Coming into last week's FOMC meeting, Jerome Powell was expected to be hawkish. I know that because numerous articles in the financial press told me so which makes me wonder if the articles themselves affected those expectations. Maybe. Bloomberg is now producing a Fed Sentiment index that is powered by a natural language processing algorithm trained on more than 60,000 [...]
Be careful what you wish for lest it come true! - Various of Aesop's Fables Shinzo Abe was elected to a second term as Japanese Prime Minister in 2012 and launched his three arrows plan to revive the Japanese economy. The three arrows were: Ultra loose monetary policy, a de facto policy to weaken the Yen Fiscal policy - increased [...]
Is this normal? I haven't made any money in like two years. - Question from a recent acquaintance upon hearing what I do for a living Let's get this out of the way quickly. The answer to his question is yes, this is painfully normal. When you have a bear market - or you have two in four years like [...]
Interest rates surged last week on the back of a hotter-than-expected inflation report that wasn't actually that bad (see below). Not that my - or your - opinion about these things matters all that much to the market. In the short run, all that matters is what the majority believes is the truth. What they believed last week was that [...]
Total bank credit (blue line) vs Nominal GDP (red line) and Real GDP (green line). A lot of "analysts" were saying that the big drop in the year over year change in credit was pointing to a recession. But that isn't how this works. GDP actually leads credit - economic growth increases the demand for credit - so the rise [...]
Markets year to date have been a lot more interesting in the details than the headlines you get in the financial media. The narrative has focused almost exclusively on Artificial Intelligence and the stocks benefitting from it. Large cap growth stocks - especially in the IT and Communications sectors - have garnered all the attention. But beneath the surface markets [...]
The first quarter of 2024 is in the books and the US economy and markets continue to defy expectations, which coming into this year were that growth and inflation would both moderate and the Fed would be able (or forced, depending on how much things slowed) to cut interest rates 0.25% as many as six times this year. In fact, [...]
Special Note: I'm in Miami this week, a mix of business and personal. I lived here for 30 years and we raised our family here but we moved to South Carolina a little over 3 years ago because we were tired of the traffic and, more than that, the irritability that comes with so many people crammed into such a [...]
Over the last two years, the evolution of the US economy has been driven by a return to “normal”. The distortions of the response to COVID had a profound impact on the economy that I believe will persist for many years. The change in cash levels at the household level were large and have proved more persistent than most expected. [...]
I skate to where the puck is going to be, not where it has been. Wayne Gretzky I took my wife to dinner Saturday night at a local, boutique hotel. The Willcox Hotel was established in the late 19th century to cater to the Winter Colony of wealthy northerners who spent their winters in South Carolina. Today it still caters to [...]
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