19 Sep 2022

Core Inflation Knocks Market

Stocks sold off sharply this week, as noted above, mostly because markets had anticipated good news on the inflation front and didn’t get it. When I first saw the release, I thought it looked pretty good because the headline rate of inflation was only a tenth of one percent for the month, which brought the rolling one-year rate down to 7.8 percent.  While 7.8 percent is still far too high,… Read More

29 Aug 2022

The Word From Jackson Hole

In the 1970s, the Federal Reserve Board of Kansas City put on a series of three-day symposiums and invited economists, central bankers, and journalists to the Great American West to discuss the day’s topics. Former Fed Chair Paul Volker, who famously broke the back of inflation, liked to fly fish, so he steered the conference to Jackson Hole, Wyoming, in 1981, where it’s stayed ever since. The event became a… Read More

15 Aug 2022

Fed Tightening and Stocks

While inflation may or may not have peaked, Federal Reserve officials are still talking about raising interest rates. Several Fed officials called for rate hikes through 2023, and St. Louis Fed President said that the overnight rate should be four percent by the end of this calendar year (it’s currently between 2.25 and 2.50 percent). Although the Fed is already raising rates, a process also known as tightening, I wondered… Read More

1 Aug 2022

Patriots for a Weaker Dollar

I sometimes include changes in the dollar in the market summary that precedes the data table above. I cover the dollar less and less, though, because it’s so abstract. That said, the dollar has been immensely strong recently, and it’s impacting our portfolios. Any patriot likes the sound of a strong currency – after all, a strong currency should reflect a strong country. And a weak or debased currency is… Read More

25 Jul 2022

Looking at Inflation, Backwards and Forwards

Inflation is hard to measure, which is why there are many ways to measure it. In addition to the Consumer Price Inflation (CPI) indexes that I’ve discussed in recent months, there are also Producer Price Indexes (PPI), the Personal Consumption Expenditures (PCE) indexes, the Gross Domestic Product (GDP) purchased price index, the GDP price index, and the GDP Price Deflator index. Oh my! While I don’t intend for this letter… Read More

18 Jul 2022

Looking at Inflation, Backwards and Forwards

After quietly lying dormant for several decades, inflation is today’s big story in economics and markets. We all feel it at the grocery and pump, not to mention airline tickets, which are up more than a third from a year ago. It’s also dictating central bank policy, here and abroad, and everyone is rightly wondering whether that central bank policy will push global economies into a recession if it hasn’t… Read More

21 Jun 2022

And Now: Some Good News

The most salient question today is whether or not the US and the rest of the world will enter a recession. The answer, of course, is that, at some point, we will enter a recession. I think that a much harder question is when we enter a recession. I’ve heard a few people say that we’re in one now because the first quarter’s Gross Domestic Product (GDP) was negative, and… Read More

13 Jun 2022

Inflation: A Deep Dive

I like to say that this newsletter is a mix of information on investing, financial planning, and economics. Regular readers know that I tend to focus most on investing, then financial planning, and economics is a distant third place. The current inflation environment, however, is forcing me to cover more economics, although the reality is that inflation materially impacts investing and planning. Today, I will look at inflation in isolation,… Read More

31 May 2022

A Look at Bear Markets, Part II

What a difference week makes! Last week, with the market down -18.2 percent from its all-time high and dipping into bear market territory at some points during the day, it felt like a bear market was a sure thing. Of course, it may still happen, but with stocks now down -12.8 percent, it doesn’t feel as imminent. Last week’s article focused heavily on bear markets, almost to the point of… Read More

23 May 2022

A Look at Bear Markets

Even though the S&P 500 closed flat on Friday, it was down substantially in the middle of the day, down -2.3 percent in the late morning. At that moment, the S&P was down more than 20 percent from the all-time high set in January. Since a bear market is generally defined as a -20 percent decline from the recent peak (also called a drawdown), a lot of digital ink was… Read More