Thursday, June 27, 2019

American Product Trade Growth

     Charts are all in favor of American product trade growth.

     "The total return indexes for the S&P 500 Index, U.S. investment-grade corporate bonds, high-yield debt, and sovereign and quasi-sovereign debt have risen to record levels in the wake of the Federal Reserve's signal. It stands ready to lower interest rates for the first time in over a decade (bloomberg.com)"

     The TOTAL RETURN INDEX  is an equity index. The total return index for the Standard & Poor's 500 Index, which is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies, tracks group stock capital gains.  There is an assumation that any cash distributions are reinvested back into the index.  It indicates the activity, or growth, of the index. Investopedia.com

     U.S. INVESTMENT GRADE CORPORATE BONDS have a low risk of default.  Standard & Poor's bond ratings use designations consisting of upper- and lower-case letters 'A' and 'B' to identify a bond's credible quality rating. 'AAA' and 'AA' (high credit quality) and 'A' and 'BBB' (medium credit quality) are considered investment grade.  Credit rating for bonds below these designations ('BB', 'B', 'CCC', etc.) are considered low credit quality, and are commonly referred to as junk bonds. 

     HIGH-YIELD DEBT has a high risk to default.  SOVEREIGN DEBT is a central government's debt. Sovereign debt is issued by the national government in a foreign currency.  This is in order to finance the issuing country's growth and development. The stability of the issuing government can be provided by the country's sovereign credit ratings which help investors weigh risks when assessing sovereign debt investments.  Sovereign debt is also called government debt, public debt, or national debt.  

     QUASI-SOVEREIGN DEBT is credit issued by corporates that are essentially government-backed or government owned.

     When the Federal Reserve Bank lowers interest rates Federal funds are reduced.  Reducing the federal funds rate makes money cheaper.  This allows an influx of credit into the economy through a wide variety of loans.

     All of these movements are pushing toward a better economic environment for the United States.  "President Donald Trump has pushed the issue to the forefront, proclaiming that his government will have two major economic goals http://www.businessinsider.com/what-does-made-in-usa-actually-mean-2017-2."

     Currently, a huge gap between import and export is a still an issue.  In 2018, total U.S. trade with foreign countries was $5.6 trillion. That was $2.5 trillion in exports and $3.1 trillion in imports of both goods and services. The United States was the world's third-largest exporter, after China and the European Union.https://www.thebalance.com/u-s-imports-and-exports-components-and-statistics-3306270

     The import and export margin will even out.  We need more brands and retailers that sell merchandise 100% made in the USA https://clark.com/shopping-retail/american-made-in-the-usa/.

     The American economic environment is favorable.