Notes on the Week Ahead

As one year ends and another starts, I often think about a personal balance sheet for the year gone by and make some resolutions for the year ahead. For myself and our own family, 2023 was a pretty good year, particularly relative to the pandemic-scarred years at the start of this decade. As for resolutions, apart from the usual healthy-living aspirations, I am determined to spend less time lookin...

As winter weather envelops the homes of New England, our thoughts naturally turn to warmer days and maybe a beach house on Cape Cod. Of course, if you intend to rent such a house for a week next summer, it’s pretty much a roll of the dice. You could get lovely weather or it could rain every day. However, if you plan to buy a beach house on Cape Cod, you really only need to understand the climate....

One of the least pleasant aspects of winter is driving on icy roads as the snow piles up in front of you. Long experience has taught us that winter driving is possible. But it is slower, with a narrower margin for error, and a greater chance of sliding off the road. Similarly, if we extend the economic forecast horizon to encompass not just 2024 but also 2025, it’s still possible to trace out a “s...

Last Wednesday, the University of Michigan released its final reading on consumer sentiment for November, with the index coming in at 61.3, up from its flash reading but down from October and worse than 92% of monthly sentiment readings since 1978. Meanwhile, the “misery index” for October, calculated as the sum of the unemployment rate and the year-over-year CPI inflation rate, came in at 7.1%, b...

If you do a quick google search on the phrase “tensions rising”, you get 230,000 hits. If you search the phrase “tensions falling” you get 3,700 hits. One of the cardinal rules of journalism is to only report on rising tensions and never improvement. However, in recent weeks, there has been a quiet decline in tensions across a number of dimensions. This is being matched by falling inflation pressu...

One almost unnoticed innovation in our modern world is the tracking app. Whether you’re booking a car service, enduring a long flight or just waiting for a pizza, with a click or two, you can find out exactly how long it should take the car, flight or pizza to reach its destination. These apps are useful for planning purposes and provide a level of reassurance that you are, in fact, headed to wher...

On August 16th, 1858, the first telegraph message was transmitted across the Atlantic on a cable newly laid on the ocean floor. The line speed was slow and the cable failed a few weeks later but it was a start. By the late 1860s, a second cable, made of better material, was in operation and telegrams began to be sent more regularly, cutting the time required for transatlantic communications from w...

“We just came for one thing, too”. Sari and I were meandering toward the checkout in a crowded Costco on Saturday morning and I was reflecting out loud on our accumulation of a substantial and diverse pile of goods, although we had come to buy just one thing. But we were not in the same league as the woman who’d overheard me. She may have come for just one thing too, but the lower rack of her cart...

Investors in the week ahead will likely be most focused on the aftermath of the terrible attacks in Israel over the weekend. The consequences of this violence are, of course, first and foremost a human tragedy for all the families affected and they are in our prayers at this time. However, an initial rise in the dollar and oil prices in response to these attacks serves as a reminder of the potenti...

In an idealized world of medical practice, you would go to the doctor, describe a few symptoms, undergo a few tests and then listen carefully to the doctor’s diagnosis, prognosis and prescription. The diagnosis might well be due to something entirely out of your control and the prescription would often be a pharmaceutical. However, very frequently, the prescription would be in the form of advice o...

To tell the truth, I haven’t done much hiking up mountains recently.  I did scale a few minor peaks, years ago, when our sons were in boy scouts.  However, it was always hot weather heading up and, between separating those young gentlemen who decided to fashion light sabers from tree branches and attempting to corral those whose first instinct was to chase into the woods after squirrels, it was a...

My father worried out loud, broadcasting his concern about a wide range of issues, ranging from the suspicious surplus of toothbrushes in the upstairs bathroom and his children’s acquisition of strange accents to declining standards in public education and the ominous state of the government’s finances.  My mother fretted more quietly, sparing her vocal chords at the expense of her sleep.   

