The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

The Miyagi Market


Back in 1984, there was a popular movie called “The Karate Kid”. Mr. Miyagi was the mentor, teaching karate to a kid. Because karate moves are complicated, he simplified one move by telling the kid “Wax on, wax off”. The stock market has become “Risk on, risk off”. Yesterday was obviously “risk on”, as investors … Continue reading The Miyagi Market

Thinking About Friday


The first Friday of each month is the most important Friday to the market, because that is the day that the monthly “Jobs Report” is issued. The current forecast is an increase in jobs of about 144,000 and the unemployment rate holding at 9.6%. Creating that many jobs is certainly much better than losing 700,000 … Continue reading Thinking About Friday

One More Time . . .


The most frequent question I get is “So what? Jim, your analysis is interesting, but you don’t say what we should do now.” The reason is that I am not permitted to give investment advice to anybody who is not a client, as well any anybody whose investment needs are not clearly understood. That is … Continue reading One More Time . . .

Two Steps Forward and One Step Backward


Yesterday morning, the Commerce Department looked in their rear-view mirror and raised their estimate of this year’s third quarter GDP growth rate. We did better than expected. Yesterday afternoon, the Fed looked thru their windshield and lowered their estimate of GDP growth next year, saying the economy is doing worse than they expected previously. Conflicting … Continue reading Two Steps Forward and One Step Backward

The Wall of Worry


The stock market is always trying to climb a Wall of Worry. Today, the Wall was very tall, indeed! The day began with North Korea rattling a very loud saber. It continued with lots of unrest in Ireland about the pending, distasteful austerity package they have to swallow. It finished with conflicting economic data in … Continue reading The Wall of Worry

Attack of the G-Men


Over the weekend, we learned the SEC was launching a major crackdown on insider trading. On Monday, they raided the offices of three hedge funds. Good! After the Global Financial Crisis, the 52% drop in the stock market, and the mysterious Flash Crash in May, it is no wonder that retail investors are distrustful and … Continue reading Attack of the G-Men

The Hidden Inflation


The Fed is justifiably worried about deflation,which is more worrisome and tenacious than inflation. That is the reason they launched the latest round of quantitative easing. Many people don’t see the danger. Even the most recent data shows no serious indication of either inflation or deflation. Yet, if you look deeper, you see the U.S. … Continue reading The Hidden Inflation

The Grim Reaper


If you do nothing else today, read the article titled “China’s State Capitalism Sparks a Global Backlash” on the front page of The Wall Street Journal. It is the secret to China’s success and the reason we should be afraid, not merely worried. China has the ability to put the entire force of their nation … Continue reading The Grim Reaper

In Your Eye, Mr. President


It has never happened before. The credit of the United States was downgraded yesterday. While this is considered inevitable if we continue to run such deficits, it was nonetheless a surprise yesterday. But, the timing was interesting. It is not unusual for lots of acrimony before a G-20 Summit. This one is worse than usual. … Continue reading In Your Eye, Mr. President

Don’t Call My Kettle Black!


Regardless of who the President is, he needs a thick skin. Certainly, President Obama does as he begins the G-20 Summit in Korea. It may even be deserved. For years, we have criticized China for maintaining an artificially cheap currency, which helps their exporters. With QE2 or quantitative easing, we are greatly increasing the supply … Continue reading Don’t Call My Kettle Black!

The N-11


Did anybody see the new IMF report raising the estimated GDP growth rate for the 47 countries of Sub-Saharan Africa for the second time this year . . . from 4.5% to 5%? Those traditionally poor nations are growing more than twice as fast as the U.S. Does that bother anybody else? As an economist, … Continue reading The N-11

Enjoy the Ride . . . Again


After a highly eventful week, the stock market is at a two-year high, about the same level as we were when Lehman was allowed to collapse. Nonetheless, that is some three thousand points on the Dow — below our all-time high in 2007. The market is still down 21% from those heady days. Think back … Continue reading Enjoy the Ride . . . Again

An Economist’s Lament


The study of economics has always been an enjoyable intellectual pursuit. There are lots of arcane terms and inside jokes that economists enjoy discussing and sharing. But, it seems we have reached a tipping point where economics is becoming polluted by politics, and I’m sad about that. Should I parse my thoughts to support one … Continue reading An Economist’s Lament

Good Jobs Report . . . finally


The most important monthly economic report each month is the “Jobs Report.” The last few months, the report has shown a sadly weak economy, producing few jobs. Voters took the President to task for that on Tuesday. Today, the Labor Department announced that the private sector created 159 thousand jobs, twice what was expected. This … Continue reading Good Jobs Report . . . finally

Political Pundit George Carlin ?


