Executive Summary This week’s newsletter builds on the August 18th issue, which examined circular financing in the A.I. space. Billions of dollars are being borrowed and spent to build A.I. infrastructure, with investors betting on miraculous, life-changing results. Much of this issue draws on The New York [...]

Executive Summary Long-term interest rates are typically determined by economic conditions. Last week, in addition to U.S. debt crossing $40 trillion, Treasury Secretary Scott Bessent announced that the Treasury Department would double its bond buyback operation. On Monday, August 24, Bessent revealed his concern about long-term rates [...]

Executive Summary U.S. stock market capitalization has reached nearly $75 trillion, but many investors may not understand what is happening beneath the surface. Alongside enormous interest in AI, margin borrowing to buy stocks has increased (see first graph). Another sign of speculation, sometimes described as gambling, is [...]

Executive Summary Market pundits closely watch the monthly jobs report, but recent large annual revisions—911,000 and 598,000 jobs removed over the past two years—raise questions about its reliability. Since the working-age population grows by roughly 200,000 people per month, job creation generally needs to exceed that level [...]

Executive Summary Recently I have written about the increase in speculation in the stock market as evidenced by margin debt (see first graph). Below I provide two historical valuation measures, including the Price/Sales Ratio, which is less manipulated, to show the extremes to which valuations have reached. [...]

Executive Summary The U.S. currently runs a budget deficit of almost $2 trillion, and total U.S. Federal debt is approaching $40 trillion. With rising interest rates in recent years, the cost to service the debt, which consumes nearly 38% of total income taxes collected, has skyrocketed with [...]

Executive Summary In 2026 oil prices have round-tripped from $57 per barrel to over $110 per barrel and then back to around $70 per barrel (see first graph). With the apparent breach of the ceasefire with Iran, prices recently jumped to $78 per barrel. The blockade of [...]

Executive Summary Economic growth is the sum of the growth in the labor force and growth in productivity. Recent employment data showed the working-age population grew by 1,581,000 over the last year, while the number of people employed dropped by 1,063,000. Those who dropped out of the [...]

Executive Summary New Federal Reserve Chair Kevin Warsh faces a difficult decision on interest rates amid conflicting economic signals and persistent inflationary pressures. The first graph below titled Purchasing Power Erosion Table displays how even the Fed’s 2% inflation goal erodes the dollar. Despite recent declines in [...]

Executive Summary Currently stock market valuations, which are notably bad timing measures, are near all-time highs (see first graph). Investors are paying almost 2.6 times more for corporate earnings than the long-term median price. During similar times in history, investors bought stocks on margin (loans which use [...]