AIA August 2024

Housekeeping

There were several recent reverse splits for various stocks in the AIA portfolio. If you go to the portfolio page links, I have noted the name changes and the splits in the various spreadsheet cells.

Commentary

Note: The newsletter is a bit later than I anticipated, as I revised the commentary this month due to the market action and the Yen carry trade blowup last week.

I have been discussing the precarious nature of our markets for some time. This became evident in the last week or so as volatility has soared. The market pundits tell us this happened because of some recent poor economic news in the US and the beginning of an unwinding Yen carry trade.

A couple of items.

The Sahm rule has now been triggered. What is the Sahm rule?

In macroeconomics, the Sahm rule, or Sahm rule recession indicator, is a heuristic measure by the United States' Federal Reserve for determining when an economy has entered a recession. It is useful in real-time evaluation of the business cycle and relies on monthly unemployment data from the Bureau of Labor Statistics (BLS). It is named after economist Claudia Sahm, formerly of the Federal Reserve and Council of Economic Advisors.

The Sahm Rule signals a downturn once the unemployment rate increases 0.5 percentage points above its previous 12-month low.

The rule was triggered after the unemployment rate jumped to 4.3% in July.

Over the last 65 years, there has not been a single occurrence where this indicator provided a false signal of a recession.