Read on to get the details!<\/p>\n\n\n\n
Good Trend: Americans\nare Saving More \u2013 <\/strong>Though normally known for our robust spending, American\nhouseholds have also been locked into another trend: saving more. In the first\nseven months of 2019, the personal saving rate for U.S. households climbed to 8.2%\n\u2013 the highest it\u2019s been since 2012. If you consider that the personal saving rate\nremained below 7% for most of the 1990\u2019s and had even dipped below 5% in the\nlead up to the Financial Crisis, then it seems like a solid development and\naccomplishment for U.S. households to be saving more. We would argue that\nconsistent saving throughout a lifetime is good for building and maintaining\nwealth, so we welcome the development. But there is also another angle to this\nstory that we believe is important to take into consideration \u2013 as wages have\nbarely ticked higher over the last few years, and savings rates increase, it\ncould mean the possibility of softer spending on a going forward basis. Since approximately\ntwo-thirds of the U.S. economy is comprised of consumer spending, 1<\/sup> too\nmuch saving could eventually make its way into GDP growth figures.<\/p>\n\n\n\n Personal Saving Rate\nfor U.S. Households<\/strong><\/p>\n\n\n\n Source: Federal Reserve Bank of St. Louis2<\/sup><\/em><\/strong><\/p>\n\n\n\n ____________________________________________________________________<\/p>\n\n\n\n Is Corporate America in an Earnings Recession?<\/a><\/strong> ____________________________________________________________________<\/p>\n\n\n\n Brexit Clock is\nTicking Fast, and Options are Running Out \u2013 <\/strong>In a landmark decision this\nweek, the United Kingdom\u2019s top court ruled that Prime Minister Boris Johnson essentially\nbroke the law when he closed Parliament for five weeks (September 9 \u2013 October\n14) in the lead-up to the hard Brexit deadline of October 31. As such,\nParliament officially reconvened this week and now faces the daunting task of\ntrying to agree on terms for leaving the EU, requesting an extension from the\nEU, or leaving the EU with no deal. In essence, Parliament is in the exact same\nplace it was before the suspension, but now with less time. A hard Brexit, in\nour view, appears to be the least desirable option as it relates to the U.K.\neconomy, but we would also opine that the markets have already priced in the\nworst-case scenario. Prime Minister Boris Johnson, in his first speech before a\nreconvened Parliament, doubled down on leaving the EU without a deal.4 <\/sup> <\/p>\n\n\n\n Are the Repo Markets\nin Crisis?<\/strong> Last week we explained how the repo markets worked and what we\nbelieved caused the cash shortage (corporate taxes coming due, massive bond\nsale). This week, however, despite tens of billions of cash infusions every\nday, the cash shortage continues to be an issue for the repo markets. The New\nYork Federal Reserve has stepped in with overnight cash loans of $100 billion a\nday, with 2-week offerings of $60 billion. Even still, days like Wednesday\ncontinue to happen, when the Fed supplied $75 billion of cash but received $92\nbillion of security offers. In short, a near $20 billion cash shortfall is a\nfairly significant deal. Mutterings around the Fed this week have centered\naround the unveiling of a potential $300 billion to $500 billion standing\ncredit line, in an effort to provide consistent liquidity versus \u2018reactive\u2019\nliquidity each time there\u2019s a cash shortage.5<\/sup> Such a sizable credit\nline would bring calm to the markets, in our view, but the overarching question\nfor financial markets remains: Is there a\nsystemic problem that needs solving?<\/em> <\/p>\n\n\n\n Corporate America Could Have an Earnings Problem<\/strong> \u2013 In\nthe second quarter of 2019, earnings posted declines. This marks the second\nconsecutive quarter where U.S. corporate earnings have posted declines. If\ncorporate earnings are generally thought of as the backbone of stock market\nreturns, is this trend something investors should be concerned about as the\nthird quarter comes to an end? <\/p>\n\n\n\n Take a deeper look with our just-released September Market\nStrategy report.6<\/sup> In this report, we\u2019ll take a closer look at what\nis happening in Corporate America with earnings, and we also give readers\ninsights for possible ways to hedge portfolios against potential deleterious\neffects of the trade war.<\/p>\n\n\n\n If you have $500,000 or more to invest and want to learn\nmore, click on the link below to get your free report today!<\/p>\n","protected":false},"excerpt":{"rendered":" Brexit time and options running out, corporate America\u2019s earnings problem, and more<\/p>\n","protected":false},"author":3,"featured_media":7426,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-8272","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8272","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=8272"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8272\/revisions"}],"predecessor-version":[{"id":10699,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8272\/revisions\/10699"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=8272"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=8272"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=8272"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/02\/steady-investor-9.28.29-image-1-of-1-1024x395.png\")
<\/figure>\n\n\n\n
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While we need to keep an eye on GPD growth figures, it appears Corporate America could have an earnings problem with earnings posting the second consecutive quarter of declines. If corporate earnings are generally thought of as the backbone of stock market returns, is this trend something investors should be concerned about?
\u00a0
Take a deeper look with our just-released September Market Strategy report. In this report, we\u2019ll take a closer look at what is happening in Corporate America with earnings, and we also give readers insights for possible ways to hedge portfolios against potential deleterious effects of the trade war.
\u00a0
If you have $500,000 or more to invest and want to learn more, click on the link below to get your free report today!
\u00a0
Download Our Just-Released September Market Strategy Report<\/a>3<\/a><\/sup><\/strong><\/p>\n\n\n\n