Everybody knows there is a difference between the economy and the stock market, but they are so closely related – think brother & sister – closely related but still different. Wearing my economist hat, I see good data points follow good data points. Yes, the most recent ISM reports slipped slightly but are still very expansionary. Plus, the creation of new jobs is almost amazing,…
In Greek mythology, Cassandra was the daughter of the King of Troy. Legend says she had dark brown curly hair and coal brown eyes. By all accounts, she was extremely beautiful. In fact, the god Apollo fell in love with her beauty and wanted her as a lover. They agreed he would give her the gift of foreseeing the future, if she would become his…
The stereotype of an existentialist is that of a nerdy, 98-pound weakling who contemplates his navel or broods endlessly about death. However, existentialists see ourselves as intellectual free spirits, untethered to many burdensome conventions. The death cult characterization is unfair and stems from our casual attitude toward death. After all, how can death be important to me, if I’m not even here? There is a…
If there was even a remote prospect that you could do something to help a sick child, how could you NOT do it? That’s one of the promises of Big Data – the more data that is analysed, the more we can learn about science and medicine, the more we can help future people. Seems reasonable to me? I visited a new shoulder doctor last…
A surprisingly small percentage of people serve in the military, and an even smaller percentage actually experience the horror of war face-to-face. For others, war can be clean, antiseptic, and even academic. Yesterday, Apple announced that their revenues were suffering due to the trade war. Suddenly, a trade war is no longer clean, nor antiseptic, nor academic. When American companies start losing revenues, profits will…
I agree with the President’s new Acting Chief of Staff, Mick Mulvaney, who famously said “Trump is a terrible human being.” However, the devil does deserve his due. For decades, China has abused trading relationships with everybody, not just the U.S. Being reasonable men, Presidents Reagan, Bush, Clinton, Bush II, and Obama assumed that China was also reasonable. They forgot that history molds the future,…
Along with sixty thousand of my closest friends, I had the pleasure of watching the Dallas Cowboys beat the New York Giants in the Meadowlands. However, whenever there was a change of possession, I noticed there was a lot of just standing around by the players on the field. To my economist eyeball, that represented enormous waste. The individual team payrolls are about $170 million…
To read my latest column in Inside Business, please go here: https://pilotonline.com/inside-business/news/columns/article_5ed0af4e-0ab5-11e9-9a89-cf89b7c2e6bb.html
I firmly believe there are just as many nice people in the Republican party as the Democratic party. Conversely, I firmly believe there are just as many jerks in the Democratic party as the Republican party. But, they live and work in parallel universes. So do their families. My 2019 wish is for the partisan “leaders” in Congress to require some minimal human integration of…
We barely hit a bear market, which means the market is down 20% from its high. It is widely assumed that a bear market signals a recession. Maybe or maybe not! Of the last thirteen bear markets, there was a recession only 7 times. There was no recession almost half of the time. From the economist standpoint, there has some weakening in the data but…
Wall Street pundits have called the current market correction “a collapse without a cause.” I agree this December collapse has been illogical but no more illogical than the record 1,086 jump in the Dow during one day. As I type this, Dow futures are down 344 points. The individual opinions of economists and analysts did not cause this volatility. There is no explanation for this…
The most common question I’m hearing is — “When will the market stop falling?” What they mean is — “When will the pain stop?” Once investors stop asking when the market will bounce back and start asking when the pain will stop, that is a bullish signal. The answer is — “Not this week!” Mutual funds will close their books this Friday. Since the best…
Unfortunately, many parents have had the experience of raising a wayward child. You spend decades teaching and coaching to the best of your ability. You are proud of them! Then, disturbing little signs start to worry you. Suddenly, she is gone, and you are worried sick. One day, you see her in the distance, returning home. Your face explodes in tears. You are so happy to…
Unfortunately, many parents have had the experience of raising a wayward child. You spend decades teaching and coaching to the best of your ability. You are proud of them! Then, disturbing little signs start to worry you. Suddenly, she is gone, and you are worried sick. One day, you see her in the distance, returning home. Your face explodes in tears. You are so happy to…
Both Fox News and The Wall Street Journal are controlled by the same person, Rupert Murdoch. Watching Fox News, one gets the clear impression that Americans are resoundingly in favor of the President and his goal of building The Wall along the Mexican border. However, the newspaper reported that, three years ago, 49% of Americans believed that immigration helps the country more than it hurt. Today,…
As my hair gets whiter and my wrinkles deeper, I find the holiday season less and less interesting. Except for one silly American custom. On Christmas Eve each year, NORAD pretends to track the journey of Santa Claus. They discuss it with great seriousness on television — tongue securely in cheek. NORAD was already doing this when I was a small boy, and I hung…
My favorite stock in 2018 was Facebook (FB) — not because it did well, but because it did poorly, losing 30% of its value! Early on, I recognized their business model was to sell the privacy of others, albeit with their “consent.” The need to connect with others was more important than privacy. The need for targeted advertising was more important than privacy. I have…
