One so-called market indicator of a recession in six to twelve months, is called interest rate inversions, and it means nothing. The economic data does not indicate a high-probability of recession, although it does suggest a minor slowdown, which is called a “growth-recession.” A regular recession produces a decrease in GDP. In a growth-recession, GDP continues to increase albeit at a slower rate. A growth-recession…
When the Fed raised interest rates last December, the weight of economic data justified it, although I wrote then that the increased quantitative tightening (QT) was unnecessary. Hindsight is a wonderful thing! While I was right about QT, raising the interest rate was clearly a mistake. Last month, the Fed admitted their error and reversed course. After all, they are human. Unfortunately, that error legitimized…
I believe the National Rifle Association has caused more harm to our country than the American Communist Party AND the American Nazi Party, combined!
Traditionally, American politicians jump on a soap box, rip their shirt off, and pound their chest about a “strong dollar.” It is a “flag, motherhood, and apple pie” kind of thing. Every President has wanted a strong dollar, until President Trump. That is one reason he has been so critical of the Fed. He has a good point, as the dollar is up 11% over…
The American Institute of Economic Research has never been confused with the Institute of Comedy Research. However, their current issue contains an amusing article by its Editorial Director Jeffrey Tucker. He states two “gangs” are ruining the world, by ignoring “real” economics. The Gang of the Right says the road to redemption is lined with tax cuts, while the Gang of the Left says the…
During my education years, I learned to use the “scientific method” in reasoning. During my marriage years, I developed a grudging respect for “feminine intuition.” On a recent car trip, we were passing thru some no-name place and pulled off the Interstate for gas. When I got back into the car, my wife asked “Did you see her?” Like all husbands, I responded with “Huh?” …
I applaud President Trump for — finally — dealing with the trading abuses of China. However, as I’ve written many times, I wish we did not negotiate three different trade problems at one time. Contrary to popular belief, NAFTA II is still not complete, as Mr. Trump has not negotiated with the House to pass the bill. The nascent European negotiation has focused on cars…
Today, the Dow dropped over 800 points because interest rates inverted. What does it mean? Very little! It was discussed in this blog on August 9th. Take another look here: False Alarm
The nation of Argentina has been circling the drain since 1946, when Juan Peron became president. Since then, I’ve lost track of how many crisis the nation has endured, such as depressions, devaluations, and defaults. Their stock market dropped 38% on Monday, which is not surprising since interest rates have jumped to 74.8% from 63.7%, and their currency has dropped 30%. Their budget deficit each…
How often have you heard someone say “I can’t wait until I turn 65 and retire.” That’s crazy talk! First, age 65 as a retirement age was set long before we enjoyed greater life expectancy. Second, with unemployment at 3.6%, the sun is shining, and it’s time to bank more money. Third, you can no longer receive Social Security at age 65. It is 66…
President Trump made improvement in manufacturing a campaign priority in 2016. For two years, that sector did improve but has started to falter. It would easy to say this is entirely due to the Trump’s trade war, but that doesn’t tell a fair story. Worldwide, manufacturing is slipping, for reasons unrelated to the trade war, and that worldwide slippage is weighing on our U.S. manufacturing…
Farmers have long been respected as tough and scrappy, working hard and facing constant hardship — true American heroes. Today, farming is just another industry, albeit an important one. I just read an analysis of the agricultural industry that is too dense to summarize. However, here are some of the factoids I found interesting: The industry is not hurting as much from the tariffs as…
If you loan me money and want repayment in one year, there are few things that can go wrong over that year, which would make me unable to pay. If you loan it to me for thirty years, there are many more things that can go wrong, making me unable to pay, especially inflation over such a long period. As the time to repayment increases,…
Sociologists have marveled about the increasing divorce rate for the over-60 age group. One consequence of our increased life span is that we’re out-living our marriages. As a financial planner, people come to me for hard numbers and are disappointed when I remind them there is more to retirement planning than finding “the magic number.” Men in particular are prone to think that the hard…
Not too many years ago, I listened to a native of Fort Worth, Texas, discussing food with a person from Liverpool, England. It was a good-natured discussion of who had the best food. Actually, it was hilarious, because they couldn’t understand each other. They were both speaking English, that is the English they are used to, and they still could not understand each other. Their…
I couldn’t bear watching more than 15 minutes of the Democratic debates. It was painful. While I’m sure they are all very nice people, this process morphs them into dancing monkeys, answering questions designed to entrap and defending proposals that will never be heard again. It is little different than the equally stupid process used by the 16 candidates for the Republican nomination in 2016. …
Yesterday, the Federal Reserve System of the United States of America did two things. First, they decreased interest rates by a quarter point (25 bps). The stock market however wanted a half point (50 bps), and the Dow promptly dropped 333 points. The market also wanted the Fed to promise that this was only the first decrease in a series but were disappointed by that…