I think the late comedian was the first to describe our electoral process as “political masturbation”, a very intense, focused effort to accomplish nothing. The Libertarian view is that elections merely change the Masters, with the slaves remaining the same. It is just a different set of thieves. Maybe, that’s a little cynical. OK, that’s … Continue reading Political Pundit George Carlin ?

Election Day . . . Finally!


In this world of 24/7 cable news, which spin the news as well as report the news, it is easy to become both confused and depressed. Therefore, I recommend a disinterested foreign perspective to balance the right-wing Fox News and the left-wing MSNBC. Religiously, I read The Economist, a newsweekly magazine from England and recommend … Continue reading Election Day . . . Finally!

Rest Up This Weekend


Next week, the market could be exciting, maybe too exciting! As I’ve been predicting all year, the market will begin to rally when the election outcome comes into focus. I expected that in October and was pleasantly surprised when it started in September. Historically, the market likes gridlock, which appears to the outlook. Another reason … Continue reading Rest Up This Weekend

Nailed it!


Economists get ridiculed frequently and richly deserve it. In fact, they usually enjoy it! However, today was a good day, in that they accurately predicted the GDP growth rate in Q3 would be 2.0%, compared to 1.7% in Q2. This makes it even less likely we will see a “double-dip” or experience the worst of … Continue reading Nailed it!

The Halloween Indicator


Of all the many market indicators, this is the most useless but must be fun, as it rolls out year after year. Here it is: Since 1950, the stock market performs best from the last trading day of October to the end of April. (Of course, there are always obvious exceptions, like the oil embargo … Continue reading The Halloween Indicator

Paddling Hard . . .


Arthur Conan Doyle once described how Sherlock Holmes unraveled a mystery because of the “dog that didn’t bark”. That’s reminds me of the G-20 meeting in Korea. China is clearly manipulating its currency, but so is the U.S. But, there was little furor about this. While the finance ministries are warning of a currency war, … Continue reading Paddling Hard . . .

Please Take My Money?


Yesterday, the Treasury Department issued $10 billion in five-year bonds. In other words, they borrowed another $10 billion. But, something was different . . . very different. Instead of repaying $10 billion at the end of five years PLUS interest earned by the bond-holder, the government will repay $10 billion LESS interest paid to the … Continue reading Please Take My Money?

A Benefit of Aging


One of the benefits of aging is that a person has had time to benefit from all the good advice they have received over the years. One of the disadvantages is that you cannot remember who gave you the advice . . . Some of the best advice I received as a young investment advisor … Continue reading A Benefit of Aging

Keyboarding Burnout?


With regret, I have noticed my blog gets neglected whenever I finish doing my quarterly column for Inside Business. (You can receive copies by email at no cost by signing up at To be even more confessional, I have also been working on a book, which is still another excuse for my keyboard burnout. … Continue reading Keyboarding Burnout?

S.O.S. = Same Old Song . . . Whew!


The famous fat lady sang this morning, and, thankfully, didn’t sing anything surprising. The rate of unemployment remained constant at 9.6%, instead of increasing to 9.7% as expected. Total non-farm jobs decreased by 95 thousand, far better than the 600-700 thousand monthly decreases we saw last year but way below the 250 thousand a month … Continue reading S.O.S. = Same Old Song . . . Whew!

. . . Waiting for the fat lady . . .


She will sing this Friday morning, when the monthly Civilian Unemployement Report or “Jobs Report” will be released. To the market, this is the single most important economic report each month, probably too important. But, it is even more important this month. Yesterday, the Non-Manufacturing ISM Report indicated there was more job growth in the … Continue reading . . . Waiting for the fat lady . . .

Sometimes . . . The Truth Hurts!


