U.S. Wage Growth Continues to Disappoint

In the graph below, aggregate corporate profits after accounting for changes in inventory valuation and capital consumption (blue line) is plotted against the real median wage of U.S. workers (red line). The term 'real' in this case indicates that the data has been adjusted for inflation. Historical evidence over the past 40 years suggests that, despite increases in productivity and corporate profits, wage growth continues to disappoint. The situation begs us to ponder how an economic…

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Moment of Truth for the U.S. Dollar

The U.S. Dollar is on the ropes and its next move is critical... Investors have an important decision to make -- one that is largely tied to the overall confidence in the equity markets. Should stocks tumble, money will inevitably flee to safety. This means currencies of perceived stability (USD, YEN) and commodities where the underlying asset stores value (gold, platinum, precious metals, etc.) should appreciate in value. In the Dollar Index (DXY) chart below,…

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Elliott Wave Analysis: Dow Jones (DJIA)

In retrospect, there's something fascinating about the Dot-com bubble era and how the Dow Jones Industrial Average (DJIA) price peak at the turn of the century served as an internal third within an even larger-degree Wave I. We then witnessed a final internal fifth move higher from 2003-2007 that was abruptly cut down by a Financial Crisis, bringing the domestic and global economy to its knees. It now appears that the 2008 pullback (Wave II bottom) and…

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U.S. Interest Rate Cycle Since 1790

The chart below is loaded with important historical interest rate data going all the way back to the founding of the United States. From our perspective, the era of cheap money is just about over. Eventually, yields must rise to counter: 1) U.S./global inflation, 2) the sale of domestic bonds as the Federal Reserve reduces its balance sheet and 3) a slowdown in demand for U.S. Treasuries by key Asian countries (China and Japan). Good investing,…

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