To your Bucket List, be sure to add a visit to The National Museum of Peace and Justice in Montgomery, Alabama, which was one of the primary slave trading centers in the United States. (Please don’t call it the “Lynching Museum” as it is more commonly known.) As a non-racist Southern boy, I was certainly aware of the barbaric treatment of blacks by white people. …
No animal ever had an opinion on evolution. No plant was ever asked to vote on evolution. But, they changed over time — they evolved anyway. Originally, there was no study or discipline known as economics. It was a period of chaos, with extreme boom/bust and with harsh economic consequences during those inevitable downturns. Then, Austrian economics became the dominant economic philosophy, which said revenues…
No serious person thinks we should have zero border security – none! The political perspective is that (1) if you worship at the Republican altar, you must believe as instructed and (2) if you worship at the Democratic altar, you also must believe as instructed. Nonpartisan thinking cannot be tolerated! The religious perspective on immigration is . . . . . . . . .…
“Past performance is no guaranty of future performance” — how many times have we heard that? Standard & Poor’s just released a report on “persistence” or how long does a high performing mutual fund continue to perform so well. They looked at all 546 equity mutual funds that were in the top quartile (top 25%) of March 1st, 2017 and compared them to the same…
I had a roommate in college that was obsessed with women’s hair. If he met a nice girl in English class, he wouldn’t say that. He would say he met Brunette in English class. He never used their names. All women had just three names – Blond, Brunette, or Redhead. He was not interested in them as individuals. It was too easy for him to…
Years ago, my parents gave me a little “lockbox” with a key about the size of a loaf of bread, for my important papers and other treasures, like my collection of baseball cards. When I returned from the Army, the key was nowhere to be found. Drilling it open cost more than the original cost. The locksmith laughed at me, because thieves bring stolen lockboxes…
Raghuram Rajan recently wrote The Third Pillar: How Markets and the State Leave Community Behind, and I attended the lecture he gave in Las Vegas. He explained a healthy society needs three strong pillars, i.e., government, economy, and community. He argued that we have a strong government and strong economy but community no longer exists for mobile Americans, especially those who further self-segregate themselves via the…
For my inner economist, the first Friday of each month is the most interesting, as that is when the monthly “jobs report” is released by the Bureau of Labor Standards or BLS. This morning’s report (it is always released at precisely 8:30 AM.) showed a slight uptick in the unemployment rate to 3.7 percent. More importantly, the number of jobs created in June far exceeded…
When I went to Hong Kong in 1984, that city-state was still governed by the British but long-coveted by China. I found that city to be a vibrant, exciting international financial center, with heavy traffic, crowded sidewalks, and excitement in the air. One day, when I went on my morning run, the city was suddenly quiet and eerily empty. It seemed like a different city.…
For those who want to read my latest column in Inside Business before it hits the presses, you can find it here: https://pilotonline.com/inside-business/news/columns/article_9527f304-99ad-11e9-a8cc-c7a905cada61.html
There are many ways to spend time, without watching well-meaning windbags pretend to debate each other. Last night, when changing channels, I landed on such a “debate.” During the five seconds required to enter another channel number into my remote, I heard one windbag suggest that community college should be free. I remember thinking “fat chance” before that windbag was gone. Four or five commercials…
Sparing you the many details, the relentlessly positive economic data over the last few years has taken a turn during the second quarter (Q2). The first look at Q2 GDP growth will not be available for another three weeks, but I expect it to be substantially less than Q1 growth rate of 3.1 percent, which was skewed higher by inventory build-up ahead of the tariffs. …
So, you have searched your soul, looking for the real reason you think you want to retire . . . And, you have verbalized your thinking to a trusted loved one, giving airtime to both your thoughts and their thoughts . . . And, you have prepared a budget for a good economy and another for a bad economy . . . Now, you want…
It seems like a long time since December, which was the last time the Fed raised interest rates. The stock market promptly had a “hizzy-fit” (whatever that is?), and the President began threatening to fire the Chairman of the Fed. This week, the Fed had its normal policy meeting and strongly suggested it would cut interest rates at the July meeting. Wall Street loved it! …
You’ll recall the President’s famous boast that he could shoot somebody in the middle of Fifth Avenue and not lose a single member of his “base.” That was an interesting comment, and I started thinking about the origin of his base. At first, as a student of Hillbilly Elegy, I thought it was logical that the millions of people who were victimized by globalization and…
Ever since Lou Eisenberg wrote The Number in 2006, those thinking about retirement have focused on the one big magic number that will take care of them the rest of their lives. How big a “nest-egg” is big enough? Unfortunately that number is income-focused. You don’t know if any number is big enough, if you don’t really know your expenses. Your nest-egg is big enough only…