies cut their dividends over the past year, Exxon Mobil kept its dividend growth streak intact. Investors can thank Exxon Mobil’s diversified business model and quality assets for this. This article will discuss w... -
Finance 0
There Is No Such Thing As A ‘Business Cycle’
It says in the Bible (Genesis 41:27) that “the seven lean, ugly cows that came up afterward are seven years, and so are the seven worthless heads of grain scorched by the east wind: They are seven years of famine.” This is essentially a description of what economists normally call the ‘business cycle’, and commentators often talk about the business cycle as if it were nearly as regular or God-given as the seven lean years and seven fat years in the Bible. If we look at macroeconomic developments, we can also observe that there are periods of high growth and periods of low growth in the global economy. Furthermore, we can observe that... -
Finance 0
We’re Fragmenting Because Our Experience Of The Economy Is Fragmenting
The technocrat and capital-owning class is delighted with the economy, and can’t understand why everyone isn’t prospering. You’ve probably seen some version of this chart of average household income in America before. (You may have seen charts of median household income as well; here’s an article on the difference between the two methods of measurement: American families are learning the difference between median and mean) Here’s the data in table format, if you prefer: Household Income Quintiles. The point is that there is an enormous difference between the average household incomes of the bottom 80% and th... -
Finance 0
Fed’s 2017 Stress Tests And Gold
Last week, the Federal Reserve released the results of supervisory bank stress tests. What do they mean for the gold market? According to the results of supervisory stress tests released Thursday by the Federal Reserve Board, the U.S. largest banks (with $50 billion or more in total consolidated assets) would “retain their ability to lend to households and businesses during a severe recession”, thanks to the build-up of capital after the financial crisis. Actually, all 34 institutions passed Fed’s stress tests for the first time in seven years. Unfortunately, it is bad news for the gold market. Surely, the surprisingly good banks’ p... -
Finance 0
Will Trump Fire Yellen Or Vice Versa?
Citigroup’s Economic Surprise Index just hit its lowest level since August 2011. But this level of disappointment has ironically emboldened the Fed to step up its hawkish monetary rhetoric. The truth is that the hard economic data is grossly missing analyst estimates to the downside as the economy inexorably grinds towards recession. This anemic growth and inflation data should have been sufficient to stay the Fed’s hand for the rest of this year and cause it to forgo the unwinding of its balance sheet. But that’s not what’s happening. Ms. Yellen and Co. are threatening at least one more rate hike and to start selling what wil...
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