Desperately Seeking Neutral
One of the more fascinating and mysterious parts of watching the Federal Reserve is the ongoing dialogue between Fed leaders and Wall Street. We imagine private meetings held in great secrecy. Those may in fact occur, but I’m not sure they are even necessary.
In thinking about the 2020s, I often find myself looking back to the 1920s. That decade began with a deep recession/depression and ended with a stock market crash. While we now see the 1920s as a kind of “in between” period, people at the time didn’t know another depression and war were coming.
It’s a Stock (And Niche ETF!) Picker’s Market
The “magnificent seven,” Amazon, Alphabet, Apple, Meta, Microsoft, Nvidia, and Tesla, soared 112% (equally weighting each). They outperformed both the SPDR S&P 500 ETF Trust (SPY), which is weighted by market cap, and the Invesco S&P 500 Equal Weight ETF (RSP), which weights each stock equally.
Looking Back and Forward
It's that time of year when we start thinking about the old and envisioning the new. This has always been a special season for me, perhaps because of my unusual quirk of really wanting to divine the nature of the future—not just an investment in economics but in general.
Healthcare, a Minor Major Problem
Back in the Great Financial Crisis era, someone quipped that the federal government had become a giant hedge fund with an army attached. That wasn’t far off. Various agencies and entities were absorbing all kinds of risky assets to stabilize an overleveraged system.
The Survival of the Republic
Thanksgiving brings to mind not only turkeys, family, and friends, but also should help us recall the remarkable ideas and philosophies that helped shape, and indeed were, the foundation for the United States of America as a Republic.
What Could Go Wrong?
Exploring federal budget data is a journey through endless rabbit holes, some of which are eerily close to Alice in Wonderland insanity. Countless variables interact in unexpected ways. Seemingly small changes can cascade into billions of dollars within a few years.
What's in My Personal Portfolio?
Today, I am going to do something that I've never done. I am going to start a two-part series describing what is in my personal portfolio and why. Let me start by offering two caveats: This letter is in the “do as I say and not as I do” category.
Undeniably the most important question right now
I am traveling for business this week, but I’ll return with a fresh interview for Global Macro Update next Friday. For those of you who missed my interview with Louis Gave last week, read on… There’s a reason this was one of our most-watched Global Macro Update interviews of the year.
The Email Beige Book
I write a few newsletters, and I frequently get feedback from my subscribers. Sometimes, they’re just saying hello, and sometimes, they’re ripping on me, but sometimes, they’re telling me about things they see in the economy that are of interest.
Storms and Patterns
My last three letters reviewed Neil Howe’s new book about the Fourth Turning. Today we’ll look at another set of patterns observed by my friend George Friedman in the geopolitical realm. George’s view of how patterns shape countries is different but not inconsistent with Neil’s generational cycles.
Turning Time, Part 3
Today we’ll continue reviewing Neil Howe’s magisterial new book, The Fourth Turning Is Here, focusing on the Millennial Generation’s important role in the coming crisis. Then we’ll think about what the crisis may look like. Finally—because I always try to look on the bright side—we’ll consider what Neil expects in the “First Turning” that will follow.
We talk frequently about the way central banks and governments affect the economy. In the grander scheme of things, though, whatever the Fed does is more like throwing a hand grenade into a large building. Yes, you’ll make some noise and cause some damage. People may be hurt. But the building won’t care, and the owner will fix it.
Bearish in a Bull Market
Morgan Stanley strategist Mike Wilson finally capitulated and apologized for getting the market wrong the last nine months. He was everyone’s favorite analyst in 2022. King of the Bears. I haven’t seen that much drooling over a strategist since Abby Joseph Cohen in 1999.
Flip Side of the Inflation Coin
The market, and maybe all of us, would like to believe the latest 3% annual CPI number was a harbinger of ever-lower inflation, and we are on the road to 2% inflation by year end. I would argue, “Not so fast.” Inflation is far from dead, and CPI will likely go slightly up between now and the end of the year.