For years, economists and financial analysts have talked about the BRIC countries, i.e., Brazil, Russia, India, and China. As a group, they were rapidly growing economies dependent upon export growth. As a group, they need to curb their internal savings by individuals and increase consumption spending by those individuals. This is a happy problem. Now, … Continue reading Sometimes . . . The Truth Hurts!

Final Thoughts on China


All of my life, the U.S. has been the engine of growth for the world. That is no longer the case, as China has clearly taken our place. While that may be sad, I don’t think it is anything to be feared. During my travels over the last two weeks or so, I’ve focused on … Continue reading Final Thoughts on China

Save Your Breath, America!


The Bush Administration started applying pressure on China years ago, to allow their currency to increase in value. This makes their exports more expensive to foreigners who buy them, like the U.S. As a result, foreigners buy less, which means China produces less, and fewer Chinese workers are needed. Layoffs increase and so does social … Continue reading Save Your Breath, America!

Peeling the Onion….


Last week, I marveled that China was making the same mistake as the U.S. by letting its Social Security system get as out of control as ours. Digging into this has not been easy, but I have learned that: 1. It started in 1978, when China was still a “socialist-paradise”. 2. By 2030, it is … Continue reading Peeling the Onion….

Deja Vu…..Not This Time


Back in 1986, I was a Vice President with Citibank out of New York, and based in Dallas. With no data to go on, except a general sense of unease about the possibility of serious over-building, I rented a large van for a full day and invited all the best bankers I could to spend … Continue reading Deja Vu…..Not This Time

The Triumph of Madison Avenue


Certainly, one of the most apparent changes in China from my last visit in 1987 is the western style of clothing, which has been completely adopted by the Chinese. It is not unlike a typical walk thru Chinatown in San Francisco. Who said advertising doesn’t work? Yet, this is one of those discussions where business … Continue reading The Triumph of Madison Avenue

A Day in the Life of ….China


This nation boasts the greatest number of newspapers, with over 400. It is also accused of having jailed the most jounalists, number unknown. Still, a good read of one day’s edition offer insights into Chinese thinking see 1. Pressure from the U.S. to allow the Chinese currency (Yuan) to appreciate is not motivated by … Continue reading A Day in the Life of ….China

What Mao Meant…..?


Mao said that all great men have climbed The Great Wall. What he meant to say was “All great financial advisors have . . . “

A Rocker Got it Right


As a child of the Cold War, I just assumed I would die in a nuclear war. When I first heard the song by rocker Sting, called “Do the Russians Love Their Children Too?”, I was caught a little off-balance by the question. Yesterday, I watched an older lady stop a young mother to admire … Continue reading A Rocker Got it Right

Paging Gloria Steinam


The flight attendants for Air China are young and pretty, obviously a proven branding campaign for generations. However, just like all flight attendants everywhere, they were over-worked, harassed, and annoyed. Rolling their eyes seemed to be a primary job requirement. Yet, they seem to have more authority than U.S. travelers normally see. When they tell … Continue reading Paging Gloria Steinam

A Troubled Economic Paradise


In 1987, I made my last trip to China. Mao had only been dead 11 years, and Deng was still trying to figure out how to use Soviet-style Five Year Plans to unleash the Chinese economy. To me at that time, it was a large, Second-World nation with an agrarian economy. My principle take-away was … Continue reading A Troubled Economic Paradise

More breadcrumbs leading to . . .


Yesterday, it was announced that wholesale inventory levels rose 1.3%, which is the best performance in two years. Sometimes, a rise in inventory means sales have decreased, causing inventories to backing up. However, it was also announced that sales at the wholesale level increased twice as much as expected. This means wholesalers are re-stocking their … Continue reading More breadcrumbs leading to . . .

Stealth Globalization


There is no good measure of globalization, a fact that drives economists crazy. Traditionally, we have used the Baltic Dry Index, which measures the cost of shipping dry goods around the world. It’s a good start, but here is another. Every three years, the Bank for International Settlements in Switzerland measures the volume of trading, … Continue reading Stealth Globalization

A Good Morning, Indeed!


It’s nice to start the day with two pieces of good economic data. First, initial jobless claims dropped more than expected, down 27,000 to 451,000. That makes three jobless reports in a row that have been better than expected. It certainly smells like a bottom in an awful jobs market. Second, the trade deficit shrank … Continue reading A Good Morning, Indeed!


Contact Us Bottom