Priced For More Than Perfection, Markets Have Dismissed Economic Reality

The holidays are upon us, and we wish our clients and friends health, peace and happiness. Recent income, output, and employment data have turned sour. We’ll see what that does to holiday shopping. The financial markets, especially equities, have looked past the valley (abyss), and the vaccine news has enhanced the view that “normal,” or at […]

The Economy: On the Other Side of the Abyss

The good news is that a vaccine is definitely coming.  But getting to herd immunity is going to take more than a quarter or two, especially given the resistance of about half of the American population to getting the vaccine, at least early on. The economy is likely to remain soft until well after the […]

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.  […]

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 […]

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 […]

The Recovery Stalls; Fed Pledges “Lower for Longer;” Equity Markets Pause

With the Fed pledging to keep rates low even when (or if) inflation rises above its 2% target, it is hard to see why long-term Treasury yields (and those of other quality issuers) won’t move toward yields of similar debt in the world’s other industrial economies (i.e., Europe and Japan). The economic lull is now […]