Economic Analysis for 2014
Economic Analysis takes place when an investor evaluates economic conditions through a logical and systematic approach. This type of analysis is done in order to find the underlying trends and investment opportunities. When an economist looks at the state of the economy, they might consider GDP growth, inflation, interest rates, major political events, unemployment, and consumer demand.
An economic analysis can help investors get a general idea of upcoming market conditions and a possible trend reversal.
I will be formulating my complete stock market outlook for 2015 in a couple weeks, but at this time, I’m feeling somewhat uneasy. This year has turned out to be what I was expecting back in January 2014, with stock market trading being characterized by uncertainty and hurdles. Small-cap stocks are heading for their worst performance since 2011, when the Russell 2000 fell just below six percent. The index is languishing, with a loss of one percent after the nasty down week we just experienced. The selling was, in my view, somewhat driven by panic selling and capitulation. It gave stock market investors reasons to dump positions and take profits prior to year-end. The s ... Read More
Heck, it doesn’t look like Santa will be coming to the stock market this year. The blue-chip Dow Jones Industrial Average (DJIA) fell 185 points on Tuesday, prior to rallying to cut its loss—but this was followed by a 170-point intraday decline on Wednesday. Yesterday, the DOW did rally 63 points, but the index was up more than 200 points earlier in the session, so clearly, the apprehension continues to grip the market. The volatility and stock market apprehension is even more amazing given that the DOW came within nine points of testing 18,000 just a few days back. The mainstream financial media was quickly talking about the DOW at 20,000 and how amazing the stock market bull run was. On CNBC, I heard a stock market ... Read More
Recently, in the U.S. economy, we have been seeing decent jobs numbers, cheaper gas prices, and appreciating wealth in the housing market. The end result is consumers with more money to spend on things that make them happy, such as dining and travel. And I can see an investment opportunity opening up in some restaurant stocks. When people are confident with their financial situation, they tend to spend more freely. Take a look at the chart of the Dow Jones US Restaurants & Bars Index, which has been edging higher and appears to be breaking out following a sideways channel. I feel there’s a continued investment opportunity in the sector, as lo ... Read More
The U.S. economy has been showing some positive growth that has helped to propel the stock market higher, but be careful: there appears to be some cracks forming in the global economy to which the U.S. economy will not be immune. Japan reported that its economy fell back into a recession after contracting an annualized 1.6% in the third quarter, representing the second straight quarter of contraction. Part of the blame will squarely lie with Prime Minister Abe and his controversial decision to raise the country’s sales tax from five percent to eight percent in April. I consider the decision to raise the sales tax wrong, as it largely impacts the middle cla ... Read More
The annual Asia-Pacific Economic Cooperation (APEC) summit started on Monday in Beijing, and I bet there will be a lot of discussion on the state of China and Asia in the global economy. My readers all know the impact of China on the global economy, as I’ve written on its relevance before. If China fails, so will the global economy, including the United States and the fragile eurozone. Russia is already looking to extend its economic ties beyond the Great Wall. Yet it’s clear the country that gave us spectacular double-digit gross domestic product (GDP) growth for years is now strugglin ... Read More
As many of my long-time readers may already know, I have been bullish on China and Chinese stocks for some time. However, I’m now thinking that there could be some growth issues forming in the shadows—but that doesn’t mean there isn’t an opportunity to profit. We have been seeing some obvious signs surfacing that suggest China’s economy is stalling, but we really don’t know the true underlying gross domestic product (GDP) growth rate in the Chinese economy. According to the National Bureau of Statistics, China’s GDP grew at an annualized 7.3% in the third quarter, the slowest growth in five years and down from ... Read More
October U.S. retail sector sales numbers are in, but are they worth getting excited about? The Census Bureau announced on Wednesday that October retail sector sales increased 0.4% month-over-month and 3.9% year-over-year to $428.1 billion. From a shorter-term perspective, the 0.4% increase really isn’t anything to get excited about; that 3.9% year-over-year increase, though, looks pretty good. (Source: “Advance Monthly Sales for Retail and Food Services October 2013,” U.S. Census Bureau web site, November 20, 2013.) Or does it? Take a step back, and you ... Read More
Maybe I’m reading into the economy too much, but the current state of the U.S. economy and Wall Street isn’t adding up. The vast majority of people don’t think we’re in a bubble, including Federal Reserve chair nominee Janet Yellen. Granted, you can only really point to a bubble in retrospect, but still, it certainly looks and feels like we are in one. Talking before the Senate Banking Committee during her first public appearance as Federal Reserve chair nominee, Janet Yellen said she plans to keep p ... Read More