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ProBank Austin Advisor

May 26, 2020 - 1 min read

The data from April continues to be terrible but May looks better. While this is not the last of the terrible economic data, we are near the end of the worse. The key data this week is consumer confidence due out on Tuesday. This reading of consumer sentiment dropped by more than 30 points in…

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ProBank Austin Advisor

May 18, 2020 - 1 min read

Even with record drops in economic activity, financial asset pricing has held up. It should be no surprise that retail sales and industrial production dropped by record amounts in April. When we close stores, restaurants and force people to stay home, consumption expenditures will decline by huge amounts. When we close manufacturing factories, industrial output…

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ProBank Austin Advisor

May 11, 2020 - 1 min read

The April data being released is as bad as the worst forecasts expected. There is little reason to spend time on the economic data being released for April. The unemployment rate jumped to levels not experienced since 1940 and even this 14.8% rate is probably understated. The survey was taken in the middle of April…

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ProBank Austin Advisor

May 5, 2020 - 1 min read

We are resuming issuing our economic forecast as conditions become clearer. There is no way to describe the carnage to the economy from the coronavirus pandemic. The data for economic conditions being released for April is unprecedented. The Advance report for Real GDP in the first quarter indicated a decline of 4.8%. This was despite…

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ProBank Austin Advisor

April 27, 2020 - 1 min read

Economic data continues to be shocking but fully expected. The issue is not how bad is the economic data from March, the issue is the pace of restarting the economy. At this point, it appears it will be a rolling restart with parts of the economy allowed to restart in some parts of the country…

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ProBank Austin Advisor

April 20, 2020 - 1 min read

The data is ugly, but this is expected and is not moving financial markets. As everyone knew, the data being released for March is shocking. Retail sales, housing starts, and industrial production all were down record monthly amounts. Shutting down the economy not only leads to a huge increase in unemployment but also causes output and…

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ProBank Austin Advisor

April 13, 2020 - 1 min read

The beginning of the bad data has begun and will only get worse through next month. The first of the economic data impacted by the coronavirus shutdown is being released. Unemployment claims have totaled 17 Million in the last three weeks. There are more of this kind of data to be released in the next…

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ProBank Austin Advisor

March 30, 2020 - 1 min read

Economic data is of little value in making longer-term forecasts. It is too early in the health crisis to be able to forecast the nature of economic conditions when this passes. There are forecasts of a V-shaped business cycle where growth surges in either the third quarter or fourth. There are forecasts of a U-shaped…

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ProBank Austin Advisor

March 23, 2020 - 1 min read

New proposals are being made each day which makes forecasting impossible. Economic forecasting is worthless at this point. While first quarter Real GDP may come in at better than expected levels, second quarter data is unknown. There is little reason to guess at the economic impact of current conditions. We have seen some forecasts of…

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ProBank Austin Advisor

March 16, 2020 - 1 min read

The Fed has moved aggressively to address the possible impact of the health crisis. The Fed dropped managed rates by 100 bp on Sunday night. They have now moved rates down by 150 bp, all between FOMC meetings. They also announced a new QE program of buying $700 billion of bonds and dropped rates at…

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ProBank Austin Advisor

March 9, 2020 - 1 min read

Economic data from the first two months of the year means nothing in a period of panic. The worst conditions one can imagine are being priced in financial markets. This is being caused by the fear of the unknowns, with respect to the coronavirus being the major unknown, but there are others. The political outlook…

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ProBank Austin Advisor

February 24, 2020 - 1 min read

Fear has taken over financial markets as the coronavirus spreads. Current prices for financial assets always reflect expectations for future conditions. Stock prices incorporate expectations for future profits and bond prices incorporate expectations for inflation. It appears both markets will open the week with expectations of the worse for the future. In the short run,…

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