I refuse to believe, despite gathering evidence to the contrary, that I am getting older. This being my mindset, I am perpetually astonished by the increasing youth of my colleagues. According to the Census Bureau, the median age of an American today is 38 years which doesn’t, on its face, sound extraordinary. However, what it does mean is that most of the people I work with have only experienced two recessions in their adult lives – the recession of 2007-2009 and the recession of 2020. For addi...
Jun 22, 2022•12 min•Ep. 183
I have been on many delayed flights recently and have a certain sympathy for the pilots who, having repeatedly told us that we would be taking off shortly, have to continually backpedal due to weather or staff or equipment. They always thank us for our patience but in reality they are the patient ones. We, the passengers, are seething, and what’s more, we have suddenly become vocal experts on dodging weather, managing staff and fixing planes. But to get us safely to our destination the pilots ha...
Jun 15, 2022•8 min•Ep. 182
Following a solid jobs report last week, investors this week will turn their attention to inflation which, to say the least, has been more of a problem this year. We expect this Friday’s CPI report to show a 0.6% increase in prices overall and 0.4% excluding food and energy. On a year-over-year basis, we are looking for headline inflation to fall from 8.2% to 8.1% and for core inflation to drop from 6.1% to 5.7%.
Jun 06, 2022•9 min•Ep. 181
My father, otherwise a very accomplished man, never learnt how to type properly. However, he compensated for a lack of skill with an intensity of application. As children, we would hear him behind the door of his study, pecking away at his Remington typewriter using only his two index fingers. In the afternoons, it would be a gentle, relaxed clicking, interrupted every 20 seconds or so by the merry chime of the carriage return bell.
Jun 01, 2022•10 min•Ep. 180
Last Wednesday, the Treasury Department announced a record monthly budget surplus for April of $308.2 billion. The report elicited no noticeable market reaction, as investors continued to fret about high inflation today and slowing growth in the months ahead. However, a Federal Reserve recognition of the economic implications of a fast-falling budget deficit could hold the key to a recovery in recently battered stock and bond markets.
May 16, 2022•12 min•Ep. 179
In the movies, in order to convey the passage of time, a director will sometimes film a scene as the seasons quickly pass before your eyes. With wistful music playing in the background, the snow melts from trees, buds blossom, leaves rustle in the summer sun and then turn yellow and red as fall arrives. It all, of course, seems a bit quick, but no doubt the movie has places to go and hopefully things will settle down for a while and allow the plot to evolve. For additional insights from Dr. Davi...
May 10, 2022•8 min•Ep. 178
In any given year, four big exogenous forces tend to have the most impact on portfolio returns, namely, earnings, interest rates, taxes and the dollar. While the tax environment appears to be stable, in all other respects, 2022 is shaping up to be a difficult year with slowing earnings growth and fast-rising interest rates. In addition, the dollar has risen significantly so far this year, as it did in 2021 and this is having negative impacts on both portfolio returns and economic growth. For add...
May 02, 2022•8 min•Ep. 177
Economic data in the week ahead should highlight a stumble in economic growth and a surge in inflation in the first quarter. While second quarter numbers will likely partly offset both of these trends, they will remind investors of the challenges faced by the Federal Reserve in trying to return the economy to a path of steady growth and moderate inflation. While some Fed officials have advocated very aggressive tightening, both the likelihood of near-term moderation in growth and inflation and l...
Apr 25, 2022•10 min•Ep. 176
A number of years ago, as part of a team-building exercise at an overseas conference, I got bullied into taking a ride on a particularly fearsome roller coaster. For someone who suffers from vertigo and is an admitted control freak, the next 90 seconds were not pleasant. Once the ride stopped, I stumbled out of the contraption. However, I could not proceed with our merry band of team-builders until I had done a serious inventory of the state of the world, starting with some rather fundamental qu...
