The Fed’s New Bubble

“Most valuation parameters are either the richest ever or among the highest in history. In the past, levels like these were followed by downturns. Thus, a decision to invest today has to rely on the belief that ‘it’s different this time.’ I’m convinced the easy money has been made.” (Howard marks, Oaktree Capital, WSJ, 1/29/18). […]

Fed Likely to Put Economy at Risk

Market volatility finally showed up in the popular indexes (DJIA, S&P 500, NASDAQ).  These were down two weeks in a row as of November 17 on rising volume (never a good sign when markets are falling), and they are no higher than they were a month earlier (October 20).  The VIX, a measure of market […]

The Headlines Say Growth…

The headline numbers, for jobs and GDP, and most of the sentiment indexes, would lead one to conclude that the economy was robust and accelerating. Even the Fed agrees, as they upgraded their view of the economy to one now in “solid” growth mode. The reality is that much of the data was distorted by […]

The Fed and the Phillips Curve

Deflation is the Order of the Day The Fed was established in December, 1913 after the Panic of 1907 (the latest in a series of financial panics dating back to the middle of the 19th century) put the economy into a severe recession via bank runs and subsequent bank failures.  The Fed’s original purpose was […]

On a Recession Watch

For the first time since the industrial revolution, the U.S. faces two significant growth issues: 1) a declining labor force; and 2) a job skills mismatch.  The declining labor force is demographic in nature and is occurring in every industrial economy; likely a function of the long-term success of capitalism.   The skills mismatch is a […]

Investing in a slow-growth world

The first quarter provided quite a ride, featuring a rapid equity downdraft and chaos in the high-yield bond market accompanied by irrational fear about another implosion in the financial system and a resulting recession. All of this was brought on by the rapid fall in the price of oil, something that ordinarily would be a […]