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 […]

The Inflation Scare

Interest rates backed up last week.  The 30-year T-Bond, which was 1.19% on August 4, closed at 1.44% on Friday (August 14).  The 10-year T-Note closed at 0.71%.  It was 0.52% on August 4.  The CPI showed up with a +0.6% M/M rise (7.4% annual rate) for July.  That pushed the Y/Y rate to +1.0% […]

The Economy: Navigating Scylla & Charybdis

  In Greek mythology, Scylla and Charybdis were mythical sea monsters existing on the opposite sides of the Strait of Messina, between Sicily and the Italian mainland.  Scylla was a six headed sea monster; Charybdis a huge whirlpool.  Because they were so close together, any passing ship was threatened.  In Homer’s Odyssey, Odysseus passed close […]

The Shape Of Things To Come: ‘V’ Or ‘L’ Recovery

What do -38%, -34%, -30%, and -25% have in common? If you guessed that these are the Q2 real GDP forecasts from the major financial houses (Morgan Stanley, Goldman Sachs, Bank of America, JPMorgan), you would be correct. Incredible as it may seem, we are likely headed for a drop in Q2 real GDP in that magnitude, […]

Coronavirus: The Black Swan

  Black Swan taking off (Cygnus atratus) South Island, New Zealand (Photo by: VWPics/Universal Images … [+]VWPICS/UNIVERSAL IMAGES GROUP VIA GETTY IMAGES   The equity market finally had a reaction to the effects of the coronavirus (Covid-19) last week, and it was significant with the S&P 500 falling 252 points (7.4%) from its record high close […]

Demographic Trends: The Case Against Negative Interest Rates

Japan has a 2.2% unemployment rate, yet, for 30 years, they have not had any significant economic growth, due to their demographic structure. Today, the developed world has Japan’s 1990s demographic features, with falling fertility rates, rising dependency ratios (retirees/working aged), and, ultimately, declining populations. Under these conditions, aggregate GDP growth will be harder and harder to […]