Like this post? Consider subscribing to my Substack for additional insights and content today! “There is a great deal of ruin in a nation” - Adam Smith, 1777  Recently there has been a noticeable uptick of “Roman Empire” scuttlebutt on the socials, which wouldn’t be all that interesting except for the fact that in this instance, it appears as though there is a significant effort being made to somehow associate the act of “thinking” about the “Roman Empire” with manhood and men’s supposed preoccupation with concern for the unwind of the United States. A comical exa ..read more

Like this post? Consider subscribing to my Substack for additional insights and content today!  For one brief moment at the 2022 Jackson Hole symposium, we got a glimpse of what a Fed Chair could achieve in the way of “jawboning” if he concluded that to be the right action and, going even further, possessed the leadership quality to get it done. In that moment, Powell both presented and truly embodied something revolutionary, particularly to a generation of delusional speculators with virtually no conscious or even lived memory of anything other than a permissive Fed doling out endless ..read more

Like this post? Consider subscribing to my Substack for additional insights and content today! For roughly the last 15 years the Fed’s reckless “easy money” zero interest rate policy (ZIRP) has encouraged more than just gratuitous speculation in assets like stocks, cryptos and housing. In undermining our sense of the value of “money” by encouraging imprudent uses of artificially cheap debt and discouraging thoughtful uses of real earned productive capital, the Fed has warped and distorted our entire economic system thereby creating the “Everything Bubble”. But this “Everything Bubble” is NOT ..read more

Like this post? Consider subscribing to my Substack for additional insights and content today! It’s time to face the facts, recession is here, not “officially” of course since it takes the NBER with a boat load of highly revised and settled macro-economic data to officiate that fact, but “technically” and in a fashion that is widely felt. Q1 2022 registered a first negative real GDP print for this cycle (i.e. the cycle that started after the COVID pandemic induced mini-recession) and only the third (but most significant) time a quarter turned negative (if you leave off the COVID debacle) sinc ..read more

Like this post? Consider subscribing to my Substack for additional insights and content today! For the last few months now, I have been suggesting that the Fed needs to move the Fed Funds rate up much faster than they have been, arguing that they are not only “behind the curve” given their failed “transitory” position, but that they have totally lost the narrative as far as taking a “hawkish” stance is concerned.   My suggested approach to rate hikes has been for the Fed to move in the range of +100 to +125 basis points at each scheduled meeting (of 2022) as well as implementing ran ..read more

Like this post? Consider subscribing to my Substack for additional insights and content today! Arguably the most unique trait of the human condition is our unbridled inventiveness.  Reading the transcript of Blake Lemoine’s “interview” with LaMDA, Google’s remarkable, and possibly sentient AI, makes that perfectly clear but also highlights the potential for this type of ingenuity to overrun the current limits of our capacity to forecast the impact and, ultimately, the cost of such creativeness. Putting aside whether or not LaMDA is truly sentient for the moment, reading the exchanges got ..read more

Today, like 2007, the economic zeitgeist is marked by a palpable sense of significant headwinds and the uneasy feeling of oncoming disaster. True, the uncertainty and potential risks driving this sense of doom now are very different from the circumstances that existed then, but every cycle always brings a unique set of challenges and a distinctive narrative as to why markets overshot and why they are bound to revert to the mean. This is simply how history rhymes… the precise circumstances don’t just play out over again but instead, provide a rough guide that an astute observer can leverage to ..read more

Financialization, as I have pointed out before, allows for some truly powerful dynamics that would not otherwise be available to market participants but, as the old comic book adage states, “with great power, comes great responsibility” and responsible use of innovations in finance, being subject to the whims and foibles of human nature, has lead to significant economic calamity. Think of the farmer who has to contend with the ever-changing variables of his trade; weather, pests, labor, material input costs all in advance of the day when his crops or livestock are ready for market and in the ..read more

Today’s release of the Personal Income and Outlays Report showed that personal income increased by $89.3 billion in April (rising 0.4% from March) while disposable personal income increased $48.3 billion (rising 0.3%) and personal consumption expenditures increased $152.3 billion (rising 0.9%) over the same period. Clearly, consumers are increasing spending particularly as the COVID-19 pandemic become more of a distant event and the process of post-pandemic normalization continues but today’s report also indicated that durable goods (appliances, furniture, autos) consumption expenditures incr ..read more

Today’s release of the FOMC meeting minutes shows that the Fed is still way behind the curve as they continue to characterize current inflation as a primarily transitory symptom “… reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures” rather than a largely monetary phenomena. Further, citing the war in Ukraine and the COVID-19 lockdowns in China, the Fed portrays recent world events as “… creating additional upward pressure on inflation”. This is simply a charade as the Fed adopts a common strategy used in the political arena, atte ..read more