There is a tiny crack in the Fortress Economy of the United States. Corporate earnings per share (EPS) are slowing. They have been increasing at a 25% annual rate so far this year, but that is obviously not a sustainable rate. It has to slow down somewhat. Most companies try to manage expectations and provide “guidance” on what they expect their EPS will be each…
The relentless flow of good economic data can become boring. Indeed, the latest Consumer Confidence Index is the highest in eighteen years. Remembering that a confident consumer will spend more money than a frightened consumer and that consumer spending is about two-thirds of GDP, this new data suggests continued strong economic growth and even stronger retail stocks. Yea! However, this index has been even higher…
It seems unnatural to applaud bureaucrats anywhere, but the bureaucrats of the European Union are doing more to protect the privacy of their citizens than the august Congress of the United States. Europe now has the General Data Protection Regulations (GDPR). Fortunately, the state of California has rushed in to fill the American vacuum left by Congress. They have now passed California Consumer Privacy Act…
Watching Will Ferrell reprise his impersonation of former President George W. Bush on Saturday Night Live, one is reminded of the first law of Political Economy. His portrayal showed the formal President essentially saying “I know history says I was an awful President, but don’t I look pretty good now, compared to President Trump?” Bush was blamed for the 2008 market collapse, but that was unfair. The…
Economics is about the allocation of limited resources to satisfy unlimited needs. There are about 35 thousand gun deaths each year in the U.S. Another 45 thousand die of strokes, and about 35 thousand die from opioid abuse. That is every year! Only a cumulative of 120 people have died from terrorism attacks in the U.S. since 2012. Yet, where do we spend the money…
Obama was right. Trump is wrong. Stockbrokers are very different from registered investment advisors (RIAs). Stockbrokers can charge all sorts of hidden fees and follow the “suitability” standard, which allows them to put mutual funds into a client’s portfolio that pay kickbacks to the stockbroker. They even increase the price of bonds and make the client pay the increased price. RIAs do not follow these…
Apparently, Mueller has “flipped” Manafort, who will now testify against Trump. I would caution my Democratic friends to be less gleeful. Impeachment is a terrible thing. It is bad for the country. I was opposed to the impeachment of Clinton, and I am opposed to the impeachment of Trump. With one exception! If Mueller finds Trump is merely another sleazy real estate developer, will anybody…
I listened to an interesting lecture yesterday. Some laws of nature are immutable. Water runs downhill. Moths are attracted to lights, and poor people are attracted to wealth. Just as certain as death and taxes, there will be immigration. Reflecting Paul Erlich’s iconic 1970’s The Population Bomb, the speaker predicted social chaos by 2030 or just twelve years hence. Unfortunately, rich women don’t have kids, but…
The bookstore at the University of Pennsylvania/Wharton has always been a favorite of mine. It was always such a pleasure to leaf through the new books, but that bookstore has changed in two ways. First, there are fewer books. Of course, many books are now electronic, on Kindles, etc. In addition, information is now cheap. We drink information from a fire hose and learn less.…
Sitting on my balcony here on the beach, the weather is delightful – warm, gentle breezes with low humidity. Yet, I am looking at white sea gulls but thinking about Black Swans. You know, Black Swan events are those events that happen suddenly, with no warning but seem utterly predictable in hindsight. Far offshore right now, there is Hurricane Florence, hurtling toward my little piece…
On September 11th of each year, we stand and remember the almost three thousand people murdered by sick, crazed terrorists in New York and Washington. Certainly, our hearts still go out to those victims and their families. But, I also think about the collaterally damaged people, like our next door neighbor, who worked in the Pentagon. When the plane hit, thousands of employees began running…
1. Call me shallow, but I enjoy watching NFL football games. 2. Color me patriotic, but I think the First Amendment is fundamental and is actually worth defending. 3. Paint me pointy-headed, but I believe race relations are still incredibly and inexcusably poor. 4. Thus, I defend the right of NFL players or anybody else to protest the poor state of race relations in this…
Economists have flunked and have let America down! All we have done is provide the intellectual ruse that the two political parties use to indulge their worst impulses. For the Republicans, we have provided “supply-side” economics, which argues that all tax cuts improve the economy at all times and under all circumstances. For the Democrats, we have provided “Keynesian” economics, which argues that increased spending…
President Trump is justifiably concerned about our nation’s ongoing trade deficits. At first blush, the latest results are not encouraging. For the first seven months of this year, the deficit is a whopping $22 billion more than last year. It doesn’t appear that his worldwide trade war is making much progress. But, it is premature to make any judgment. For one thing, the stronger U.S.…
News Flash: Fox News is NOT “fair and balanced” . . . but neither are CNN nor MSNBC. Fox is more interested in complaining about “mainstream news” even though Fox has more viewers that CNN and MSNBC – combined. Doesn’t that make Fox the mainstream media that it criticizes? The other two have breathless coverage over the never-ending Mueller probes and the inevitable impeachment –…
Scratch any financial advisor, asking how much a person should save for retirement, and the answer is always “MORE”. That is more than a flip response. Scratch most prospective retirees, asking how much of their income that they will need in retirement, and the answer is usually 70% of current income. That is more than wrong – it is dangerously wrong. One recent study shows…
