CAMS Weekly View from the Corner – Week ending 8/3/2018
August 8, 2018
A common sense off-shoot of a strong economy are income levels that are growing consistently.
Through all the endless breakdowns of economic views via various forms of media the bottom line “tell” if you will is simply if the citizenry are experiencing solid growth in their income rates.
Disposable Personal Income (DPI) is an often referenced broader measure that reflects income after taxes.
This past week the Personal Income data was released and it reflected a pickup out of a recent range. If we were looking at this through the lens of a chart only we would call this a breakout higher after a sideways digestion.
With this we would sit up and take note as the market under review would be offering us a behavior change to the positive. In this case the “market” is the income earning market of the citizenry at large.
Logically this harkens back to the employment market and general wage earning backdrop we are experiencing.
Click for Larger View: https://fred.stlouisfed.org/graph/?g=kI5n
The above is a ten year view of the just updated Disposable Personal Income. With the aforementioned breakout higher DPI has broken above the 5% growth barrier and is currently registering a year-over-year increase of 5.4%. This is excellent performance as the breakout higher is representative of a solid economic landscape.
Going forward we need to see this trend higher or at least hold in the 5% range. As the chart depicts in the last decade anytime 5% or higher was attained it was merely a blip and quickly turned south to go sub 5% or worse.
With our historically highly valued markets coupled with the citizenry’s debt levels strong personal income growth to support them all is essential.
This breakout higher is yet another checkmark on our current economic strength.
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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