Economic Analysis

On Thursday, May 21, the National Association of Realtors released its report on existing home sales in April. Total existing home sales declined 3.3% to an annual rate of 5.04 million units in the U.S. (Source: National Association of Realtors, May 21, 2015.) April’s existing home sales are…

There is so much supply out there, oil prices could very well experience another material price correction, making the business case for producers extremely limiting. One thing that isn’t plentiful in this stock market is value. But it has appeared in the energy sector as both oil prices…

Economic data coming out of China does not look good. At the very least, they’re collectively saying that Chinese economic activity is slowing at a staggering pace. China’s Dismal Factory Output, Retail Sales, and Investment Miss Estimates April’s factory output increased 5.9% year-over-year, beating March’s 5.6% increase. However,…

Low interest rates create an incentive for retail investors, hedge fund managers, and banks to consider riskier assets that offer higher returns. Cheap money also makes it easy to borrow when the return exceeds the cost of borrowing. When short-term interest rates are low and unstable, investors are…

We are frequently told that the U.S. economy has recovered from the Great Recession of 2008 and 2009. However, according to a recent report, 32 states still face budget gaps in fiscal 2015, 2016, or both. (Source: Reuters, April 27, 2015.) Does a Revenue Problem Mean Higher Taxes…

On Tuesday, May 19, the euro fell almost one percent against the U.S. dollar. This was mainly due to a top-ranking executive at the European Central Bank (ECB) signaling that the central bank will increase the pace of its bond buying. (Source: Financial Times, May 19, 2015.) The…

Over the past year, oil prices have dropped by more than 50%. Not surprisingly, jet fuel, an airline’s largest expense, has dropped in step with oil prices. Ticket prices, on the other hand, remain sky-high. In North America, jet fuel prices have fallen nearly 36% from a year…

On Tuesday, May 19, Wal-Mart Stores Inc. (NYSE/WMT) released its earnings report for the quarter ended April 30, 2015. Its earnings per share (EPS) are $1.03, lower than the expected $1.04. Quarterly revenue is reported at $114.82 billion, lower than last year’s $114.96 billion. (Source: Wal-Mart, May 19,…

The Federal Reserve is expected to raise interest rates in September. When this happens, I expect the U.S. housing market to become one of its first and biggest victims. You must remember that the housing market and interest rates have a negative relationship. If interest rates rise, home…

I am not surprised that the retail sales remained unchanged in April. Although warmer weather is upon us, the April retail sales data did not warm up the way the industry would have liked. Retail Sales and Consumer Confidence Fading After barely growing in the first three months…

The London Interbank Offered Rate (LIBOR) is the interest rate at which large financial institutions, mostly banks, can borrow from one another. The forecast for LIBOR is clear, but the consequences of market manipulation remain uncertain. LIBOR Rate Forecast LIBOR is the underlying benchmark for consumer and corporate…

The U.S. economy is slowing down. Even the Organization for Economic Cooperation and Development (OECD) said U.S. growth is lagging and an economic slowdown shouldn’t be ruled out. The OECD’s leading indicators are designed to anticipate economic changes whether the economy is expanding or slowing down. The OECD…

It has been six years since the global economy and U.S. entered the worst recession since the Great Depression. While many are championing the economic recovery, on closer inspection, it looks like history might repeat itself sooner rather than later. U.S. Economy Grows at Slowest Pace Since WWII…

On Tuesday, May 12, Moody’s Investors Service downgraded the city of Chicago’s credit rating to junk bond status. (Source: Moody’s, May 12, 2015.) One day later, the rating agency downgraded the debt of Chicago public schools and park district to junk bond level. (Source: Moody’s, May 13, 2015.)…

Over the past few years, the U.S. national debt has increased drastically since the financial crisis. To give some perspective, since President Obama has taken office, U.S. public debt has jumped by $7.0 trillion. (Source: Committee Responsible Federal Budget, May 11.2015.) With stocks at an all-time high, people…

The British pound to U.S. dollar exchange rate (GBP to USD) is driven by the performance of the U.K.’s economy, relative to that of the U.S. While the U.K. remains the strongest economy in Europe, is it enough to take the British pound higher? Technical Analysis: GBP vs.…

May 13, 2015 was a busy day for the release of European economic results. How did the European economy fare and how do these numbers affect U.S. companies? Forecasts, for the European economy as a whole, call for the region to muddle through a “mild cyclical upswing” driven…

Over the past six years, the Federal Reserve has been the major driver of the bonds market, snapping up $3.5 trillion in bonds. Thanks to the Federal Reserve and a number of other factors, investors are getting nervous and selling. In fact, they’re selling so much so that…