The Yield Curve is Back to Normal, Manufacturing is Picking Up & Space Wine!

Posted in , By David M. Smith

A big news item since this spring was that the U.S. government bond yield curve had inverted. An inverted yield curve is when short-term yields are higher than long-term yields and it is one of the closely watched indicators of upcoming slowing growth or a recession. In the last few weeks the yield curve has reverted back to a traditional yield curve where short-term rates are lower than long-term rates. So that economic concern has been taken off the table (at least for now). And many recent economic indicators have been solid. Third-quarter GDP came in at 1.9%. That was a little slower than the 2.0% from the second quarter, but it was better than expected. It's not robust growth, but still solid. CNBC

This year, central banks and governments around the world have been pushing policies to stimulate growth, just like when the Federal Reserve cut rates again last week. So for all the hand wringing earlier this year amid talk of a severe global slowdown and a potential recession, it didn’t happen. And based on the recent indicators, it doesn't appear it will happen in the near future. This is not to say that everything is rosy. We still have trade issues, gridlock in DC, and flat business spending, but moderate growth seems to be where this economy is settling in right now.

This week there are a couple more articles on the health of the economy. For some interesting and fun stuff, there are articles on aging wine in space, the global fertility crash, artificial intelligence, bringing New England mills back to economic life, and how oatmeal can power your athletic performance!

Thank you for reading The Friday Buzz, have a great weekend!

The Economy is Still Creating Jobs: The U.S. Labor Department reported jobs expanded by 128,000 workers, despite 42,000 autoworkers being on strike. That is good news for consumer confidence and spending. WSJ

U.S. Manufacturing Rebounding? The U.S. October Manufacturing PMI came in at 51.3, the highest reading in six months. A reading above 50 indicates the sector is expanding and growing. Gains were driven by new orders and an uptick in foreign demand. At the same time the service sector is still expanding and the October PMI was reported at 50.6. So both sectors are still growing, albeit moderately, but the expectation is that the moderate growth will continue. Check out the two charts in the links. Trading Economics Trading Economics

Space Station Wine Cellar? This week a dozen bottles of French Bordeaux wine were delivered to the space station. The wine will be returned to earth in one year. Researchers will then study them for how weightlessness and space radiation affected the aging process. The goal of the experiment is to develop new flavors and properties for foods. I wonder if the astronauts will only be able to find eleven bottles to return next year…

The Global Fertility Crash: Regions all over the world are having to deal with dropping fertility rates, especially in the developed world. The rate of births to replace a population is 2.1 per woman. In 2017, about half of all countries in the world were below that rate versus only five percent of countries fifty years ago. Less births lead to less workers and aging populations. This will have massive implications on economic growth, social programs, immigration, etc. Bloomberg

Artificial Intelligence is Here: Speaking of massive societal changes, I saw a Frontline episode this week on artificial intelligence (AI). The show offered a fascinating glance into the potential positive and negative consequences AI could have on our lives. There will be no hiding from AI and it is on the way. PBS Frontline

Refurbishing Mills More Popular: All across New England old mills are being refurbished and repurposed. I see it in the areas surrounding Portsmouth and Portland. The buildings are beautiful red brick with open spaces and a lot of natural light and character. Those empty old mills that were once symbols of the region's past manufacturing glory are now starting to teem with life again. NYT

High-Performance Oatmeal: I'm a big fan of oatmeal and probably have it for breakfast most mornings. Due to its healthiness and ability to pair it with so many other nutrient foods and flavors, many high endurance athletes eat it too. The athletes have created some great oatmeal recipes, which I can't wait to try. Hey, financial planning is an endurance sport too!!! Get Pocket

Please feel free to forward the newsletter to anyone who may have interest. Have a great weekend!


About the Author David M. Smith

David is a Senior Financial Advisor and the firm’s Co-Chief Investment Officer. He has more than 20 years’ experience in the financial services industry and holds the highly respected Certified Investment Management Analyst™ and Certified Financial Planner™ designations; he is a Co-Managing Member of the firm.
Disclaimer and Disclosures: Past performance is no guarantee of future results. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. Our opinions are subject to change without notice as market and economic conditions shift. Robinson Smith Wealth Advisors, LLC is a Registered Investment Advisor with the U.S. Securities and Exchange Commission (SEC). Registration with the SEC does not imply any certain level of skill or training. Personalized financial planning and individual investment advice are not offered through this website. The general financial and investment information furnished through this website or associated with this website by links is believed to be accurate, however, Robinson Smith Wealth Advisors makes no guarantee to this fact and does not have control over the accuracy of websites found through links within.