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| HEALTH, WEALTH, AND HAPPINESS |
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Hi Everyone,
While there has been plenty of data lately indicating that the global economy is indeed exiting the pandemic recession, the latest economic figures from the U.S. do appear to challenge this narrative. |
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Economists were prepared to receive a sour data print this morning, with a forecasted 0.5% decline in retail sales, but were bitterly surprised when the Census Bureau announced a decline of 3%.
In this graph, we have the monthly retail sales data in blue and the analyst forecasts in gold. As we can see, the pandemic has made fools of these so-called experts. |
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| This is some pretty short-term data however, and the markets have taken it in stride. After all, bad news is good, right? |
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Bad is good
If anyone might have been happy to see this short-term data, it's the Federal Reserve.
No doubt Fed Chair Jerome Powell, i.e. J-POW, has been brooding over his speech tomorrow, one that puts him in a particularly precarious position.
The Fed would like nothing more than to support the markets with additional stimulus. However, it's kind of difficult to take drastic measures when things are running so smoothly.
After all, this must be the only recession in history where instead of seeing assets plummet, we're seeing stocks shoot to record highs and a housing boom to boot.
It's not that everyone is doing well. There's a lot of pain and suffering right now, especially for those who are too poor and/or uninformed to benefit from this massive asset price inflation.
This article does a fairly good job of highlighting the negative effects of 2020. The graph below is a clear indication that it's not only the impoverished who are hurting.
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Even though Fed stimulus does nothing to alleviate this sort of pain, it seems very likely that the central bank will bring it up tomorrow as a concern and a key reason to continue providing ample stimulus for the markets.
Many thanks to all for your continued engagement with these newsletters. Your awesome insight, amazing feedback, and well-thought-out questions are my number one source of inspiration. Have a wonderful evening. |
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Mati Greenspan Analysis, Advisory, Money Management |
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