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

8 Aug 2022

Warren Buffet

I heard an amazing statistic a few weeks ago: Berkshire Hathaway, Warren Buffett’s investment vehicle, could lose 99 percent of its value and still enjoy a track record that beats the S&P 500. Over the weekend, Berkshire released their second-quarter earnings, which reminded me of my newfound fact, so I pulled up the data. Sure enough, it’s true. And perhaps even more remarkably, it’s been consistently true since the year… 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

11 Jul 2022

Value’s Long and Winding Road

In a bear market like this one, when stocks are down -20 percent and bonds are down -10 percent, it’s hard to find good news. I learned a long time ago that in an up market, investors care about relative returns (earning 12 percent versus 10 percent, for example), but in a down market aren’t interested in that at all (losing, say, -8 percent instead of -10 percent). In both… Read More

5 Jul 2022

Visualizing the Supply Chain

Growing up, I’d never heard of the supply chain. Toys were either on the shelves or there weren’t. Today, I hear relatively young kids talking about how the supply chain is preventing them from getting the toys they see online in less than three days. It’s amazing actually. Last week, I was looking at the New York Federal Reserve website trying to find their model that predicts recessions. I didn’t… Read More

27 Jun 2022

The Chance of Recession

Last week, I promised to discuss the odds of entering a recession in more depth and suggested that a financial crisis is less likely this time (but you never know). If you missed it, you can read it here. I also referenced a talk I saw by local Fed official Bill Emmons, who highlighted the possibility of a recession in 2018. He wasn’t right about that (well, he only said… 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