I remember the day when I first appreciated the importance of the American consumer. It was the winter of 1982 and I was huddled around a table with some fellow econ students in the cavernous restaurant of University College Dublin, gulping down the sinister brew which the authorities labeled as “tea”. As undergraduate students, we were fed a narrow diet of theory and math. But the Irish economy was once again floundering helplessly in the heavy wake of an overseas recession and the only relevan...
Sep 27, 2021•9 min•Ep. 153
Like most people, I suppose, I get my hair cut every four weeks. If, either by consulting the calendar or the mirror, I am “due” for a haircut, I head off and get one. The passage of time or the growth of my hair since my last visit, is a very reliable predictor of the timing of my next one.
Sep 20, 2021•8 min•Ep. 152
There is an old house with a box of dynamite in the attic. Every few years, for as long as anyone can really remember, the children of the house have brought the box downstairs and played games with its contents. The owners have never seemed very concerned – after all, so far, it has never exploded. But each generation of kids seems just a little more reckless and irresponsible than the last and it takes just one mistake……
Sep 13, 2021•10 min•Ep. 151
The parking lot of our local high school is fortified by great ranges of speedbumps. These ancient mounds of asphalt were erected in the distant past by school authorities, presumably in tribute to the precision and focus demonstrated by our town’s youngest drivers.
Sep 07, 2021•12 min•Ep. 150
Investors, in the week ahead, will have little time for financial analysis. The headlines will be dominated by the U.S. withdrawal from Afghanistan and the terrible impact of Hurricane Ida in Louisiana. Meanwhile families will be trying to stretch out summer days, while making all the adjustments necessary for a return to work and school in a still-untamed pandemic.
Aug 30, 2021•7 min•Ep. 149
On March 23rd of last year, at the start of the coronavirus pandemic, the S&P500 briefly traded below 2,200. Since then it has more than doubled, surfing on a wave of corporate profits, in a sea of central bank liquidity. However, investors should recognize that this wave will face challenges going forward while the tide of monetary easing should turn. As this happens, a focus on valuations should be more rewarding than has been the case in recent years.
Aug 23, 2021•8 min•Ep. 148
Much has been written about the mutating virus and how its more contagious Delta variant has spurred a surge in cases, hospitalizations and fatalities. However, the economy is also mutating and adapting. These adaptations are reducing the ability of pandemic waves to slow the economy. They are also boosting productivity and profits. However, a failure to recognize this resilience is promoting inappropriately easy monetary and fiscal policy, potentially setting the stage for higher inflation and ...
Aug 09, 2021•8 min•Ep. 147
Every few years our talented colleagues in marketing tell us we need a new palette for the Guide the Markets. They’re right of course – staring at the same colors, year after year, gets boring. But a new palette requires us to change almost every color on every page which is fairly labor intensive work. Moreover, if we do it right, the new chart will just convey the same message as the old one.
Aug 02, 2021•10 min•Ep. 146
The week ahead will be a quiet one for economic data and a busy one for corporate earnings. It could also be a pivotal one in Washington as the Biden Administration tries to advance its agenda in Congress.
Jul 19, 2021•7 min•Ep. 145
My wife, Sari, was born with a lead foot. By all rights, she should have accumulated a bountiful harvest of speeding tickets over the course of her career. But she understands how the system works. If she is, for example, buzzing along at 75 in 55 mile-an-hour zone and sees the state police ahead, she dons a sunny smile and gently taps on the brakes. This action, of course, still leaves her well above the limit. However, for some reason, the police seem to appreciate the gesture as a respectful ...
Jul 12, 2021•7 min•Ep. 144
When my wife, Sari, was 9 years old, a tornado touched down in Grand Rapids, Michigan and destroyed most of her home. Luckily she and her family were at her grandparents that evening and so weren’t there when the storm hit. But the next day, when they all drove back to the neighborhood, it was barely recognizable with many houses destroyed or badly damaged. Her great concern, at the time, were the family pets who thankfully managed to ride out the storm unscathed. But her parents must have been ...
Jul 06, 2021•10 min•Ep. 143
After a long period of absence, I’ve visited New York multiple times in the last month. Each time, the city has seemed more bustling than the week before, with fewer masks, more crowded restaurants and more New Yorkers expressing their emotions by their habitual cheery and liberal use of their car horns. As cases of Covid continue to fall, it is as if springtime has arrived in the city and in the nation.
Jun 28, 2021•8 min•Ep. 142
Some months ago, as the snow melted off the lawn, a rabbit appeared at the end of our back yard. Our twin shih tzus, Buddy and Bruiser, spotted the intruder and, barking furiously, headed off in pursuit. The bunny, having given our fearless duo a head start, then bounced off into the undergrowth, cotton-tail waving in the air, leaving them barking at each other as if to say “Where’d he go? Where’d he go?”
Jun 14, 2021•9 min•Ep. 141
Next week, the Federal Reserve holds its fourth FOMC meeting of the year. After the meeting, they will release a statement, very likely communicating no change in policy. Fed Chair, Jerome Powell will likely emphasize the same message in his post-meeting press conference. However, for investors, the most important information will be delivered in numbers rather than words, as the Fed discloses the median forecasts of FOMC members in their June Summary of Economic Projections.
Jun 07, 2021•9 min•Ep. 140
I recently read a book, entitled The Code Breaker by Walter Isaacson, about a revolution in gene editing prompted by the discovery of something named CRISPR in bacterial DNA. I won’t delve into the details except to say that the book is a great read and made me appreciate, once again, the relative simplicity of the economic systems I spend most of my life pondering compared to the extraordinary structure and machinery within a single human cell.
