Notes on the Week Ahead
The Stagflation Scare

The Stagflation Scare

October 18, 2021

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.

Facing Reality on Growth and Inflation

Facing Reality on Growth and Inflation

October 11, 2021

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.

The American Consumer: Still Ready to Drive the Recovery

The American Consumer: Still Ready to Drive the Recovery

September 27, 2021

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 relevant question was: when would the American consumer bounce back?  I remember being very impressed when someone at the table started reciting the latest U.S. 10-day car sales numbers and asserting that a recent turn up in these data meant that better times were surely ahead for the global economy. 

Haircuts and Roulette Wheels: Are we “Due” for a Correction?

Haircuts and Roulette Wheels: Are we “Due” for a Correction?

September 20, 2021

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.

Washington games and their consequences for risks, taxes, stimulus and investing

Washington games and their consequences for risks, taxes, stimulus and investing

September 13, 2021

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……

Speedbumps on the Road to Recovery

Speedbumps on the Road to Recovery

September 7, 2021

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.

Monetary and Fiscal Timetables

Monetary and Fiscal Timetables

August 30, 2021

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.

The Profits Wave

The Profits Wave

August 23, 2021

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.

The Investment Implications of a Mutating Economy

The Investment Implications of a Mutating Economy

August 9, 2021

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 interest rates and a significant rotations in asset class performance.

New Palette Same Picture

New Palette Same Picture

August 2, 2021

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.