A bear market is usually measured by a 20% drop from its high. By that measure, the NASDAQ companies are now in the dreaded bear market. Even worse, the Dow and S&P are close behind. Investors are understandably frightened. First, this is not the end of the world. The stock market will recover! Never forget — corporate profits are “the mother’s milk” of stock prices. …
In Part One, we discussed how the supply and demand for bonds impacts interest rates. In particular, we discussed how Quantitative Tightening (QT) was putting upward pressure on interest rates. In this part, we’ll discuss how changes in interest rates cause changes in the market value of bonds. Let’s say you bought a new bond for $1,000 paying 5% or $50 annually. Now, what happens…
If I was under six different investigations and . . . If I worried my kids might go to jail and . . . If people didn’t want to work for me . . . If American banks wouldn’t do business with me and . . . If my allies decided I was unpredictable and untrustworthy and . . . If my only friends were…
There are many definitions of interest rates. One is that interest rates are the price or cost of liquidity. As liquidity increases, the cost goes down. (The supply of liquidity is greater than the demand for it.) As liquidity decreases, the cost goes up. (The demand for liquidity is greater than the supply of it.) One of the factors pushing our interest rates up is…
Fighting is easy. Walking away from a fight is difficult. The Federal Reserve is a creature of Congress and can be terminated whenever Congress chooses. Fortunately, Congress recognizes that independent economic guidance cannot come from either the Executive or Legislative branches of government. After all, somebody has to guide the economy who cares more about the economy than the latest polls. In September, I wrote…
I am confident that, if my family depended on it, I would find a way over or under or around or thru any fence. (Of course, I still remember how to use C-4 plastic explosives, as well as “bangalore torpedos.”) Assuming that is mere bravado or over-confidence on my part, then a wall on the Mexican border might make sense. However, if I was Nancy…
During the global financial crisis of 2007/8, the assessed value of my home starting dropping. Two years later, it had dropped 29%. Did I cry? Did I sell my home? Did I curse my realtor? Of course not! I just waited for it to recover. The S&P 500 has now dropped 11% and is still dropping. This year will probably be the first losing year…
Let’s say you’re a large pension fund that wants to buy 100,000 shares of Apple. If you enter such a large BUY order into the market, it would drive the price up. Of course, you don’t want to pay any more than necessary. So, what do you do? You enter a “dark pool.” Large financial institutions maintain these dark pools. If you want 100,000 shares…
I parted company from my Republican friends, when they impeached Clinton for lying about sex with a woman. I will part company from my Democratic friends, if they impeach Trump for lying about sex with two women. Sure, there are nuances of differences, but they are only nuances. HOWEVER, if Trump — or any other person — colluded with the Russians, then I hope they…
Like most people, economists like to argue. However, one idea that almost all economists agree with is: “If you want less of something, tax it. If you want more of something, subsidize it.” Otto von Bismarck said: “Politics is the art of the possible, the attainable — the art of the next best” The president of France, Emmanuel Macron, understood the French people would use less…
Like most people, economists like to argue. However, one idea that almost all economists agree with is: “If you want less of something, tax it. If you want more of something, subsidize it.” Otto von Bismarck said: “Politics is the art of the possible, the attainable — the art of the next best” The president of France, Emmanuel Macron, understood the French people would use less…
When I go to sleep at night, I reluctantly relinquish control of the TV remote. By then, that poor piece of plastic is exhausted, breathing heavy, and sweating profusely. That’s because it has been worked so hard — after all, every commercial break requires a channel change. In the never ending search for a balanced view, I rotate between Fox News, CNN, MSNBC, and Newsy. …
Many years ago, the mentor of Warren Buffet was Benjamin Graham. He taught: “In the short run, the market is a voting machine but in the long run, it is a weighing machine.” Colleges teach us that the stock market reflects both current economic conditions and future expectations. It weighs economic data. Today, the economic data is strong and healthy. So, when is the market not…
Inside our country, the stock market has been fretting over the possibility of slowing growth in corporate earnings and GDP, as well as rising interest rates, an ominous yield curve, the trade war, and the perpetual political circus. As if all that was not enough burden on U.S. investors, we just imported two more – overnight. First, the once fearsome OPEC looks like it may…
Inside our country, the stock market has been fretting over the possibility of slowing growth in corporate earnings and GDP, as well as rising interest rates, an ominous yield curve, the trade war, and the perpetual political circus. As if all that was not enough burden on U.S. investors, we just imported two more – overnight. First, the once fearsome OPEC looks like it may…
Think of buying a bond like loaning money to a friend. If he must repay the money tomorrow, there is not much that can go wrong before then. However, if he must repay you in twenty years, there are many things that could go wrong, and you might not get repaid. An example would be a surge in inflation, reducing the value of the repaid…