Monday, September 9, 2019

Closer to Home

Nobel laureate economist Robert Shiller stated in an interview on Bloomberg this week that he “wouldn’t be at all surprised” if U.S. home prices started to fall.  Shiller warned that fears of a recession driven by economic narratives such as the trade war and inverted yield curves could be just enough negativity to weigh on consumers’ desire to purchase a home. 

Last week, home sales, mortgage applications, housing starts, and permits all missed expectations.  Shiller’s own gauge of the housing market, the S&P CoreLogic Case-Shiller home price index rose just 0.11% month-over-month (half the expected rise) and slowed to just a 6.3% year-over-year gain—its weakest reading since December of 2017.  The “canary in the coal mine” moment for housing prices will come when some of the hottest markets begin to roll over.  But wait - one already has: Seattle, the home of Amazon, Microsoft, Starbucks and many other hot, growing companies.

Seattle’s Home Price Index (HPI) went negative year-over-year in May, as shown in the chart below from EPB Macro Research.  Should another hot market do the same, showing that Seattle is not an anomaly, we’ll have a trend - and not a good one.

Friday, August 30, 2019

What Do You Know About Labor Day?

Labor Day is celebrated on the first Monday every September. For some Americans, it signals an end to summer; for others it represents much more. See what you know about Labor Day by taking this brief quiz:

1. In the late 1800s, the typical work week in an American mill was about 73 hours long. Men, women, and children worked slightly more than 12 hours per day, seven days per week. How much did they earn?

a. $30 to $34 per week
b. $0.07 per hour
c. $3 to $3.50 per week
d. $0.52 per hour

2. The Fair Labor Standards Act established the minimum wage in 1938. It was set at:

a. $0.25 per hour
b. $0.76 per hour
c. $0.08 per hour
d. $1.17 per hour

3. In 1900, which group declared that trade unions were good for democracy?

b. U.S. Industrial Commission
c. National Labor Union
d. U.S. Department of Labor
4. In the United States today, a 40-hour week is considered full-time work. How many Americans worked more than 40 hours a week in 2009?
a. 44% of American men
b. 29% of American women
c. 37% of Americans
d. All of the above
If you would like to make sure your savings and investments are working as hard as you are, give us a call. We would be happy to schedule a time to sit down and review your situation.

Happy Labor Day!

Best Regards,

Womack Investment Advisers Team
1. C – $3 to $3.50 per week
2. A – $0.25 per hour
3. B – U.S. Industrial Commission
4. D – All of the above 

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Monday, August 12, 2019

Global Selloff

 Global selloff. Quick comeback.

Investors boomeranged from stocks to safe havens and back as trade tensions between the United States and China intensified last week. The Economist reported:

“On August 1st President Donald Trump warned that he would soon impose a 10 percent levy on roughly $300bn-worth of Chinese goods that have not already been hit by the trade war. Four days later China responded by giving its exchange rate unaccustomed freedom to fall. The yuan weakened past seven to the dollar, an important psychological threshold, for the first time in over a decade. And stock prices in America duly fell...”

Asia Times explained, “Beijing has signaled that it is prepared to endure a long and debilitating trade war with the United States…A reported directive to Chinese companies to refrain from buying U.S. farm products seems an in-your-face challenge to the U.S. president.”

The possibility of a prolonged trade war triggered worries about global recession and set off a selloff. Global stock markets experienced the biggest one-day decline since February 2018, according to Bloomberg, and U.S. stocks delivered the worst one-day performance of 2019, reported MarketWatch.

Stocks staged an impressive recovery on Tuesday. Then, central banks in India, Thailand, and New Zealand announced unexpected rate cuts. The moves incited concern about the health of the global economy and stocks dropped again – and recovered again. By the end of the week, nearly all losses in U.S. stock markets had been erased.

If recent volatility has triggered a desire to change your investments, please get in touch with us before you do.


Top Ten Markets for U.S. Ag Exports

Market turmoil this week was caused in large part by President Trump’s additional tariff announcement, followed quickly by China’s announcement that it was officially terminating all purchases of US agricultural products.  The loss of sales to China was called “devastating”, “crippling”, and “a very big deal” by agricultural experts.  So how big is the Chinese market for US ag exports?  Big, but surprisingly not the biggest, or even second biggest – it is (or was!) the fourth largest market for US ag exports last year, as shown in this chart from CNBC.