Notes on the Week Ahead

My wife, Sari, was born with a lead foot.  By all rights, she should have accumulated a bountiful harvest of speeding tickets over the course of her career.  But she understands how the system works.  If she is, for example, buzzing along at 75 in 55 mile-an-hour zone and sees the state police ahead, she dons a sunny smile and gently taps on the brakes.  This action, of course, still leaves her we...

When my wife, Sari, was 9 years old, a tornado touched down in Grand Rapids, Michigan and destroyed most of her home.   Luckily she and her family were at her grandparents that evening and so weren’t there when the storm hit.  But the next day, when they all drove back to the neighborhood, it was barely recognizable with many houses destroyed or badly damaged.  Her great concern, at the time, were...

After a long period of absence, I’ve visited New York multiple times in the last month. Each time, the city has seemed more bustling than the week before, with fewer masks, more crowded restaurants and more New Yorkers expressing their emotions by their habitual cheery and liberal use of their car horns. As cases of Covid continue to fall, it is as if springtime has arrived in the city and in the...

Some months ago, as the snow melted off the lawn, a rabbit appeared at the end of our back yard. Our twin shih tzus, Buddy and Bruiser, spotted the intruder and, barking furiously, headed off in pursuit. The bunny, having given our fearless duo a head start, then bounced off into the undergrowth, cotton-tail waving in the air, leaving them barking at each other as if to say “Where’d he go? Where’d...

Next week, the Federal Reserve holds its fourth FOMC meeting of the year.  After the meeting, they will release a statement, very likely communicating no change in policy.  Fed Chair, Jerome Powell will likely emphasize the same message in his post-meeting press conference.  However, for investors, the most important information will be delivered in numbers rather than words, as the Fed discloses...

I recently read a book, entitled The Code Breaker by Walter Isaacson, about a revolution in gene editing prompted by the discovery of something named CRISPR in bacterial DNA. I won’t delve into the details except to say that the book is a great read and made me appreciate, once again, the relative simplicity of the economic systems I spend most of my life pondering compared to the extraordinary st...

In 1895, at the age of 60 and in some financial difficulties, Mark Twain embarked on a speaking tour of the British Empire to pay the bills. He later published an account of his travels in a book entitled: Following the Equator.

The all-boys Catholic school where I spent my formative years was a traditional establishment.  The air was thick with chalk dust and a steady tension between a rebellious student body and an establishment which resorted to corporal punishment to maintain discipline.  However, a second line of defense for the authorities was the issuance of report cards every six weeks.  Twice a quarter, the Headm...

Last Friday’s April Jobs report was clearly much weaker than expected. On average, analysts expected a payroll job gain of 1,000,000, with the unemployment rate falling from 6.0% to 5.8%. In the event, non-farm payrolls rose by just 266,000 and the unemployment rate rose to 6.1%.

On May 22nd, my wife and I plan to eat dinner at a restaurant. In normal times, such a news item would not exactly make the family headlines.  But since the pandemic struck, we have taken a cautious approach and eaten at restaurants only once or twice and then only if outside dining was available.  For the last six months, a New England winter has deprived us of even that option. However, on Wedne...

Memories of the great inflation of the 1970s have faded in the public’s consciousness.  Half of today’s population wasn’t even born when inflation stalked the land and, in the decades since, the failure of inflation to reappear has naturally eroded interest in the subject. 

On Friday, I had the privilege of speaking at the annual strategic investment symposium run by the College of Charleston in South Carolina.  Sadly, like everything else over the past year, the conference was virtual and so I couldn’t revisit Charleston itself.  Just to rub it in, the host let me know that it was sunny day in Charleston, with a high expected in the mid-to-upper 70s.

The economy is experiencing the first effects of a powerful double-dose vaccine of broad inoculation and fiscal stimulus.  The reality is that forecasts remain very uncertain.  The pandemic recession had no modern precedent and so we have no good road map on the speed at which the economy might naturally recover.  In addition to this, we have no example of the impact of fiscal stimulus of this sca...

It has been, by any reasonable measure, an eventful first quarter. At the start of the year, the pandemic was raging and vaccines had barely begun to roll out. Today, despite a recent tick up in cases, the light at the end of the tunnel is looking brighter and closer. At the start of the year, a very contentious election seemed destined to be followed by political gridlock.

In recent months, falling political uncertainty, two powerful rounds of fiscal stimulus and the rollout of covid-19 vaccines have resulted in a long-anticipated rotation in markets. Since early November, value stocks have outperformed growth, small caps have outperformed large and international stocks have outperformed their U.S. counterparts, with each of these moves reversing a multi-year trend....

The pandemic has had an unfortunate impact on my piano practice.  In truth, I have never been a promising student - my musical efforts have always rather resembled roadwork on an overused urban highway - that is to say, not so much an exercise in inventive construction as one in increasingly inadequate repair.  Still, for some years, my piano teacher would relieve the general ear strain by suggest...

As a hungry child, growing up in a large family, some forays into cooking were essential.  My early rice-making experiments, however, were exercises in frustration.  I would start with a large sloshing pot of icy water and, having transported it to the stove with wobbly hands, I’d dump in a bag of rice and wait for results. It seemed to take ages for the water to heat up, as I peered down hopefull...

The week ahead will be a busy one for market-moving events and economic data.  However, beyond the noise, investors will continue to mull two crucial questions: First, how far could interest rates rise and, second, what could that mean for equities?

Long-term interest rates have risen sharply in 2021 so far, with the yield on the 10-year Treasury bond climbing from 0.93% on January 4th to 1.34% by last Friday.  This move is a logical reaction to better news on the pandemic, encouraging data on how the economy has weathered an early-winter surge in covid cases, and rising prospects for significant fiscal stimulus.  However, given this positive...

In a year when everything has been different, it was comforting to watch an almost normal Super Bowl with Tom Brady, albeit wearing the wrong uniform, winning yet again.  It wasn’t that close a game – Tampa Bay established a lead in the first half and just did what they needed to do to hold that lead to the end. 

This Friday, February 12th, marks the start of the Chinese New Year and the Chinese people, like the rest of humanity, will say a hearty good riddance to the last year with hopes for easier times ahead.  The Year of the Ox should be better, with vaccines gradually allowing for a return to normal life and China should be able to build on its early economic recovery and resume its very long trend of...

In two weeks, in Daytona Beach, Florida, 40 cars will compete for the most coveted prize in NASCAR.  As the cars slowly circle the track in the pace laps before the green flag drops, the noise of engines revving will give notice to all of the speed to come.  In a similar fashion, while the U.S. economy has slowed to a crawl over the winter, there are growing reasons to expect a sharp acceleration...

In most decades, there are dramatic events that interrupt the course of history and the last twenty years have seen at least three obvious examples of this.  However, more often than not, it is the reaction, in public attitudes and policy, rather than the event itself, that shapes the path taken by society in its aftermath. The horror of 9/11 laid the groundwork for wars in Afghanistan and Iraq. ...

Last Thursday, ahead of the inauguration, President-elect Biden outlined proposals which, if implemented, could have profound social and economic effects as well as impacts on the broad direction of fiscal and monetary policy.

At the start of a new week and a new year, investors have plenty to think about.  Despite the rollout of vaccines, the pandemic has worsened in recent weeks, dragging on the global economy.  U.S. stock markets ended at record highs on Friday and both bond and equity valuations look lofty.  And in the week ahead, the Congress will certify the election of Joe Biden as President, although with an unu...