Executive Summary In September 1981, the yield on the 10-year Treasury Note peaked at around 15.8%, and the annual inflation rate was about 10.8% resulting in a “real” (after inflation) rate of about 5%. Today, the 10-year Treasury is yielding about 1.40%, and inflation in November rose [...]
Executive Summary Corporate profit margins are being squeezed by upward wage pressure and downward productivity, all while stock prices are rising. The second graph below of the Wilshire 5000 Index divided by GDP shows bubble values which are almost 50% higher than the peak of the 2000 [...]
Executive Summary The Volatility Index, known as the Vix, is a projection of future volatility and fear in the market. Over the long run it averages about 18. A move above 20 means risk is building, and a move over 30 indicates higher daily volatility and downside [...]
Executive Summary The Friday after Thanksgiving was a short trading day which incurred steep losses in many asset classes. News outlets blamed the identification of the Omicron variant of Covid19 as the cause. However, last week’s update indicated many “red flags” are waving according to Dr. John [...]
Executive Summary In this week’s Update, I share important information published in an interim comment by economist Dr. John Hussman. He uses numerous market indicators to gauge market extremes, which all culminated last Friday, November 19. While claiming he is not “calling the market top,” the risk [...]
Executive Summary Everyone is paying more for groceries and gasoline, so inflation is the concern of the day. The Federal Government stimulus payments provided short-term boosts to demand for goods and services during the pandemic. However, now prices are being propped up by supply constraints rather than [...]
Executive Summary In January 1999 the Shiller P/E broke 40 and by December of 1999 peaked at 44. Having been in the business at that time, I recall many in the industry looking back in hindsight commenting those overvaluation levels would never be reached again. But what [...]
Executive Summary As the everything bubble remains in the “Blow off Phase” (first graph), the third quarter GDP number came in at only 2%. The negative COVID impact to GDP and the resulting stimulus positive impacts can be seen in the second graph below. Now the stimulus [...]
Executive Summary Drawing upon Dr. Lacy Hunt’s Quarterly Review and Outlook for the third quarter 2021, this week’s commentary looks at the relationship between debt and economic growth. The amount of new debt needed to produce a new dollar of GDP currently is near an all-time high. [...]
Executive Summary In the past China’s fast-growing economy was driven by production of exports for the West. However, post the Great Recession exports waned, so China turned to infrastructure spending for growth. This resulted in the over-development of buildings and entire ghost cities (never occupied). Now the [...]