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Economy

Vaccine: That Pinhead of Light at Tunnel’s End

Pfizer’s vaccine announcement gave the equity market the vision and hope that some semblance of “normal” was closer than previously assumed; perhaps a light at the end of the tunnel. Reality is that, due both to the complex logistics of handling the Pfizer vaccine, the two shot inoculation process, and the voluntary system in America, that light at tunnel’s end is just a pinhead, with a long and treacherous journey …Read More

The Economy: Through the Rear-View Mirror

The upbeat October employment report is likely showing the labor market through the rear-view mirror. The weekly state employment numbers, too, as reported in the mainstream business media, only tell half the story.  The entire story includes an additional 9+ million people on Cares Act supplements; a program that is growing as state eligibility is exhausted, but a program that expires as the year ends. High frequency data also confirm …Read More

The Wile E. Coyote Market/Economy

The Wile E. Coyote stock market has now looked down. Nothing but air! The “good news” data from the U.S. economy is all stimulus related. Without stimulus, Q3 GDP would have fallen double digits. The economy has yet to face the oncoming eviction crisis in the rental markets and foreclosure tsunami in the commercial real estate market. No matter how the economic numbers are presented, 22+ million unemployed tells you all you …Read More

In A Changing World, The Old Economics May No Longer Apply

One must be careful in interpreting data. The world has changed, and it impacts how people behave and ultimately the resulting data. The recent Retail Sales data is a case in point. It cannot be interpreted with a pre-virus backdrop. It’s rise in September 2020 doesn’t mean the same as a similar rise would have meant in September 2019.  We have seen some back-up in interest rates over the past month. Fixed income investors are …Read More

The Real Recession Is Just Starting

At month’s end, we are going to see the BLS announce a 30%+ bounce in real GDP (the Atlanta Fed’s forecast is now above 35%). Much of this is already priced into the equity market, so a positive or negative reaction will only occur if the reported number is significantly above or below the consensus view. In addition, this is old news, as Q3 will have been in the rear-view mirror for …Read More

The New (Scary) Fed Steps Into New Territory

The pandemic’s second wave has appeared in Europe and now in the U.S. The Fed is more concerned about the economy and has taken the unprecedented step of telling Congress it will monetize whatever spending Congress desires. (Not your Father’s Fed!) The latest weekly unemployment data confirm the Fed’s worst fears: The Recovery has stalled! Overview No matter who wins the election, the following issues must be faced: Deflationary forces are at …Read More