Jun 01, 2021•9 min•Ep. 139
In 1895, at the age of 60 and in some financial difficulties, Mark Twain embarked on a speaking tour of the British Empire to pay the bills. He later published an account of his travels in a book entitled: Following the Equator.
May 25, 2021•7 min•Ep. 138
The all-boys Catholic school where I spent my formative years was a traditional establishment. The air was thick with chalk dust and a steady tension between a rebellious student body and an establishment which resorted to corporal punishment to maintain discipline. However, a second line of defense for the authorities was the issuance of report cards every six weeks. Twice a quarter, the Headmaster would stride into the class room brandishing a batch of colored cards to be signed by parents and...
May 17, 2021•11 min•Ep. 137
Last Friday’s April Jobs report was clearly much weaker than expected. On average, analysts expected a payroll job gain of 1,000,000, with the unemployment rate falling from 6.0% to 5.8%. In the event, non-farm payrolls rose by just 266,000 and the unemployment rate rose to 6.1%.
May 10, 2021•10 min•Ep. 136
On May 22nd, my wife and I plan to eat dinner at a restaurant. In normal times, such a news item would not exactly make the family headlines. But since the pandemic struck, we have taken a cautious approach and eaten at restaurants only once or twice and then only if outside dining was available. For the last six months, a New England winter has deprived us of even that option. However, on Wednesday, Sari got her second shot and I get mine on May 8th. And so, two weeks later, I can already see m...
Apr 26, 2021•10 min•Ep. 135
Memories of the great inflation of the 1970s have faded in the public’s consciousness. Half of today’s population wasn’t even born when inflation stalked the land and, in the decades since, the failure of inflation to reappear has naturally eroded interest in the subject.
Apr 19, 2021•8 min•Ep. 134
On Friday, I had the privilege of speaking at the annual strategic investment symposium run by the College of Charleston in South Carolina. Sadly, like everything else over the past year, the conference was virtual and so I couldn’t revisit Charleston itself. Just to rub it in, the host let me know that it was sunny day in Charleston, with a high expected in the mid-to-upper 70s.
Apr 12, 2021•10 min•Ep. 133
The economy is experiencing the first effects of a powerful double-dose vaccine of broad inoculation and fiscal stimulus. The reality is that forecasts remain very uncertain. The pandemic recession had no modern precedent and so we have no good road map on the speed at which the economy might naturally recover. In addition to this, we have no example of the impact of fiscal stimulus of this scale, aimed primarily at low and middle-income consumers. What we can say is that early signs show the re...
Apr 05, 2021•10 min•Ep. 132
It has been, by any reasonable measure, an eventful first quarter. At the start of the year, the pandemic was raging and vaccines had barely begun to roll out. Today, despite a recent tick up in cases, the light at the end of the tunnel is looking brighter and closer. At the start of the year, a very contentious election seemed destined to be followed by political gridlock.
Mar 29, 2021•9 min•Ep. 131
In recent months, falling political uncertainty, two powerful rounds of fiscal stimulus and the rollout of covid-19 vaccines have resulted in a long-anticipated rotation in markets. Since early November, value stocks have outperformed growth, small caps have outperformed large and international stocks have outperformed their U.S. counterparts, with each of these moves reversing a multi-year trend. U.S. long-term interest rates have been at the center of this move, with 10-year Treasury yields ri...
Mar 23, 2021•11 min•Ep. 130
The pandemic has had an unfortunate impact on my piano practice. In truth, I have never been a promising student - my musical efforts have always rather resembled roadwork on an overused urban highway - that is to say, not so much an exercise in inventive construction as one in increasingly inadequate repair. Still, for some years, my piano teacher would relieve the general ear strain by suggesting some new tune for me to work on.
Mar 15, 2021•7 min•Ep. 129
As a hungry child, growing up in a large family, some forays into cooking were essential. My early rice-making experiments, however, were exercises in frustration. I would start with a large sloshing pot of icy water and, having transported it to the stove with wobbly hands, I’d dump in a bag of rice and wait for results. It seemed to take ages for the water to heat up, as I peered down hopefully at the submerged pile of grain. Eventually, things would begin to bubble and steam, but long before ...
Mar 08, 2021•10 min•Ep. 128
The week ahead will be a busy one for market-moving events and economic data. However, beyond the noise, investors will continue to mull two crucial questions: First, how far could interest rates rise and, second, what could that mean for equities?
Mar 01, 2021•9 min•Ep. 127
Long-term interest rates have risen sharply in 2021 so far, with the yield on the 10-year Treasury bond climbing from 0.93% on January 4th to 1.34% by last Friday. This move is a logical reaction to better news on the pandemic, encouraging data on how the economy has weathered an early-winter surge in covid cases, and rising prospects for significant fiscal stimulus. However, given this positive news flow, the bond market may have under-reacted so far, suggesting that investors need to be positi...
Feb 22, 2021•8 min•Ep. 126
In a year when everything has been different, it was comforting to watch an almost normal Super Bowl with Tom Brady, albeit wearing the wrong uniform, winning yet again. It wasn’t that close a game – Tampa Bay established a lead in the first half and just did what they needed to do to hold that lead to the end.
Feb 16, 2021•11 min•Ep. 125
This Friday, February 12th, marks the start of the Chinese New Year and the Chinese people, like the rest of humanity, will say a hearty good riddance to the last year with hopes for easier times ahead. The Year of the Ox should be better, with vaccines gradually allowing for a return to normal life and China should be able to build on its early economic recovery and resume its very long trend of strong economic growth.
Feb 08, 2021•10 min•Ep. 124
