Notes on the Week Ahead
Reversing the Population Pause

Reversing the Population Pause

October 19, 2020

It always requires discipline to look beyond the next few weeks and months and take a long-term view. In the short run, investors remain focused on election uncertainty and how the once-again worsening pandemic, combined with stalemate over further fiscal stimulus, threatens to dramatically slow the pace of economic recovery, following a strong third-quarter bounce.

The Fed’s Timetable

The Fed’s Timetable

October 12, 2020

Turbulence defines today’s investment environment, with great waves of uncertainty surging from the pandemic, the election, fiscal policy and a slowdown in what had been, to this point, a sharp recovery from a very deep recession. But amidst the tumult, investors should not neglect the crucial role of interest rates. The waves of uncertainty should fade in 2021 and, as they do so, the primary role of interest rates in determining asset class returns should reassert itself.

The Investment Implications of a Contested Election

The Investment Implications of a Contested Election

September 28, 2020

For most Americans, November 3rd can’t come soon enough.

U.S. presidential election campaigns are always hideously long and this one has felt particularly painful, with such a deep divide between the supporters of the rival candidates.  However, recently there has been increased speculation about the grim possibility of the election outcome being contested.  Quite apart from the further division this would inflict upon our bruised democracy, many investors are wondering what this could mean for the economy and markets.

The Problem with MMT

The Problem with MMT

September 21, 2020

For most of the last 40 years, the United States, like most developed economies, has suffered from a lack of demand for goods and services. This has contributed to a steady slide in inflation. More importantly, it has indirectly triggered recessions by funneling money towards assets, feeding bubbles which have inevitably burst. A lack of aggregate demand has also slowed the recovery from those downturns, inflicting hardship on millions of workers and small business owners.

The Pandemic Marathon

The Pandemic Marathon

September 8, 2020

This week, I, like about 20,000 others, will attempt to complete the virtual Boston Marathon.  I had signed up again with the Dana Farber Marathon Challenge team to run it in April, after a rather ragged performance in 2019.  But then the race, like so much this year, first got postponed and then went virtual.  And so, next Saturday morning, I will nervously walk out my front door, turn left and jog off, on my own, into the dawn’s early light.

An Exuberant Rally in an Incomplete Recovery

An Exuberant Rally in an Incomplete Recovery

August 31, 2020

English, as spoken in Ireland, is full of colloquialisms, phrases which are plain and clear to the local population and entirely mysterious to visitors.  Of course, Irish people don’t realize this and, over the years, I’ve become used to the bemused smile of Americans who clearly hear what I say but, equally clearly, have no notion of what I mean.

Average-Inflation Targeting in a Washington without Hawks

Average-Inflation Targeting in a Washington without Hawks

August 24, 2020

Washington Hawks flourished in the late 1970s and 1980s, when deficits and inflation were seen as significant threats to the nation. However, their numbers have dwindled in recent years due to persistent low inflation and the rise of populism. The current pandemic recession appears to have dealt a death blow to the species and its traditional habitat has now been taken over by swirling flocks of red and blue doves.

The Human Implications of the Washington Stalemate

The Human Implications of the Washington Stalemate

August 17, 2020

The title of these weekly articles often starts with, “The Investment Implications of…..”

This is usually appropriate since almost all big issues have investment implications and the focus of these articles has always been to see the investment environment with clarity.

The Investment Implications of the Coronavirus Debt Surge

The Investment Implications of the Coronavirus Debt Surge

August 10, 2020

Apparently, the hard-working analysts at the Congressional Budget Office threw in the towel on Friday afternoon. They were scheduled to release their estimates of the budget deficit for July but, late in the day, the CBO website announced that the numbers would be coming out today instead.

The View from the Base of Recovery Mountain

The View from the Base of Recovery Mountain

August 3, 2020

New GDP data released last week confirmed that the 2020 recession has been the deepest in over 70 years, with a peak-to-trough decline in real output of 10.6%. This, of course, was already evident in monthly data on consumption, employment, trade and inflation and has been reflected in a very sharp decline in corporate profits.