Executive Summary Markets are again extremely overvalued in relation to long-term norms. In this issue, I provide several methodologies to explain the situation. First the trailing twelve-month P/E ratio is 27.2, with the long-term median being about 15. Next is the Shiller P/E or the (CAPE) which [...]

Executive Summary This week’s edition continues from last week in looking at Federal Government data released. Real GDI (Gross Domestic Income) and real GDP are typically the same except for some minor statistical disparities, as described below by economist Dr. John Hussman. However, looking at the first [...]

Executive Summary Many respected economic analysts have been questioning the numbers being reported by the Federal Government. For example, the “new jobs” numbers reported through November 2023 were strong. However, they were just revised down by 439,000, leaving analysts to question the initial reports. Along those same [...]

Executive Summary The S&P500 has been pushed back to speculative highs. The 0dte options activity, discussed in previous newsletters, by large investment firms creates a very risky environment for individual retail investors. Pundits point to excess liquidity in the market as the reason for the highs; however, [...]

Executive Summary Consumer loans, credit cards and other revolving debt now exceed $1 trillion, far above the pre-Financial Crisis and pre-COVID balances (see first graph). Whenever consumers need to borrow money, those who extend credit create new methods to fulfill the need. The latest method is called [...]

Executive Summary 2024 will present significant obstacles for regional banks. Simply stated, regional banks use depositors’ funds to make loans or invest in Treasury and Agency securities. The sharp rise in interest rates in 2023 created significant unrealized losses from Treasury securities. During 2024 and 2025, over [...]

Executive Summary The stock market move this year has primarily been a result of the Magnificent 7 stocks, as well as the change in options trading. The options market is now 11% bigger than the stock market in terms of assets deployed. Utilizing zero days to expiration [...]

Executive Summary Speculators in the stock market are betting on the Federal Reserve Bank lowering the Federal Funds Rate. Although, Jerome Powell has said rates will not be lowered until inflation reaches their 2% target. The first graph below compares the inflation rate of 3.2% (measured by [...]

Executive Summary With last quarter’s credit and government-spending inspired 5.2% annualized GDP print, combined with the Atlanta Fed’s November 22 GDPNow estimate for annualized fourth quarter GDP growth at 2.1%, calls for a recession have moved to calls for a “soft landing.” The ISM November Manufacturing PMI [...]

Executive Summary Citing strong retail sales, financial pundits are espousing a strong consumer. However, they appear to be omitting the impact of inflation. “Real” or inflation-adjusted sales have been flat or down compared to last year (see first graph). Many, who had paid down credit card balances [...]