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US Markets, Jobs, Economy

markets

How is the US faring right now vis-à-vis markets, jobs and the overall economy? Unfortunately the anticipated increase in private payrolls by Dow Jones was not met (173,000 being the expectation; 129,000 the result).  According to Moody’s Analytics Chief Economist Mark Zandi:

“The job market is weakening, with employment gains slowing significantly across most industries and company sizes. Businesses are hiring cautiously as the economy is struggling with fading fiscal stimulus, the trade uncertainty, and the lagged impact of Fed tightening. If employment growth weakens much further, unemployment will begin to rise.”

The only gain that did transpire was through services, which encountered an increase of 135,000.  Looking at education and health services was encouraging as there was a hike of 56,000 and professional/business services jumped by 41,000.  Other increases occurred with: hospitality, IT, leisure, trade, transportation and utilities.

The Fed is claiming its lengthened low interest rate policy can be linked to higher salaries, full employment and stronger bargaining power.  It also seems that those most affected positively were the more underserved groups including women and blacks.

Earlier this year, Barclays Chief US Economist Michael Gapen explained:

“The labor market is as strong as it’s been since pre-crisis times. The basic fundamentals of the economy are still solid. Therefore markets should expect the Fed’s policy rate to still go higher. How many more times, and when, is debatable, but this is not a report that tells the Fed they should just be on pause forever.”

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Hedge Fund Managers and Global Growth

Hedge fund managers are (rightly) concerned about global growth.  According to Hayman Capital CIO Kyle Bass it seems like South East Asia is headed for a recession this year; Europe also but the US with its fiscal impulse from tax stimulus will wear off toward the end of the year.  We have to realize that the US won’t be exempt from a worldwide recession.

US Citizens: Measuring Quality of Life

There are many ways to measure the success of a country.  One way is to look at quality of life.  According to a recent article, this has actually improved in America quite significantly over the last two years.  While it cannot be denied that there is a lot of anti-Trump sentiment in America, the statistics – as he announced in his state of the union address – speak for themselves:

“We have created 5.3 million new jobs and, importantly, added 600,000 new manufacturing jobs.  Wages are rising at the fastest pace in decades … . Unemployment has reached the lowest rate in half a century. African-American, Hispanic-American and Asian-American unemployment have all reached their lowest levels ever recorded. Unemployment for Americans with disabilities has also reached an all-time low.”

That has to attest to an enhanced quality of life.  But if it doesn’t, then the IBD/TIPP Quality of Life Index solidifies the sentiment.  This index is based on a survey which actually asks the public how they view their quality of life and if they predict it will improve, worsen or remain stagnant over the next half year. Likewise with the  IBD/TIPP Economic Optimism Index, which has reached over 50 during this same time frame, up from its 46.8 figure under Obama.

In addition, the American Enterprise Institute (AEI) released a new national survey on the American dream. It

“found that beneath the surface of the nation’s social divisions lies a more optimistic storyline of life in America . . . [showing] that people still trust in the goodness of their communities, believe in the American dream, and prioritize family and freedom over materialism. Significant majorities in every demographic group (age, race, income, etc.) say they are satisfied with life in the community where they live and rate it good or excellent. Most percentages on these issues hover around 75 percent.”

US Power Lists

business executives

Being featured on a power list has often been a measure of success for many executives.  It is indicative of becoming credible in their fields and being recognized and respected from industry peers.  In this article we take a look at three individuals who have recently been featured on power lists throughout the nation.

First, Michellene Davis who was included on the ROI Influencers Power List 2019: Government Affairs.  This list – established by Prospect Publishing Group – has few categories including: education, finance, healthcare and law.  Davis is regarded as:

“a powerhouse in New Jersey, whether it is on politics, health care or women and POC empowerment…No one can question her natural talent. She can make calls and lobby at the local, state and federal level with ease, all thanks to her networking prowess.”

Second, Nita Lowey who was featured on The 2019 New York City Power 100 which seeks out “the people with the most influence over the city.”  As Chairwoman of the House Appropriations Committee, Lowey found a place on the list as she was deemed:

“the most powerful woman in the country, but Rep. Nita Lowey is close behind. The Westchester County Democrat is the first woman to head the House Appropriations Committee, putting her in the middle of funding battles over Planned Parenthood, safety net programs and border security. After helping avoid a second federal government shutdown, she is now on the front lines fighting the president’s emergency declaration to fund a border wall.”