Existentialists generally have a low regard for “pomp and circumstance” or ceremonies, finding them to be hollow exercises, all form and no substance. They are unneeded constants in a fluid world. We generally avoid them at all costs. Still, the 2 1/2 hour ordeal that was the funeral for John McCain seemed too short. We witnessed powerful people surrendering themselves to all that pomp and…
Predicting an economic recession is difficult enough, even with tons of economic data. For example, we learned this week that GDP grew at a 4.2% annualized rate during the second quarter (Q2). This is very strong growth, indeed. Consumer confidence is at a 17-year high. Not surprisingly, Consumer Spending is robust. The economic data tells us there is no recession on the immediate horizon. Predicting…
To those poor souls burning in Hell – Rejoice – Snow is coming. Long time readers know my strong feelings about Google (AKA Alphabet). I have long thought they should be ashamed. They did NOT say to Americans, in any understandable fashion: “In return for giving you vast amounts of information on the internet, we will sell your personal information to strangers for profits, which…
Some economic data points tell us how things are today, while others suggest how things will be in the future. Consumer Confidence is the latter – it hints at the future. The latest report is the best in seventeen years. Because two-thirds of GDP is consumer spending, the latest Consumer Confidence report suggests consumer spending will continue to increase, pushing the economy even stronger. Also,…
I had an interesting conversation with a fellow retired banker. He is quite the intellectual, as well as a devout Christian. The conversation drifted into the difference between long-term and short-term thinking. He explained that his greatest long-term fear is going to Hell, and his short-term tactic to avoid this is to follow the teaching of Jesus every single day. Then, he asked my greatest…
While I did not always agree with the late Senator John McCain, I always respected him — more than any other elected official. I knew that nobody in Washington loved this country more than John McCain loved it. America is a better place because John McCain was here, and that was all he ever wanted! I deeply regret that I never had the opportunity to…
It was July of 2015 that Donald Trump trashed John McCain the first time. I was deeply offended at the time that Trump trashed a war hero, a national hero, as well as a personal hero to me. That was the line in the sand for me — it was then crystal clear to me that Donald Trump was unfit to be President of the…
Tax lawyers must never sleep! In January, the President unfolded his new tax code. One of the provisions was that deductions for state and local taxes (SALT) became limited to a max of $10 thousand. This shifted some of the tax burden from Red states to Blue states, as Blue states normally have higher SALT. Therefore, Democrats lost more deductions than Republicans. Already, tax lawyers…
If it was wrong then, it is wrong now! I agreed with my Democratic friends that President Clinton didn’t deserve to be impeached for covering up a sexual dalliance between consenting adults. I agree with my Republican friends that President Trump doesn’t deserve to be impeached for covering up sexual dalliances between consenting adults. Yes, there are differences, i.e., the number of women, the hush…
The President said the stock market would crash if he was impeached. The stock market hates surprises. If he was suddenly impeached, the stock market would drop suddenly and scarily, maybe even crash. But, it is inconceivable the Democrats take the House, form committees and take votes in the dark without anybody knowing. His impeachment will not surprise anyone. I expect the market to drift…
The economy cannot read a calendar and does not own a watch. Neither does the stock market! There is much gnashing of teeth now that the current bull market has become the longest or oldest one since World War II. Does that mean a crash is imminent? No! The current bull market does not know it holds any record. Economic cycles and the stock market…
Webster’s Dictionary has four definitions for the word – truth. Apparently, there should be a fifth definition — that truth is the opposite of fake truth . . . huh? Rudy Giuliani tells us that “truth isn’t truth” if based on different facts. Just like there is fake news and non-fake news, there must be fake facts and non-fake facts. If non-fake facts lead us…
Decades ago, television news began as a 30-minute segment in the early evening that simply recited the news of the day unemotionally. As these programs were so profitable, more news programs appeared over time. Then, channels developed with 100% news. To gain viewers, and therefore advertisers, their coverage became increasingly breathless – creating a need to see news. And, Fox started selling breathlessness plus fear…
President Trump has made a serious proposal that deserves serious discussion. Currently, companies traded on stock exchanges are required to report their financial condition and certain other changes every quarter or four times annually. He has proposed that should be changed to every six months or semi-annually. The debate makes for strange bedfellows. Agreeing with the President, we see most corporate managers and most economists. …
Everybody remembers where they were, when Kennedy was murdered or when OJ led the famous white Bronco chase. Investment strategists and economists have similar memories of the Thai baht and Russian ruble collapse of 1997-1998. (Remember Long Term Capital Management?) Their currency problems morphed into a worrisome systemic risk for the entire financial world. The collapse of the Turkish lira is causing the same worries…
My favorite professor at Wharton was the affable but brilliant Dr. Jeremy Siegel. His latest commentary said he “does not see this (the Turkey currency crisis) morphing into a world-wide currency crisis.” I agree! The real significance of this crisis in Turkey is not economic. It is only 1% of world economy. There is some political significance, as Erdogan is unlikely to leave gracefully. But,…
Another Ponzi scheme was just been disclosed. This time, it was in my home town of Virginia Beach. While it was relatively small, less than $5 million, it is a very big problem for the poor investors. Many investors feel they have no way to protect themselves from a Ponzi scheme, but they do! Find out who their custodian is, simple as that. The custodian…