Apr 12, 2022•9 min•Ep. 175
Last Thursday, as I headed home from a conference, the car I’d booked to take me to the airport didn’t show up. Luckily there was a taxi nearby so I hopped in and discovered that, in addition to a comfortable ride to my destination, the fare entitled me to a free lecture on the state of the labor market. “The reason your car didn’t show up”, opined the retired police sergeant at the wheel, “is you can’t find drivers anymore. It’s the millennials - they just don’t want to work”. For additional in...
Apr 05, 2022•7 min•Ep. 174
Despite their best intentions, the Federal Reserve sometimes appears to be trying to steer a big boat, through violent rapids, armed only with a small paddle. The reality is that forces well beyond their control will mostly determine the fate of the economy. However, the energy with which they paddle could have a major impact on investments. For additional insights from Dr. David Kelly, listen to the Insights Now podcast ....
Mar 23, 2022•8 min•Ep. 173
At 5:30AM on Saturday morning, Coach Jack posted on the team Facebook page – the training run was a go. Just as well. The Boston Marathon is now five weeks away and as a proud member of the gasping geezers division of the Dana-Farber Marathon Challenge team, I knew we needed to get in a long run. Between Covid and the weather, training has not exactly been easy. On Saturday, the forecast was for rain with the possibility of torrential downpours. But getting wet on Saturday was a better choice th...
Mar 14, 2022•10 min•Ep. 172
In the week ahead, the world’s attention will continue to be focused on the horrific human consequences of the Russian invasion of Ukraine. However, American investors will also be considering what it means for financial assets. While the most severe economic consequences will likely be felt in Europe, the most important effects on U.S. portfolios depend on the implications of Ukraine for the U.S. economy.
Mar 07, 2022•7 min•Ep. 171
Every winter, here in eastern Massachusetts, we are visited by Nor’easters. Each storm is plotted on weather maps days in advance. A low pressure area swoops down from the Rockies, gathers moisture in the Gulf of Mexico, rides up the east coast over the warm waters of the Gulf Stream and then stalls in the Gulf of Maine, churning itself into its full intensity. Every storm has the potential to turn into a blizzard. But whether it does or not depends on two things: First, what is the exact track ...
Feb 22, 2022•9 min•Ep. 170
Financial markets sold off last week as investors worried about a possible Russian invasion of Ukraine. Before engaging in any analysis of what this could mean for long-term investors, three broad points are worth emphasizing.
Feb 14, 2022•7 min•Ep. 169
So far this year, the 10-year Treasury yield has risen from 1.52% to 1.93%. This increase has been accompanied by broadly lower equity markets, with value outperforming growth and international stocks outpacing their U.S. counterparts.
Feb 07, 2022•10 min•Ep. 168
In the last few weeks, it seems everyone is playing Wordle. Each morning, a UK website posts a new game and you get six attempts to guess the five letter word. If you guess the right letter in the right square, the square turns green. If you get the right letter in the wrong square, the square turns a mustard yellow. If you get it all done in four tries the program says “splendid!” If it takes you six tries, it says “phew”. It’s a nice distraction in what we all desperately hope are the waning d...
Jan 31, 2022•9 min•Ep. 167
n Saturday, at an average home, on an average road in Maplewood, New Jersey, the realtors staged an open house. Even for a January, this was a rare event and parking was at a premium as dozens of mostly young couples lined up outside, braving cold and Covid. There was a whiff of desperation in the air as the multitude assessed its own numbers. The more experienced in the crowd, though well-armed with bank pre-approvals and hefty down payments, shared in the general pessimism, knowing that the pr...
Jan 24, 2022•8 min•Ep. 166
Our baseline view of the world does not include a U.S. recession in the next two years. However, it is certainly possible, and investors would be well advised to consider what it might mean for their portfolios. With that in mind, it is worth thinking about what could cause a U.S. recession, the implications of such a recession for financial markets, inflation and monetary and fiscal policy and how assets would fare in its wake.
