Climb In Inventory/GDP Ratio Reason For Concern

The climb in inventory/GDP ratio offers some pause for concern, as without the drag from inventories, investment spending would have made a positive contribution to GDP, notes Source Research.

Paul Jackson and András Vig of SourceETF in their November 1, 2015 research report “Uncommon Truths” reiterate their preference for equity-like assets and short duration within bond portfolios.

Drawdown in inventories knocked 1.44% from GDP

Jackson and Vig point out that a December Fed rate hike is back on the agenda, reflecting the laxity of its policy stance at a time when nominal GDP growth has been acceptable. They note despite confidence being battered by the summer slide in stocks, it’s interesting to note the 8% gain in global stocks during October in...