Finally, traditional indicators also may be missing the mark in predicting persistent inflation.  In particular, in the June Summary of Economic Projections, most members of the Federal Reserve’s Federal Open Market Committee in effect professed that an unemployment rate of 4% or higher was necessary to attain the Fed’s long-term objective of 2% inflation.  However, the unemployment rate has now b...

For almost 60 years, the British journalist and New York resident, Alistair Cooke, recorded a weekly, 15-minute radio commentary entitled Letter from America. As a teenager, I would listen to it, late at night, on the BBC World Service. Cooke had a beautiful speaking voice and a remarkable way with words, as he painted landscapes of American culture and portraits of America’s personalities. Letter...

The only real drawback to my job is the number of flights I have to take - but this is a serious drawback when evening flights get delayed. Without the energy to do any productive work, I often combat the misery by playing board games on my iPad and I’ve lately added Monopoly to my repertoire.  I used to play Monopoly as a child, of course, but my strategy has evolved with the years. When I was yo...

To be good long term investor, you need courage and you need brains.  However, you need them in different quantities at different times.  In the depths of a bear market, you mostly need courage since it’s almost a “no-brainer” that the economy will recover and will lift financial assets with it.  In a bull market, its mostly about brains since, while people are less haunted by economic fears, valu...

As the calendar flips to August this week, consumers, workers, investors and the Federal Reserve all have reason to be pleased with recent data. Stock market returns have been strong all year, economic growth has been surprisingly resilient, unemployment remains very low and, despite all of this, inflation has fallen sharply. The Fed continues to tighten in a manner that appears aggressive given t...

The pandemic was my excuse to abandon piano lessons.  It wasn’t that I wouldn’t practice or didn’t enjoy pounding away on the keyboard.  The problem was that my piano teacher, Tatiana, is a perfectionist.  She wanted me to get it exactly and precisely right and so I practiced the same piece over and over.  She would smile as I did my lessons but it was a strained and pathetic smile, as the masterp...

Over the centuries, an abiding tension among many major religions has been the pendulum of severity. One era will be marked by a relaxed view, where smiling clergy make liberal allowances for minor transgressions. However, this is often followed by a puritanical reaction, wherein the flock is warned that the path to salvation is an exceedingly narrow and rocky one. The Federal Reserve seems to hav...

When I first arrived in this country, 40 years ago this summer, my strongest impression was that America was a land of optimists. European economists, politicians, commentators and consumers all saw the outlook as dark and troubled. However, Americans, facing equal challenges, seemed to see the glass as half full.

I have a sad tale to relate.  After dodging Covid for the last three years, my wife Sari and I were at a wedding two weeks ago and the virus decided to crash the party.  Two days later, I tested positive and Sari tested negative.  I’ll spare you the grim details, since almost everyone has had a similar experience.  However, despite only mild and fleeting symptoms, I experienced a rebound and so I’...

One of the advantages of being back in the office, when I am actually in the office, is I get to hear a variety of opinions.  These opinions are sharply divided today on the issue of a U.S. recession.  One camp feels that recession is inevitable.  Another sees a path to a “soft-landing”.  Of course, this argument really refers to a recession starting in the next quarter or two.  Sooner or later, a...

Markets in the week ahead will be focused on Wednesday’s FOMC meeting. We expect the Fed to leave the federal funds rate unchanged although both the post-meeting statement and the dot plot will likely emphasize that inaction this week should be considered “skipping a rate hike” rather than putting an end to monetary tightening. Indeed, Fed communications could explicitly warn of a possible further...

In 1787, on the last day of the Constitutional Convention, a lady asked Benjamin Franklin what form of government had been agreed to.  He famously replied, “A Republic – if you can keep it”.  He was, of course, alluding to the danger that partisanship or ill-advised policies could yet return the young country to the monarchy it had so recently escaped. 

I am shockingly, comically bad at golf.  However, that doesn’t stop me from occasionally watching more gifted souls play the game.  One of their techniques is to examine a putt from multiple perspectives.  They take a careful look at the green as they come up to mark their ball, look at the putt from the side, squat down to consider it from the opposite direction, and generally scout out the lay o...