Latest Blog: Beach Reading - 04/29/2021
Investment Insights are written by Angeles' CIO Michael Rosen
Michael has more than 30 years experience as an institutional portfolio manager, investment strategist, trader and academic.
HOPE AND REALITYPublished: 04-06-2017
Why is everyone so happy? Well, maybe not everyone, but a lot of people are as optimistic as they’ve been in a long while. Start by looking at consumer confidence, as collated by the Conference Board below. Confidence is at the highest level in the past five years (see graph below); in fact, confidence is only a little shy of its all-time peak in September 2000 (which, ominously, marked the top of the great Internet bubble).
Conference Board Survey of Consumer Confidence, 2011-2017
One finds the same results in nearly all the surveys, from consumers to small businesses to baseball fans (except, maybe, Padres fans, whose team will struggle to win a third of their games this year). Is this optimism justified? Well, if you look at the actual data, the economy is doing fine, plugging along. By my count, over the past month, positive economic surprises are outpacing disappointments by about a 4/3 ratio. Labor and housing data have been especially strong, manufacturing and construction a little light (although bad weather may account for some of that). Looking at the broadest measure of economic output, gross domestic product (GDP), it has been remarkably stable over the past five years, at around 2% p.a. (see graph below, showing quarterly changes along with the two-year moving average).
Source: Bureau of Economic Analysis
So, there’s not been a lot actual change in the trajectory of the economy, in contrast to the huge jump in confidence recently. In fact, the gap between hope and reality is the widest on record (see graph below).
So, why is everyone so happy? We can’t be sure, but we had an election that promised to sweep away the old, sclerotic ways of Washington, to be replaced by swift and decisive actions: cutting taxes, culling regulations and, especially, creating jobs (although, it should be said, the economy has created 12 million jobs over the past five years, and I’m not sure we’re going to (or can) do any better over the next five). So that’s pretty exciting.
If this explanation is right, we will keep our eyes (and Twitter accounts) on Washington. The first attempts at swift, decisive action was a little less than successful, but there will be more cracks at the bat. Like the baseball season, it’s early in the season.PRINT THIS ARTICLE
How The Mighty Fall 11-11-2014
Between March 2000 and October 2002, the NASDAQ Index fell 75%, from over 5,000 to under 1,300. Of course, valuations ...READ MORE
2016 - 1st Quarter Commentary 05-17-2016
To read more, download the full 16 page PDF: ...READ MORE
It's probably no surprise to you that I see offering world-class investment advice as a valuable service for the ...READ MORE
We build portfolios of best-in-class investment managers across all asset classes. If you would like to be considered for our portfolios, please contact us using our manager inquiries form.
- MANAGER INQUIRIES
How Can We Help You?Institutional Investors
Fully resourced investment office built to manage sophisticated client investment programsPrivate Wealth
Personalized discretionary portfolio and wealth management services powered by institutional processInvestment Management
Rigorous process and a flexible platform designed to meet client needsArticles & Insights
Latest insights and perspectives from the Angeles teamContact Us
Get in touch