Few people understand the impact of inflation in their lives because it happens slowly. When inflation is high, budgets get stretched. When wage growth is flat inflation sinks hopes. Today, economic data suggests prices are rising very, very slowly. Yet, surveys suggest that the average American’s daily experience with inflation may be quite different than
This week, a few things especially caught our attention. International diversification is starting to reward investors again after a considerable period when a blend of U.S. Stocks and bonds outperformed relative to most other asset allocations. Inflation is starting to accelerate a bit, which contributed to a sell-off one day last week. We also noted
Hardly a week goes by without our having several discussions about the financial aspects of retirement. This week we address some issues from the last several days. How much house can I afford? The traditional rule of thumb—i.e., not more than 28% of your monthly income going for a mortgage payment—is not particularly helpful. There
Markets were rocked last week due to a dramatic drop in oil prices. This week we discuss what to make of it. The plunge in the price of oil should act like a shot of adrenaline to the world economy. But, there will be winners and losers. Overall, the effect of cheaper oil is clearly
What drives market volatility? Professor Robert Shiller of Yale contrasts the narrative of recent volatility with volatility in 2011. Skyrocketing volatility of the last several weeks, although painful, is normal and can be healthy, according to the analysts at Charles Schwab. In the final article, Mark Miller of Reuters analyzes recent social security inflation adjustments
News from Jackson Hole, Wyoming leads off this week, where central bankers from across the globe met last week. In addition, the analysts from Charles Schwab provide a market perspective, and an overlooked vehicle for saving for retirement is examined. No rate change until U.S. has 2% inflation and strong job market. Each year the
Global growth appears to be gathering momentum after an unusual cold snap in the U.S. The employment picture has improved with four months of sustained job growth. And, inflation is firmly under control, with the implication that stock and bond markets are fairly valued in a low interest rate environment. Outlook for Global Growth. The
Inflation rates—a general increase in prices--are very low. With Fed officials talking openly about low inflation and the risk of deflation, it is appropriate to examine inflation risk and how to address it. High levels of inflation erode purchasing power and the value of stocks and bonds. This week we review aspects of inflation. The
This week we examine the topic of financial repression, the term to describe the deliberate action of government to hold down interest rates below inflation. It represents a tax on savers and transfers benefits to government and other borrowers that would otherwise be spent elsewhere.
The Dow Jones Industrial Average and the S&P 500® Index recently reached all-time highs. Yet, a seeming disconnect between the economy and the stock market exists. In this blog we focus on news events that clarify the economic situation and Fed policy and the apparent disconnect with the level of the major stock indexes. We also mention an item in the President’s budget proposal that is central to this region’s economy.