Early in 2018 we said the US economy has gone from being a Plow Horse to Kevlar. Nothing that has been thrown at the economy since – neither trade conflicts nor tweets, not higher short-term interest rates nor the correction in stocks – is likely to pierce that armor. A year ago the economic consensus [...]
As we head into the last weekend before Christmas, the news outlets are busy trying to distract us from what should be a joyous time with fabricated stories of impending doom and gloom. Once again we would like to be your antidote to misinformation. For the last 40 years, the US stock market has averaged [...]
Last week in the New York Times, Yale economist Robert Shiller wrote we are "experiencing one of the greatest housing booms in United States history." Given what happened in the aftermath of the last boom – a financial panic and the Great Recession – this will add to investors' fears about another recession lurking around [...]
Last Friday, the 10-year Treasury Note closed at a yield of 2.85%. That's up from 2.41% at the end of 2017, but down from the peak of 3.24% on November 8th, and well below where fundamentals suggest yields should be. In the last two years, nominal GDP growth – real GDP growth plus inflation – [...]
New Narrative Alert: Fed Chief Jerome Powell is to blame for the volatility in stocks. Back on October 3rd, with stock markets near their record highs, Powell said "we're a long way from neutral." That was not long after the Fed had moved the federal funds rate to a range of 2.00% to 2.25%, so [...]
It's that time of the year again. Holiday sales data show surging online sales while foot traffic at brick and mortar stores remains tepid. If you have a sense of déjà vu, it's because you heard the same stories last year. Black Friday had a 23.6% increase in online sales this year, according to Adobe [...]
Fed Chair Jerome Powell and others have started a new narrative about economic "headwinds." They think past rate hikes, slower foreign growth, and "fading fiscal stimulus" should slow the Fed's rate hikes. But is fiscal stimulus really fading? Powell and others think the growth benefits of both the 2018 tax cuts and increased federal spending [...]
Growth is determined by a perpetual tug-of-war between entrepreneurship and government redistribution. When President Obama was in office, we believed incredible technological innovation would allow for economic growth in spite of Obamacare, greater redistribution, higher taxes and increased regulatory burdens. We thought it would be a Plow Horse Economy, and that things would get better [...]
October Market Scaries As most of you know, we’ve advocated for many years that you not pay attention to the daily drivel of the financial media but rather focus on more important things like your family and friends. For the hundreds of you who have experienced the benefit of following that advice, read no further [...]