Jan 18, 2022•11 min•Ep. 165
There is an old and much-quoted saying by the Greek philosopher Heraclitus: “A man never steps in the same river twice” – because it is not the same river and it is not the same man. A very similar observation could be made about investors considering their portfolios as the pandemic, hopefully, begins to wane. Covid-19, and the policy choices it triggered, changed the economic and financial landscape in a significant manner. However, it also changed investors, leaving them, for the most part, w...
Jan 10, 2022•10 min•Ep. 164
Growing up in Dublin, my parents were of the firm belief that the streets of the city were safer without David behind the wheel of a car. Consequently, I first learnt to drive in my early 20s on the backroads and highways of Michigan, with my future wife, Sari, as my instructor. There were a number of perils associated with this including my tendency to ignore all traffic signs when focused on the task of steering the car or my habit of stalling out due a chronic inability to synchronize the app...
Jan 03, 2022•9 min•Ep. 163
When our children were very young and they committed some transgression, we had a rule in our house. It wasn’t enough to say sorry. You had to say what you were sorry for. That way, we had some hope that they wouldn’t make the same mistake again.
Dec 13, 2021•9 min•Ep. 162
Despite a disappointing gain in non-farm payrolls in November, numerous recent data points show an extraordinary excess demand for workers. This excess demand won’t persist forever. However, it’s important to understand its causes as this can provide some guidance on two crucial questions, namely, how long might it last and how will it be resolved. The answers to these questions can also help in assessing which asset classes could outperform in 2022 and beyond.
Dec 06, 2021•11 min•Ep. 161
Financial markets tumbled last week as reports spread of a new, highly-mutated variant of Covid-19 which could be more contagious than the Delta variant and which could evade some of the immunity built up around the globe over the past year through vaccinations and infections.
Nov 29, 2021•6 min•Ep. 160
The week ahead will, of course, be dominated by Thanksgiving, leading, appropriately, to less focus on financial markets. That being said, this should also be a week of greater clarity on fiscal and monetary policy. This clarity should reinforce the view that Washington aid will become considerably less generous in the year ahead, reducing inflation fears but posing some threat to recently very strong profit growth.
Nov 22, 2021•7 min•Ep. 159
Financial market commentary in the week ahead will likely center around the question of inflation. The headlines speak for themselves. CPI inflation jumped to 6.2% year-over-year in October, its highest reading in 31 years.
Nov 15, 2021•11 min•Ep. 158
My first summer job as a teenager was in the mailroom of a Dublin law-firm. The more intellectual duties of this position involved substantial paper-folding, envelope-licking and a daily fight with the franking machine. However, the important part of the job was buzzing around Dublin on my 10-speed bike (with the dropdown handlebars), delivering the mail directly to various law offices and clients and thus eliminating the inevitable delays of the Dublin postal service.
Nov 08, 2021•11 min•Ep. 157
It feels like so long ago, but back in 2019, the economic and financial environment was remarkably placid. Real GDP growth was plodding along at 2.3% pace, unemployment drifted down to end the year at 3.6% and corporate profits were growing slowly from very high levels. Consumption deflator inflation was still running below the Fed’s 2% target and, in recognition of this fact, as well as market volatility at the end of 2018 and a sluggish global economy, the Fed cut the federal funds rate three ...
Nov 01, 2021•14 min•Ep. 156
Every summer since 1960, the World Lumberjack Championships have been held in Hayward, Wisconsin, a small community in the north west of the state. Among the featured events in this and similar gatherings is logrolling, where two competitors scamper furiously on top of a very wet and smooth log, floating on a shallow, muddy lake.
Oct 18, 2021•6 min•Ep. 155
On Monday, I have the privilege of running the Boston Marathon for a third time on behalf of the Dana Farber Cancer Institute. I love being part of the team – despite many difficult personal stories, the volunteers, organizers and runners are a very warm and positive bunch to train with. Moreover, the research conducted by Dana Farber is critical to winning more of the millions of individual battles which constitute the war on cancer.
Oct 11, 2021•8 min•Ep. 154