Third, Nadia Boujarwah, who was included in The 2019 NYC Tech Influencers “the people driving New York tech.”  As co-founder of plus size fashion company DIA&Co, Kuwait native Boujarwah

“has been able to successfully scale the business, serving over four million customers with a team that has grown to over four-hundred employees. With Boujarwah at the helm, the company has raised a total of $90M in funding and is backed by Union Square Ventures, Sequoia Capital, Next View Ventures, and Maveron. Outside of the lucrative business, at its heart, Dia&Co is a purpose-driven company to make retail more inclusive, allowing millions to have a healthy body image through style.”

Being included in a power list is a great way to reach the next level in one’s industry.  It’s also a huge compliment to be recognized in this manner.

Understanding America’s Public Debt

America’s debt is huge.  Standing at 22 trillion dollars, this figure is not doing anyone any favors.  Indeed, according to Research Assistant at the Catholic University  of America, Robert Warren, “we have a credit card now and our grandchildrens name is on the card and they will get the bill. They will have to pay back for us, 22 trillion dollars to our creditors and they will receive no direct benefit from it.”

There should be cause for concern.  The current figure is actually the highest it has ever been, reflecting an increase of over $2 trillion from 2017 when Trump came into power.  Which is strange really given that America is currently in its second-longest economic expansion since the post-WWII boom.  And annual deficits are anticipated to rise even more.

Furthermore, according to the CBO, the next decade will witness an anticipated growth of $1.2 trillion per annum.  Plus: “Other than the period immediately after World War II, the only other time the average deficit has been so large over so many years was after the 2007–2009 recession.”  

It’s therefore crucial to put tax increases in place in an effort to reduce the debt issue.  While of course this is hard to hear for most people, some wealthy individuals welcome it.  Indeed, a few months ago, billionaire Douglas Durst said outright that he “support[s] higher taxes on people like

[him]

.”  If it isn’t going to have much impact on this sect of society, but it could positively effect the US economy.

The US: Business and Consumer Spending

measurements


One way to measure the success of the US economy is to review consumer spending.  While Q4 2018 business spending escalated to 2.6 percent, economists are concerned that Q1 2019 will not even grow at half that level due to “sluggish consumer spending” as well as the government shutdown.

One of the reasons for the positive Q4 2018 figures was due to a 13.1 percent acceleration in intellectual property as well as a 6.7 percent increase in equipment spending.  The concern is the significant slump in retail sales from last December which could indicate shakier consumer confidence at the beginning of 2019.

It was also found by the Bureau of Economic Analysis that consumer spending in 2018 comprised 68 percent of America’s economy.  As well, in Q4 2018, consumer spending reached $14.2 trillion; two-thirds of which is on services like housing and health care and nearly a quarter on non-durable goods like clothing and groceries.

High levels of consumer spending is good for the economy and significantly contributes to the 2-3 percent healthy GDP growth rate.

Still, if it’s true that “Americans apparently reduced spending in December by the largest amount since the economy exited recession in 2009,” then something has to be done to change the trend.

Hedge Funds and AI: A Great Combination

Artificial Intelligence (AI) machines are increasingly being used for analysis, investigation, and the decision-making process with hedge fund activity.  One example of this is Aidyia, a hedge fund that generated a 2 percent return on its first day of trading US equities using an AI machine. 

According to research conducted by alternative assets market financial data firm Preqin there are 1,360 hedge funds using the machines for trading.  They give far more data than just regular software as they are able to provide traders with “full autonomy” which eliminates the need for a data scientist.  The machines have the capacity to analyze huge amounts of data very fast which results in the analysis of market prices, fiscal reports, social media, new trends, and more. That data is then programmed into the AI machine for a “vote” to be taken to determine the next step.

Peltarion is an AI service provider.  With its $20m fund injection from Euclidean Capital, the firm should now be able to reach its goal of “mak[ing] AI accessible for all in order to solve the world’s problems faster”. Luka Crnkovic-Friis, Peltarion CEO and co-founder explained:

“AI is a technology that everyone should benefit from. Our mission is to make AI technology useable and affordable for all and this investment will help us to grow and scale in order to do more good in the world.”

