I normally wake up between 4:30 and 5:00 in the morning. Yesterday was no different, except the television was already on, showing a bunch of fancy-dressed-folks going into an ornate cathedral in London. More importantly, there was tens of thousands of people outside cheering wildly, which is not the same thing as working hard. British economists … Continue reading The Cost of a Good Emotion
The Flinchum FileThoughtful Economic Analysis and Existential Opinions
Economists often develop a religious fervor about some school of thought. We see constant dogfights between Keynesians, Supply-Siders, and Austrian (Tough Love) economists. Sometimes, we still hear from Monetarists. But economics is more like situational ethics than religion. Different ideas are appropriate at different times in different places. Today’s editorial in “The Wall Street Journal” … Continue reading Situational Economics
We all know the importance of international trade, but imagine trying to do business globally if there was no traffic cop. Fortunately, 134 nations got together and created the World Trade Organization (WTO), which has been instrumental is the growth of globalization. We need a traffic cop, a big burly one! In 2001, it began … Continue reading Meanwhile . . . under the radar . . .
We all know about leading economic indicators, i.e., those that tell us where the economy is going. There are also lagging indicators that tell us where the economy has been and are usually not worth knowing. Lastly, there are coincident economic indicators that tell you where the market is right now. Two coincident indicators are underwear and … Continue reading Dueling Coincident Indicators
Today, Ben Bernanke took a risk. In an laudable effort to bring greater transparency to Fed thinking, he held the first press conference ever for a Fed Head. There was lots of anxiety that he would accidentally say something, and the market would over-react to it. Fortunately, it was a wonderful non-event. The talking heads … Continue reading A “Whew” Rally
Yesterday was a great day for the market bulls, driving up the Dow by 115 points. Quarterly corporate earnings reports continued to be strong. In addition, the Consumer Confidence Index was unexpectedly strong. The S&P is at a three-year high! Today will be different. While the continuing flow of quarterly corporate earnings is expected to … Continue reading Holding Our Breath
One of the oldest proverbs of traders (not investors) is to “sell in May and go away.” The research is pretty compelling that stocks do much better in colder months than warmer months. I don’t think this year will be any different. There are just too many unresolved issues, even more so than usual. Does that … Continue reading “Sell in May?”
Forgive me, but it worries me to see our elected children in Congress playing with fire, by threatening to keep the debt level at the current level. That means we cannot borrow anymore–immediately, we cannot borrow anymore — on that day. It would be immediate! Given that 42% of every dollar spent is borrowed, which … Continue reading Playing With Matches
Without being too existential, I’m beginning to wonder why the stock market continues to bound over the famous “wall of worry.” GDP growth is slowing. Who cares? Unemployment is going down bitterly slow. Who cares? The Congressional children may cause a national disaster by not raising the debt ceiling. Who cares? The budget deficit this … Continue reading Does Anything Matter?
Rolling Stone magazine once referred to legendary investment banking firm Goldman Sachs as the “great vampire squid wrapped around the face of humanity.” I don’t find any reason to disagree with that. Yet, I have great professional respect for their cold, hard, unblinking analytical capabilities. In their latest analysis, they estimate that our GDP growth is being … Continue reading The Enigma of Goldman
As a child growing up near Williamsburg and Yorktown, I was always fascinated by the notion of America revolting from the tyranny of an oppressive England. As a teenager, I enthusiastically read the books of Ayn Rand, especially Atlas Shrugged, which was a story of free-thinking people revolting against an oppressive governmental bureaucracy. (It was … Continue reading The Tragedy of Ayn Ryan
OK, I’ve read the report from Standard & Poor’s yesterday that said the economic outlook for the U.S. was downgraded from Stable to Negative. I’ve listened to numerous pundits and read numerous analysis by people I respect. And, I’ve learned very little that I did not already know. In summary, here are my thoughts on … Continue reading Our “Negative” Outlook
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