Commentary

A Brief Chronicle of the Federal Reserve’s First Balance Sheet Contraction

If we follow the threads underlying inflation over the past year to their earliest beginnings, they run straight through the fog of pandemic, quickly pass by the financial crisis in 2008, and wind their way past the Great Inflation of the 1970s...

Commentary

The Moment When Monetary Policy Runs Aground on the Third Great Mistake

The story of the Banque Royale and the Mississippi Bubble in the first issue of the Macro Value Monitor may sound like a tall tale of financial fiction, but those events did in fact occur three centuries ago in France.

Commentary

The Policy Repercussions of the Third Great Mistake Are Slowly Becoming More Apparent

As much as last year centered around the Covid-19 pandemic and its impact on the economy, the major topic of discussion in the financial markets this year has been centered around inflation, and its prospective impact on monetary policy.

Commentary

A Look at Prospective Market Returns Amid a New Era of Negative Real Rates

One theme we have focused on in these letters over the past three years is what a transition into a regime of negative real interest rates looks and feels like, and the long-term consequences such a regime brings for the markets, and for investors.

Commentary

Shiller’s ECY Makes Relative Sense, but the Market’s Absolute Return May Be Another Story

It often happens that associations which end up leaving an indelible mark on our collective memory of certain market events are the result of sheer happenstance

Commentary

This Era May Come to Be Remembered as the Federal Reserve’s Third Great Mistake

The Great Inflation of the 1960s and 70s, the earliest stages of which were already underway when Graham spoke at the St. Francis Hotel, eventually produced some of the most astonishing economic dislocations in U.S. history.

Commentary

Recession is On the Way: Questioning One's Sanity; Beat the Crowd, Panic Now!

In 2006-2007 I called for a recession. We got a big one. I called for another one in 2011, as did the ECRI. That recession never happened. 50% is not a very good recession predicting track record except in comparison to consensus economic opinions that have never once in history predicted a recession. Consensus opinion is batting a perfect 0.00%
Commentary

Diving Into the Payroll Report: Wages Rebound (But Don't Get Too Excited), Revisions, Huge Jump in L

Wages rebounded from the dip last month (but don't get too excited as per details below). Also, there were big upward revisions to many prior numbers. The unemployment rate rose this month because of a huge increase in the labor force. The civilian institutional population also leaped this month, and apparently these newly-found people are all looking for work.
Commentary

Germany's "Time Pressure" Thesis; Noose Tightens on Europe

Today German Chancellor Angela Merkel proclaimed Greek Diplomatic Offensive Is Failing. Merkel’s Christian Democratic-led bloc in parliament has agreed not to give in to any “bad compromise that “defacto adds up to a debt writedown,” Hans-Peter Friedrich, a deputy leader of the caucus, said in an interview today.
Commentary

Gallup CEO Calls 5.6% Unemployment Rate "The Big Lie": What's a Realistic Unemployment Rate?

On Linked-In, Gallup CEO, Jim Clifton proclaims 5.6% unemployment is "The Big Lie". And it is. I have talked about this for years, but perhaps it would be interesting to hear the same thing from a CEO of a big agency. I picked this story up from ZeroHedge.
Commentary

Australia Coming Apart at the Seams

With the huge spotlight on Europe, Greece, the US Dollar, Canada, Switzerland, and China, it's easy to lose track of major things outside of mainstream attention. Like what? Like Australia. Australian Government on Brink of Collapse
Commentary

Diving Into the ISM: What's It All Mean?

This morning the Institute for Supply Management released its much followed Manufacturing ISM® Report On Business®.
Commentary

Fed "Mystified" Why Millennials Still Live at Home; My Answer May Surprise You

A New York Fed research paper wonders Whats Keeping Millennials at Home? Is it Debt, Jobs, or Housing?
Commentary

Japanese Style Deflation Coming? Fed Falling Behind the Curve?

There's some interesting discussion points in the UK-based Absolute Return Partners October 2014 Letter, by Niels C. Jensen, most of which I agree with, others not.
Commentary

Reflections on 2013: What's Important, What's Not, and What's Ahead

A tale of 2 halves with lingering questions characterizes what we can say was the story for housing for 2013. In the first half of the year, rates were low as the 10 year note was well under 2%. People were still refinancing, as home prices rocketed. Multiple bids were common, and pundits like Ivy Zelman cheered the improving market with praise like "Housing is in Nirvana".