The AI machines can also measure and predict bitcoin prices, and give an assessment on intangible assets.  Huge quantities of data from platforms like Twitter and news headlines can be analyzed – something that can only be carried out by a machine.

Overseas Investments: The Options

Where is it best for investors to search for new opportunities worldwide?  In this article we take a look at some of the promising places for 2019 as well as some of the considerations vis-à-vis country jurisdictions and restrictions.

According to a recent article in City AM:

“Currency risk is a factor to be borne in mind when investing overseas. Additionally, depending on the jurisdiction, there may be limited to access to a given stock market for individual investors, corporate governance may not be developed to the same degree as in the UK or US (although several funds are beginning to address this in their investment requirements, with Environmental, Social and Governance (ESG) becoming an increasingly important theme).”

It seems that Greece has historically been a popular overseas investment region.    The firms from America, Asia and Europe that have invested in Greece over the years have done well overall.  Greece doesn’t necessarily make it easy to invest per se, but there have been many success stories including an international telecom leader, Chinese shipping company Cosco and more.  Germany – through Hochtief – did well too with its construction and operation of the Athens International Airport, a couple of decades ago.

When it comes to popularity and even an element of awe from foreign investment companies, Japan has done quite well.  From 27 January to February 1, 2019 $5.8 billion in bonds were purchased by international investors.  in addition a Bloomberg article pointed out:

 “An auction of 10-year government bonds drew the highest bid-to-cover ratio for the tenor since 2005 on Tuesday [February 5], just a day before the central bank’s regular purchases.”

Japanese Government Bonds (JGBs) have almost zero (or negative) yields.  nonetheless, international investors can still make great returns thanks to their foreign currencies.  they can use that to switch into yen and then invest the proceeds. Plus, according to Sumitomo Mitsui Trust Asset Management Co.’s senior economist, Naoya Oshikubo:

“Foreign demand will remain robust this year, especially for futures and shorter maturities, thanks to basis swaps.”

There are certain regions in Bali that provide a good environment for foreign investors also.  Apart from the fact that it makes for a great holiday destination, buying property there – especially in Canggu, Bukit/Uluwatu, Ubud and Lovina – can, according to realtor Pratama Antonio, “really give a good bang for your buck.”  At the end of October last year, approximately $ 42 billion in investment opportunities were created in infrastructure projects and tourism. It is likely that East Nusa Tenggara (NTT) will be reaping the most benefits thanks to its ever popular islands including: Flores, Komodo and Sumba.

Best Tips for Stock Market Investments

stock market

When it comes to learning how to invest in the stock market, who better to take tips from than “one of the world’s most powerful investors….Warren Buffet.”

Over the years, the Berkshire Hathaway CEO has given his tips for stock market investors:

2017

“The best thing with stocks, actually, is to buy them consistently over time. You want to spread the risk as far as the specific companies you’re in by owning a diversified group, and you diversify over time by buying this month, next month, the year after, the year after, the year after.”

He also said in the same year:

“If you save money, you can buy bonds, you can buy a farm, you can buy an apartment/house — or you can buy a part of an American business. And if you buy a 10-year bond now, you’re paying over 40 times earnings for something whose earnings can’t grow. You compare that to buying equities, good businesses, I don’t think there’s any comparison.”

CEO of Amazon, Jeff Bezos has in the past, told his employees:

“When the stock is up 30% in a month, don’t feel 30% smarter — because when the stock is down 30% in a month, it’s not going to feel so good to feel 30% dumber.”

Peter Lynch said:


“Behind every stock is a company. Find out what it’s doing.”

And Bill Ackman said:

“From day one, I was always unafraid to ask someone to invest because, I thought that, while capital was a commodity, good investment ideas were rare assets…Investing is one of the few things you can learn on your own.”

For those looking to get into the hedge fund industry, or wanting to make investments, it’s worthwhile contemplating these above ideas.

Hedge Fund Manager on Global Economy

This video presents a brief overview on the world’s largest hedge fund manager – Ray Dalio who talks about how the dollar is losing its reserve currency status. Over the past 34 years Dalio has seen China do something unprecedented.  A massive shift which has made it “the greatest economic miracle ever.” Charts show what China has done from 1978-2018 and how things look now in the global economy.