Inside the Economy with SH&J: February 27, 2017

This week on Inside the Economy with SH&J, we discuss what the next brewing bubbles in the U.S. economy may be, and whether or not their imbalances could cause the next recession. In addition, we review the capital inflows of international money into U.S. commercial real estate and why China is selling off a portion of their U.S. Treasury holdings. Listen in to hear the economic chances of a recession in the near future.

Inside the Economy with SH&J: February 13, 2017

This week on Inside the Economy with SH&J, we review the driving forces for raising interest rates and inflation including unemployment, consumer debt, and retail pricing. Also covered is the longer-term potential growth slope for GDP. Listen in to hear this week’s discussion, which includes insight on the United States’ dependence on trade and an update on the Eurozone.

Inside the Economy with SH&J: January 30, 2017

This week on Inside the Economy, we discover why the age of low inflation may be ending and how yields are likely to be pushed higher. The Dow crossed above 20,000 for an all-time high on January 25, 2017, creating a stir in media headlines. Which sectors are being positively and negatively impacted by the incoming administration’s new policies? Listen in to find out more!

Our Thoughts on the Dow and 20K

Stock Market - newspaper business conceptYou’ve likely heard noise in the media recently about the potential of the Dow hitting 20,000. We recently wrote about the history of the Dow and want to remind you that the media has a tendency to add hype where it is not warranted. In our reading over the weekend we found an article that illustrates our feelings about the Dow and the recent hype around it quite well.

In the article, Why Dow 20k doesn’t matter, published in the Chicago Tribune, author Jill Schlesinger said, “I think the Dow is perhaps the least meaningful U.S. stock index available. Sure, it’s got history on its side — it was created by Charles Dow in 1896 in order to provide investors with a snapshot of how the overall stock market was doing. But it includes only 30 large companies, and considering that Amazon, Google and Facebook are not part of the Dow, it is hard to make the case that it reflects the broader market.” (source)

The full article can be read here and we think it is a worthwhile read.

 

Inside the Economy with SH&J: January 16, 2017

This week on Inside the Economy, we review how a strong U.S. dollar and higher interest rates have affected the exporting sector of the U.S. economy and borrowing costs over the last year. Can you guess what the next bubble may be? Listen in to find out, and hear more on expectations for manufacturing’s share of total employment here in the U.S., as well as what a cut in corporate tax receipts could mean for Federal Revenue.

Dow 20,000 and the History of the Dow’s Milestones

The Dow is within “striking distance” of reaching 20,000, a milestone that many investors may feel as though they have been waiting forever for (source). As we are potentially days away from the arrival of the Dow 20,000, and while this is merely just a number – a big, round number – we consider the history of the Dow Jones Industrial Average and the time it took to reach some of its past milestones.

Historically, the index has struggled reaching major milestones. The Dow first reached 100 in 1906, but after many fluctuations, it wasn’t until the mid-1920s before it convincingly traded higher than that level, and it permanently broke above it in 1942 (source).

This was the case for the Dow 1,000 as well. It initially hit the 1,000 mark intraday in 1966 but did not close above that mark until November 1972. It wasn’t until 1982, 16 years after initially reaching 1,000, that the Dow finally traded above that mark for good (source). It took roughly 15 years from first closing above 1,000 in 1972 for the Dow to progress another 1,000 points to the 2,000 milestone, yet only four years to go from 2,000 to 3,000 points.

The Dow first hit 10,000 in 1999, but the average fell below that level for 11 years, until 2010 when it took residence above that milestone. Now, seven short years later, the Dow is about to hit 20,000.

The chart below shows the important Dow milestones and additional key dates that defined what the Dow is today:

shj_sharkey_howes_javer_important_dow_milestones

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Inside the Economy with SH&J: January 3, 2017

In our first Inside the Economy of the new year, we discuss our economic outlook for 2017. The U.S. is about 7.5 years into the current business expansion, which is approaching the 10-year record from the 1990’s but will the S&P 500 continue to increase in valuation? What can we expect for mortgage rates this year? Listen in to hear more on these topics in our first economic update of 2017!