“Conflicted” is the word today. Economic data is always conflicted, as it is today. Industrial Production is slightly down, but the Empire State Manufacturing Index is way up, almost double the previous reading.
Unemployment is higher than it should be, when you count the all the folks who have given up looking for a job, but …
- In the first half of this year, the (nominal) hourly compensation in the U.S. nonfarm business sector increased 3 percent from the year before. That compares with an average 1.9 percent increase in 2012 and 2013.
Although not always conflicted, the market these days seems to be, given the perplexity surrounding the timing of the Fed regarding raising interest rates and the positive economic data, especially that data which derives from the US consumer.
- The S&P 500 fell 1.1 percent last week, ending the longest streak of gains this year, as data showing the fastest increase in retail sales in four months and the highest level of consumer confidence in 14 months spurred speculation that the economy is recovering enough to justify higher interest rates.
Keep in mind the Fed is also watching inflation, as it is the single most important reason to raise rates. As long as inflation is steady and folks are making more money gradually, the Fed has plenty of wiggle room on its timing for raising rates. And even though wages are higher year-over-year, 3% is right in line with the Fed’s inflation target.
Thus, if you are conflicted about the market because you are worried about the Fed raising rates, this suggests to me you are an investor worried about the long-term outlook for your money. It suggests you listen to the noise about the future – the Fed raising rates sometime this coming year.
- Investors – as opposed to variable-frequency traders – should not play the game of trying to pinpoint the timing, the extent and the speed of policy changes by the U.S. monetary authority (Fed).
Given the recent market volatility and the news flow around this, it is understandable why market investors are worried. Heck, take today for example. The market ride has taken us deep into the red and now it is working its way up the green side. No! Wait! It is now working back to the red.
This volatility is happening because the market is conflicted, but you, as an investor, need not be. The more the breathless media presents the talking heads who then interview the celebrity analysts to talk about the Fed raising rates, the more “baked into the cake” the whole Fed raising rates thing becomes. So, when the Fed actually does raise rates, the market will be consolidated and ready for the actual news. It will not take the market down.
As I said, conflicted is the word of the day. It appears that Americans are conflicted about marriage, that institution under barrage from all sides these days. The folks who prefer same-sex love want it and those who prefer the opposite sex want it less and less, or so it seems in an interesting study from an economist named Edward Yardeni.
- If you are an American, odds are you’re single. According to a new report, more than half of Americans aren’t married, up from 37 percent in 1976.
In just under 40 years, the sociological fabric around marriage has ripped some 16%. Americans seem conflicted about “taking the plunge.” The gist of the study is that more people are living together without marrying and more people are single. Me, I just took the plunge, one year ago this coming October, so I am not in that statistical group. Me aside, the question arises: will this have an economic effect? According to Yardeni, it will.
- A nation of singletons will change the structure of the economy because it means fewer parents and homeowners.
First off, is this necessarily true? Folks living together and single people can buy houses, right? Yes, it does mean fewer children, so markets built around children will suffer. Maybe, though, the markets focused on pets will boom. In any case, Yardeni offers his own take on the good or bad of this for the US economy.
- Whether this is good or bad depends: Single people can be more flexible, which means fewer economic distortions and a more dynamic labor market, but it might make the economy as a whole riskier.
I don’t know. I am conflicted about whether it is economically good or bad that more and more folks are choosing to bypass marriage. Right now, it seems to be fine, but, who knows what the future will bring.
Like the Fed raising rates, though, I wouldn’t really worry about it because the market will adapt, meaning, money will continue to flow, even after the Fed does its thing and despite the finding that some folks want to marry, but, apparently more do not.
Trade in the day; invest in your life …
