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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 Real Story Of Employment Data

There were two separate events of economic  significance the week ended September 5th. First, the financial markets displayed volatility that hasn’t been seen for several months. The S&P 500 began the week at 3,508, rose 2.5% to 3,587 on Wednesday, fell -3.7% to 3,455 on Thursday, and after falling to an intraday low of 3,374 (-6.0% from Wednesday’s high) closed at 3,427 on Friday. On the week, the index lost …Read More

The Fed’s Ill-Designed Inflation Policies

On Thursday, August 27, Fed Chair Jay Powell spoke at the Fed’s annual Jackson Hole symposium. His talk was much anticipated, as it was expected that the old 2% inflation objective would be updated. In fact, the Fed had telegraphed the change; and the Fed has been following the newly announced policy for several months. The policy change allows the Fed to permit inflation to exceed the Fed’s announced 2% target without …Read More

What Normal Could Look Like

The economy of the future will feature more consumer savings, and business balance sheet repair (more cash, more cost, lower profits, and deferred capital expenditures).  After an initial spike up likely starting in June and continuing into Q3, growth will be difficult.  Unemployment, after spiking to the mid-20% range, will come down slowly, remaining in double digits for 2020 and perhaps getting below 10% in 2022. Inflation Inflation is coming, …Read More

Holy Cow, Batman – 2! There Really Is Rampant Inflation!

The financial markets have displayed some volatility of late. The latest excuse was the on-shoring of the second case of China’s coronavirus in the U.S. And, no wonder, on a valuation basis, equities are at or near the highs of the dot-com era and similar to October 2018. Remember what happened next? As I’ve written before, equity prices are fueled by excess money creation. That is now well recognized by market commentators, but, we …Read More