Joseki

Commentary

Quarterly Economic Update

 

The Leopard View is a quarterly economic update for our network with key current assertions plus commentary. From the most recent edition...


 

Current Economic Assertions and Changes (20 Aug 2019)

10-year U.S. Treasury rate is 1.605%, down 76.5 basis points (bps) or 29.3% from last quarter

WSJ prime rate is 5.25%, down 25 bps from last quarter and up 25 bps or 5;0% year over year

Real U.S. GDP growth (annualized BEA) for Q2 2019 is 2.1%; annual growth rates over the past 3 years:

2018 – 2.9%

2017 – 2.2%

2016 – (the last year of the Obama presidency) – 1.6%

CPI inflation 1.8% for 12 months ended June 2019

The U.S. Dollar vs major currencies index (trade weighted, FRED) is 91.745, up 1.74% from one year ago

U.S. unemployment is 3.7%, down 5.13% from one year ago; the highest unemployment rate of the past decade was 10.0% in Oct 2009; initial jobless claims as a percent of the labor force hit a new record low (data to 1967) at 0.12978%. The Civilian Labor Force has increased 113.4% from 76MM January 1967 to 163.35MM today (US population increased 66.43% during this period)

Labor force participation is 63%, up .16% from one year ago; historical peak was 67% Q1 2000

Brent crude oil price is $56.29 per barrel, down 23.11% from last quarter and down 19.75% from a year ago

U.S. real household debt as a percentage of assets is 12.6%, down 3.08%; historical peak was approximately 20% in 2008/2009

U.S. net government debt to GDP 88.0%, unchanged

U.S. equities (broad market) are up 16.89% YTD, up 13.89% over the trailing 12 months

Corporate profits are down 1.97% year-over-year (Q1 2019, FRED)

S&P Case-Schiller U.S. National Home Price Index is 216.94, up 2.39% year-over-year through May 2019, 17.51% greater than previous peak of 184.62 in July 2006

S&P Case-Schiller Las Vegas Home Price Index is 192.66, up 6.42% year-over-year through May 2019, 17.92% lower than previous peak of 234.71 September 2006

 

Commentary

I see three major evolving major forces impacting every business:

  1. Artificial Intelligence

  2. Climate Change

  3. Nationalism (the current trade disputes are grounded in nationalism)

“I believe this artificial intelligence is going to be our partner. If we misuse it, it will be a risk. If we use it right, it can be our partner.” Masayoshi Son

“The genie is out of the bottle. We need to move forward on artificial intelligence development, but we also need to mindful of its very real dangers. I fear that AI may replace humans altogether. If people design computer viruses, someone will design AI that replicates itself. This will be a new form of life that will outperform humans.” Stephen Hawking