Stock Market Anxiety? It’s Not Clinton-Trump, It’s The U.S. Federal Reserve

The financial media rely heavily on advertising sales from financial firms. Conflict of interest? Possibly. If scores of folks make “risk-off” adjustments to portfolios such that the demand for riskier assets (e.g., stocks, low-grade corporate bonds, etc.) falls of a cliff, Wall Street corporations may lose hundreds of billions in asset management revenue. And if investment companies struggle, the financial media will see a sharp decline in the advertising dollars necessary to turn a profit.

For the most part, then, you may wish to bypass the spin that reputable outlets place on the attractiveness of the stock market or the health of the economy. You’re primarily going to get headlines that cement a notion that the economy is fundamentally strong or that the stock market is essentially safe. (At least for the long haul, right?)

The latest example? Mainstream media commentators, writers and analysts expressed jubilation over the recent report that the U.S. economy expanded 2.9% in the 3rd quarter. Virtually none of them looked beneath the surface of the number. Even fewer questioned the sustainability or viability of the data itself, let alone acknowledged that the data will witness two more revisions before being finalized.

As the table above shows, two-fifths of the annualized GDP growth (1.2%) came from exports. This happened while the U.S. dollar was rising substantially during the 3rd quarter? When exports became significantly more expensive for importers? When global demand for U.S. products has been anemic? Color me skeptical.

If one digs a little deeper, according to the U.S. Bureau of Economic Analysis, goods exporting accounted for $41 billion of the $119 billion in economic growth. Were these exports across a wide range of products in a wide range of industries? Hardly. It came almost exclusively from a one-time agricultural lift.

Equally worthy of note, $38 billion of the $41 billion in exports came from a single agricultural product: soybeans. In other words, absent an enigmatic single shot from the exporting of a single agricultural product, GDP growth remains relatively tepid.