The Dow was up slightly when the news hit The Street that GDP growth was a whopping 4% in the second quarter.  That’s good news, right?  But, the Dow promptly drops a hundred points on that good news.  Why, because a stronger economy means the Fed is more likely to raise interest rates sooner, instead … Continue reading Good = Bad

I cannot remember the last time that Consumer Confidence increased 4.5 points in one month, but it did this month.  That means more people are optimistic about their current financial position as well as their future financial position.  There is a close relationship between the labor market and consumer confidence.  As the labor market improves, … Continue reading Timing Is Everything

The Federal Reserve System is the only central bank in the world that has a dual mandate, i.e., combating both inflation AND unemployment.  With inflation virtually non-existent, the focus is on unemployment.  The closely-watched monthly “Jobs” report will be released this Friday.  Absent some exogenous factor, the stock market will just churn around the flat … Continue reading A Well-Oiled Machine ??

The Old Ebbitt Grill at 15th & New York in Washington, D.C., is one of those classic old steakhouses frequented by Congressmen, bankers, and other shady characters.  I had lunch there one day with two analysts who got into an uncomfortable argument about whether Pfizer or Merck was a better investment.  They were even quoting … Continue reading Geopolitical Risk

One of my guilty pleasures is taking long walks on the beach alone.  During beach season, it is fun to watch the visitors.  Ninety percent of them and 100% of the dogs are enjoying themselves.  I don’t know why it is so enjoyable, other than the novelty of it.  Less than 50% of the adults … Continue reading A Guilty Pleasure

There are many things that I do not understand.  For example, I don’t understand why it takes years to build a road.  I don’t understand what makes window treatments cost so much money.  I don’t understand why women are so obsessed with shoes.  But, most of all, I don’t understand what happened to moderate politicians? … Continue reading I Don’t Understand

The Democrats are correct in saying we need comprehensive immigration reform.  The Republicans are correct in saying we need comprehensive tax reform, especially reform of the corporate income taxes. If you doubt the need for tax reform, consider the increasing number of “tax inversions” over the last three years  The U.S. has one of the … Continue reading Inverted Thinking

On some days, I am actually proud to be part of the human race.  Today was such a day! During the course of my workday, I routinely channel-surf between CNBC, Bloomberg, FBN, and CNN.  Today, because the stock market was so placid, I became transfixed by CNN’s coverage of the arrival of corpses from Malaysia … Continue reading Today, We Are All Dutch

For anybody waiting breathlessly by their mailbox for the latest issue of Inside Business, so they can read my quarterly column, you can also read it online at:  http://insidebiz.com/news/q2-was-bull-market-although-trading-was-low 

Yesterday, a civilian plane was shot down over the Ukraine, killing all 298 passengers.  Within the hour, Israel invades Gaza.  The Dow drops 161 points, the biggest drop in two months, reflecting the increased uncertainty. In addition, the civil war in Syria still rages on.  Despite our investment of lives and treasure, Iraq is sub-dividing … Continue reading When It Rains . . .

The Dow set a new high yesterday.  Today, the world is worrying whether the stock market is over-valued and ready for a replay of 2008.  The answer is NO.  Take a look at this chart: If you take the price of a share of stock and then divide it by the earnings per share of … Continue reading Fretting Each New High

If you live long enough, you might get to see history repeat itself.  When I first started studying economics, forecasting had a heavy dose of person-to-person interaction, where the thoughts of other thought leaders were at least as important as any independent information I might discover.  When I took my first course in statistics, I … Continue reading Such Sweet Justice

Another major bank just agreed to pay a $7 billion fine for actions leading up to the Global Financial Crisis (GFC).  In total, banks have now paid roughly $100 billion in fines, which is certainly a great deal of money.  However, estimates of the damage done by the GFC vary between $5 TRILLION to $20 … Continue reading Shooting The Survivors . . . and/or Shareholders

I could join the American Economic Association (AEA) but find them to be too academic and detached.  Instead, I belong to the National Association of Business Economists (NABE), where the everyday work of members depends on their knowledge of economics.  Their latest survey of members was just released and is briefly discussed.below.  The latest survey … Continue reading Latest NABE Survey

Greg Wright is a good friend and client.  A retired attorney, he is now a successful writer.  (You should visit his blog at http://gregrwright.com/blog )He was also a former Marine infantry officer and knows the horrific details of war too well.  Sadly, as a father, he knows that the “full measure of devotion” in war … Continue reading The Final Word on Iraq

Five or six years ago, I attended a conference in D.C. on problems with economic measurement.  Of course, there was a great deal of focus on the monthly “jobs report” issued by Department of Labor, because Wall Street invariably obsesses about it.  One of the problems is a lack of agreement about who is really … Continue reading JOLTing Jobs

To an extent I’ve never seen before, it seems the divide between bulls and bears is increasingly along partisan lines – not completely but increasingly.  Republicans tend to view the market through the lens of Austrian economics, where government budgets must be balanced every year.  Democrats tend to view the market through the lens of … Continue reading Living In The Present

I was reading about the Libertarian candidate for the U.S. Senate seat in North Carolina and saw that he subscribed to the Murray Rothbard wing of the Austrian school of economics.  While I think Austrian economics is an under-utilized but useful tool in the toolbox of economists, I loosely subscribe to the Ludwig von Mises … Continue reading An Extreme Tarheel

One of those little noticed news items from last month has been keeping me awake.  That is the probe into the huge “dark pool” run by Barclay’s Bank.  Sometimes, when large institutional investors need to buy or sell large stock positions, it can cause the stock market to move suddenly and irrationally.  So, “dark pools” … Continue reading No No Doz Needed

Memorial Day is the saddest American holiday, as we mourn those who died for our way-of-life.  Veteran’s Day is probably the second saddest holiday, as we remember those who could have died to save our way-of-life.  But, Independence Day is probably our happiest holiday, as we congratulate ourselves on having a way-of-life worth dying for. … Continue reading Still Proud

If you don’t understand that Facebook is just another advertising firm, you don’t understand Facebook!  And, if you think advertising firms have any ethical compass, you haven’t watched Mad Men. Today, it was learned that Facebook conducted an experiment on almost 700 thousand of its users, to see if the company could manipulate the emotions … Continue reading “Mad Men”-In-A-Box