Noisy News, Real Earnings, Productivity and Infrastructure
A lot of noise this week and a lot of good earnings to work with. June is historically a volatile month and this week we have a lot of possible noise. We have Comey testifying to Congress, the UK elections, and the EU central bank meeting which is very important. However, the bottom line is that earnings matter more than politics right now and the market is demonstrating that. Inflation is at a good point so we are staying the course as investors.
Productivity
An interesting number came out this morning on productivity. You have to be productive, you have to have earnings. Productivity numbers came up from negative .6 to zero. Productivity is important to understand because productivity is the total number of people working and then how productive are those people per hour. So, the more productive an individual is the more money a company can make off that individual and the more the economy can grow. Zero is better than negative .6 but if we want to see earnings continue to go up we need to see the productivity number increase. The per person, per hour growth rate helps the GDP, which helps earnings, which in turn, helps the economy. People are getting hired. We have record unemployment. People are just not as productive. This has more to do with what jobs these people are being hired to do and less to do with how productive each individual is.
What about the threat of technology and robots and all that? If robots were taking peoples jobs we would have a higher productivity level. If robots were taking jobs, we would see higher productivity and jobs being down. What we are seeing is jobs being up and people are doing these jobs but they just aren’t very productive. This is such an important topic that Trey Booth is going to do a special vlog tomorrow on productivity, how it is measured, and what it means to us for the future.
Infrastructure
In terms of productivity, we are also looking at infrastructure. This is infrastructure day at the White House, and President Trump is meeting on that subject. One interesting topic they are discussing is privatizing the air traffic controller system. This is an example of a newer way of infrastructure and then, later in the week, it will be an older way, as President Trump travels along the Ohio River talking about the older infrastructures in the Rust Belt. This could increase productivity in terms of jobs. This is a new way of doing things, a more corporate way of reinventing government dynamics. Having corporate, private, and government sectors working together.
Greg Powell, CIMA®
President and CEO
Wealth Consultant
Email Greg Powell here
Bobby Norman, CFP®, AIF®
Senior Vice President
Wealth Consultant
Email Bobby Norman here
Ashley Page, JD, MBA
Senior Vice President
Wealth Consultant
Email Ashley Page here
Trey Booth, CFA®, AIF®
Senior Vice President
Wealth Consultant
Email Trey Booth here
Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
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