Executive Summary The Federal Reserve began cutting short-term interest rates again in September 2024 to address a weakening economy; however, the bond market remains skeptical about the effectiveness of these measures in controlling inflation. Despite several rate cuts and the introduction of Reserve Management Purchases (RMPs) – [...]

Executive Summary In this missive I will share how investors must feel confused when hearing contradictory information about the economy. The wealthy may feel the economy is strong as long as the stock market bubble is growing, but others may feel as they did in previous recessions. [...]

Executive Summary Japan’s Nikkei 225 stock index peaked in 1989 and took 34 years to recover after the dramatic decline (see first graph). In an unprecedented move to combat deflation and spur growth, the Bank of Japan pursued ultra-loose monetary policies – zero and negative interest rates, [...]

Executive Summary In 1935 Franklin D. Roosevelt signed the Social Security Act into law. One could claim full retirement benefits at age 65. At that time life expectancy for a 65-year-old was 12 more years. In 1945 there were 42 workers contributing for each person drawing benefits. [...]

Executive Summary The Fed is boxed in on how to deal with inflation, with the weakening jobs market combined with the possible inflationary impacts of tariffs, proposed stimulus, and lower interest rates. In the first graph below, one can see from 1967-1983 inflation came in three waves [...]

Executive Summary Much of this issue is from a recent Reuters article by Edward Chancellor entitled "Stock market frenzy is a loud echo of the 1990s.” “Fred Hickey, editor of The High-Tech Strategist publication since 1987, used his knowledge of the high-tech industry to highlight wild market [...]

Executive Summary During stock market bubbles, investors become convinced markets can only rise. Justifications for high valuations such as it is a “New Era” (1920’s), a “New Economy” (1990’s) or some other new paradigm such as the age of AI (artificial intelligence) has arrived. However, economist John [...]

Executive Summary A good measure of the reasonableness of stock market prices is the Price to Sales ratio, mainly because gross sales numbers are hard to manipulate. With a historical average of 1.81, the current 3.38 number (see first graph) is over three standard deviations from the [...]

Executive Summary Economist John Mauldin wrote several articles reviewing hedge fund manager Ray Dalio’s book “How Countries Go Broke: The Big Cycle.” From Mauldin’s Part 1 article he said: “I described the five stages of Dalio’s Big Debt Cycle. I dubbed them the ‘Stages of Grief.’ Briefly, [...]

Executive Summary From the bottom of the Financial Crisis in March of 2009, the S&P 500 climbed to a recent high of around 6700. Along the way from 2009 to current, the Federal Government over tripled the money supply and created numerous programs to give away money. [...]