Ativo Capital

Rigorous Thinking

Financial and economic commentary reflecting Ativo’s world view:

Oil, China and Prospects for the US Economy

Thursday, May 12, 2016


April 15, 2016 Global stock markets were off to a rocky start in 2016. Was the sharp decline in U.S. stock prices early in the year a signal that the economic expansion that began in 2009 is about to end, or is the canard “The stock market has predicted five of the last three recessions” again relevant? The dramatic decline in petroleum prices has contributed to the malaise of the residents of the ten U.S.states that produce 80 percent of domestic crude oil. The prices of oil company stocks are down sharply.  Real GDP and household incomes have declined…

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Does the Stock Market Really Ruin the Economy?

Wednesday, February 10, 2016


Last week’s Wall Street Journal (2/1/2016) featured an article (Does the Economy Ruin the Stock Market Or Does the Stock Market Ruin the Economy, gated) citing recent work by UCLA economist Roger Farmer questioning whether the recent market rout simply reflects the economy, or whether a weak stock market is crashing the economy. After summarizing the conventional perspective that discounted future earnings determine market pricing, the article conceded that maybe, just maybe, stock market patterns could be influencing the real economy. Our reaction? What took you so long?! We’ve been making that case for more than thirty-five years. Of…

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