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.
First, let me wish you Merry Christmas, Happy Holidays or your favorite personal form of greetings for this time of year.
If you really want to reduce the federal debt, you don’t have to convince Congress of anything. You can just write a check. The Treasury Department gladly accepts gifts from anyone so inclined.
One thing you learn when writing about the debt problem, as I have been in recent weeks, is that many people think it’s not a problem at all.
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.
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.
The federal government starts a new fiscal year every October 1. In a rational world, Congress would fulfill its responsibilities by passing bills before that date to authorize spending in the various agencies and programs.
A movie that I’m quite fond of is 25th Hour, a Spike Lee joint about three friends in post-9/11 New York City. One of them, played by Barry Pepper, is a bond trader.
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.
Identifying problems is great. Identifying solutions is even better, especially when the politicians who are supposed to be solving our big problems don’t even try.
I have always had an affinity for short-term interest rates, and it is from my days as an index arbitrageur.
The ancient Greeks had a word κάθαρσις, which in English we now spell as “catharsis,” although it’s pronounced basically the same. It originally referred to purifying religious ceremonies, medical treatments, and so on.
We have been looking at big historical/economic/political cycles for the past two months.
When your system, whatever it may be, is working extremely well, we used to say it’s “firing on all 8 cylinders.” What does that mean?
One mark of true brilliance is the ability to make complex ideas seem simple. I think this is why so many of us fondly remember our early schoolteachers.
Intermission is over. Today we resume my series on the global cycle theories that, probably not by coincidence, all point to major change unfolding in the next few years. Finishing it may take some time since I keep finding new material.
I’ve been writing financial newsletters for 15 years. I have seen a few cycles. There have been good times and bad times, thrills and spills.
Last week we began exploring the details of my personal portfolio. This week we will finish and then move back to our discussion of various cycles.
Over the last 100 years, the US equity market has returned about 9% annually. What will it return over the next 100 years?
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.
That’s a bold prediction in the title. I believe it will come true.
Greetings from Europe. I promised to write a letter describing my personal investment portfolio. I still plan to, but it won’t be this week.
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.
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.
There’s one question I try to answer with any beaten-down stock: Is this a good company with temporary, solvable issues?
Look up the word “cycle” in a dictionary, and you’ll find something like this: “A regularly recurring sequence of events.” Sounds simple, but that definition leaves a lot of ambiguity.
First, let me start with a tweet by Larry Summers, though this chart has been passed around by Andreas Steno Larsen and others.
Today we continue our study of the historical cycles suggesting a major crisis is in our near-term (5‒8 years) future. We don’t know the precise timing or nature of the crisis, but the patterns indicate one is coming and could be severe.
Interest rates are the penalty you pay for purchasing something today instead of postponing consumption until tomorrow. They are also the reward you receive for saving and engaging in delayed gratification.
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.
You put on a trade. You are short bonds, or something like that. It may be tempting to see the people on the other trade as the “bad guys,” while you are the “good guys.”
When a mega-cap stock is sitting on a 30-year low, I can’t help but look.
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 are in the last half of what is the most disruptive and violent of the generational periods.
I am a Wall Street guy, and, being a Wall Street guy, sometimes I forget that 99.9% of the planet has no clue what the stock market is doing on any given day. Or cares. It has zero bearing on their lives whatsoever.
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.
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.
Housing is by far the biggest expense for most American households. Any inflation analysis that ignores housing misses not only the elephant in the room, but the room itself.
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.
Yesterday, we got a 3.0% inflation reading, which was a touch below expectations. Markets responded about as you might expect.
One of the hardest parts of economic forecasting is separating what we expect from what we want.
Central bankers think they can handle a situation and fire the artillery. It always has an effect… but ultimately it is rarely the effect they wanted. Doing nothing at all might have been better but that wasn’t an option. They’re trapped in an endless spiral of intervention.
A month or two ago, people were having a conniption about commercial real estate. An absolute meltdown.
Is recession still coming? Of course. But some funny things are happening on the way there.
I was watching NBC Nightly News the other night, and they ran a story about how there is no housing inventory because people are trapped in their mortgages.
A year ago, the US Consumer Price Index was rising at an almost 9% annual rate. The Federal Reserve was trying to change that trend with tighter policy. But it wasn’t just the Fed. All of us—businesses, consumers, everyone—responded to the pain.
Wall Street is a strange place. In 2017, the top Wall Street banks published over 40,000 pieces of research… every week. Yet investors read less than 1% of that, according to Quinlan & Associates.
In economics we often talk about cycles. “Business cycle theory” is an entire academic sub-field whose basic idea is that economic history really does repeat itself. Not in every detail, of course, but as a recurring sequence of expansions and recessions.
Nvidia’s (NVDA) management team is sending a signal to the market.
“Crisis” is an overused word. Actual crises are those rare times when we are on the knife edge of disaster. It’s not a crisis when a bank fails, or Congress can’t agree on a budget. Those are annoyances (unless it's your bank). While not good, they don’t spell immediate catastrophe.
