Notes on the Week Ahead
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.

An Antidote to Risk

An Antidote to Risk

July 28, 2020

Last week, I was preparing for a zoom call with some of our client advisors at JPMorgan Asset Management, by reviewing a list of questions they had kindly supplied in advance, and I came across a particularly awkward one: what has been my biggest investment mistake?

The Backroads of Economic Recovery

The Backroads of Economic Recovery

July 6, 2020

In life before the pandemic, (and it seems like years ago), Sari and I would often drive from our home in Massachusetts to New York for the weekend. The destination was always fun – seeing the kids, exploring new restaurants, catching a Broadway show and sometimes running a road race the next morning to burn off the extra calories. But we had to get there first.

The Investment Implications of a Rolling-Wave Pandemic

The Investment Implications of a Rolling-Wave Pandemic

June 29, 2020

In the week ahead, as has been the case for most of the year, markets will likely take their cues from medical rather than economic data. The key question is whether America will see a second wave in the Covid-19 pandemic.  The answer to that question has, of course, profound human and social consequences.  However, it also has implications for the economy, for fiscal and monetary policy, and, ultimately, for investment strategy.