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Recession Concerns Quieted…for now at least…

CAMS Weekly View from the Corner – Week ending 4/5/2019

April 8, 2019

The economic growth experienced in the United States in the previous couple of years seems to be the most untrustworthy (if not hated) economic growth that we have witnessed in many years and perhaps decades.  When a short string of economic reports are released that suggest a hint of softening it seemingly doesn’t take long before a growing chorus of recession callers come to the forefront.

It is important to realize that consistent economic growth, over the course of numerous years, does not occur in a never ending straight up line.  There are ebbs and flows as the growth unfolds but yet, through the process, growth continues – historically speaking that is.

There are certainly times when the “ebb” fails to flow and said historical growth teeters, or in some episodes, cliff-dives into negative growth – i.e. recession.  With this we are always vigilant on observing the growth process with emphasis on “process.”

If you are even a casual reader of these Weekly View’s you may recognize our on-going mantra of an absolute necessity of consistent economic growth to support our highly valued markets.  With this, we certainly understand the “touchiness” of the collective view that even a hint of withering growth can lead to concerns of something potentially serious.


Click For Larger View:   https://fred.stlouisfed.org/graph/?g=nyac

In recent editions we have broached the employment landscape being there were concerns in light of a less than stellar employment report in the previous month.

This past Friday the Bureau of Labor Statistics (BLS) released the employment results for the month of March.  The red arrow in the above chart points to Friday’s results which came in at 196,000 new jobs reported.

These results continue to reflect the solid employment backdrop that exists in the United States.  In addition, speaking to the ebb and flow of on-going economic growth, the above chart depicts two years worth of employment results.  Each bar represents one month.

As we can see via the chart, employment growth, like economic growth itself, does not occur in a straight line up.  The results posted Friday speak to a sound employment result after a dip in the previous month.

In the two year history depicted above, we know this is normal and part of the ebb and flow of on-going growth.  Currently, the economy remains positive with a tinge of softening but certainly not recessionary.

I wish you well…

Ken Reinhart

Director, Market Research & Portfolio Analysis

Portfolio Manager, CAMS Spectrum Portfolio

Footnote:

H&UP’s is a quick summation of a rating system for SPX9 (abbreviation encompassing 9 Sectors of the S&P 500 with 107 sub-groups within those 9 sectors) that quickly references the percentage that is deemed healthy and higher (H&UP).  This comes from the proprietary “V-NN” ranking system that is composed of 4 ratings which are “V-H-N-or NN”.  A “V” or an “H” is a positive or constructive rank for said sector or sub-group within the sectors.

This commentary is presented only to provide perspectives on investment strategies and opportunities. The material contains opinions of the author, which are subject to markets change without notice. Statements concerning financial market trends are based on current market conditions which fluctuate. References to specific securities and issuers are for descriptive purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. There is no guarantee that any investment strategy will work under all market conditions. Each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. PERFORMANCE IS NOT GUARANTEED AND LOSSES CAN OCCUR WITH ANY INVESTMENT STRATEGY.

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