Danielle’s Bi-weekly market update

Danielle was a guest this week with Jim Goddard on Talk Digital Network talking about recent developments in the world economy and markets.  You can listen to an audio clip of the segment here.

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Yield spike amplifies late cycle squeeze on economy

Starting from a record low of 1.34% in mid-2016, the increase in US 10-year Treasury yields to 2.9% over the past 18 months marks a massive 119% jump–the largest relative increase since 1982.  Extremes breed extremes, and sure enough, as shown in this chart from my partner Cory Venable, the rate backup to date has already been about twice as much as during past tightening cycles, without even testing the 35-year secular downtrend (in purple).

With all the forecasts for 3 or 4 more Fed hikes this year, we note that the much lower relative rate increases in past credit cycles were enough to trigger economic recessions as circled in 1987, 1994, 2000 and 2007.

As rates rise and consumption slows, the economy falters and central banks traditionally abandon their tightening bias. Today, when the world is much, much more indebted across every sector, than ever before, will this time be different?

As we place our bets, this table of financial conditions in January 2018 versus the secular low in 1982, offers further context for gauging the stage and strength of our current economic cycle.

 

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Endless student debt subsidies exacting a heavy cost on economy and taxpayers

Education and training are critical for making young people productive, but excessive student debt underwritten by governments have most of all provided massive subsidies to enrich lenders, schools and their administrators. In the end, debt-crippled young people make for poor consumers and savers.

We, the economy and taxpayers, will continue to pay the cost of a highly inefficient, cost-bloated education system. More efficient education delivery is essential to sustainability. More corporations and employers must also reclaim their historic investment role in helping to train and educate their workers.

CNBC’s Scott Cohn reports on the Trump administration looking for ways to fix the student loan debt crisis.  Here is a direct video link.

New rules could be in the works for student loan debt from CNBC.

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The Current: Psychology and The Good Life

The secret to happiness? Ask this Yale professor (and the 1,200 students taking her class). Laurie Santos started a course at Yale to teach students how to be happy. They responded by signing up in bigger numbers than the elite school has ever seen, and now it’s going global. Here is a direct audio link.

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The compound yield of regular exercise

Regular cardio and strength training yield dividends for life.

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The health benefits of intermittent fasting

How does intermittent fasting work? Here’s what actually happens to your body and brain when you fast.

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