Economic Analysis

What is up?/Inflation

Outside the Box

March 14, 2018

Folks, John Mauldin is feeling ill today, so this is Patrick Watson jumping in to help. John’s doctor has ordered him to stay in bed and not even think about the economy for 24 hours. He is now snoozing, but before signing off asked me to select today’s Outside the Box story.

Fortunately, I didn’t have to look too far. The prolific Peter Boockvar has a very interesting reaction to today’s Producer Price Index report. I’m skeptical of the rising-inflation narrative. I see inflation in certain...

The Great Jobs Collision

Thoughts from the Frontline

March 11, 2018

We’ve just wrapped the Strategic Investment Conference, which in many ways is the best week of my year. Seeing so many old friends, making new ones, and having countless fascinating conversations is my idea of heaven.

Why American Workers Aren’t Getting A Raise: An Economic Detective Story

Outside the Box

March 7, 2018

Something was really bugging Jonathan Tepper: In a growing economy with a booming stock market, why were workers’ wages growing so slowly? As a trained economist and investment advisor, he knew he had all the tools for understanding the problem; yet his firm’s leading indicator for wages, which had worked accurately for decades, had broken down badly from 2014 forward:

So Jonathan dug in and did a lot of research and came up with a convincing multipart answer – which is today’s Outside the...

Inflation and Honest Data

Thoughts from the Frontline

March 3, 2018

I’m going to wrap up our series on the problems of collecting and analyzing data in the first half of this letter, and then I’ll quickly comment on the Trump tariffs. I think both topics will feature in this week’s Strategic Investment Conference. At the end of the letter there will be a link to our Virtual Pass, which will allow you to watch the conference live or at your leisure and to read the transcripts of the presentations.

The Middle of an Era

Outside the Box

February 28, 2018

“We see through a glass darkly,” said the Apostle Paul. That goes double when we are talking about what the future holds. There are times when I think my future-viewing lens is utterly opaque. When I investigate why my forecasts are sometimes off the mark, I generally find that I am trying to predict the short term, which is impossible, or am succumbing to the all-too-human psychological tendency to project a recent trend into the far future. Seeing as how I doubt that I would want us to move...

State of Inflationary Confusion

Thoughts from the Frontline

February 25, 2018

“Nobody knows anything.... Not one person in the entire motion picture field knows for a certainty what’s going to work. Every time out it’s a guess and, if you’re lucky, an educated one.”

– William Goldman, Oscar-winning screenwriter

QE and Its Apologists

Outside the Box

February 21, 2018

My friend Tom Bentley sends me political rants every day and then attaches an article from someone. Today’s is from Brian Wesbury, a brilliant economist who packs a thoughtful free-market punch. I mention Tom because I want to also pass on you the note he sent me this morning, introducing Brian. Here’s an excerpt (and Tom’s full note appears below, as a preface to Brian’s piece):

As we continue to suffer under the blizzard of bullshit about everything put out by both sides, and hugely...

Data-Dependent ... on Imaginary Data

Thoughts from the Frontline

February 18, 2018

Federal Reserve officials like to say their policy course is “data-dependent.” That sounds very cautious and intelligent, but what does it actually mean? Which data and who’s interpreting it? Let’s ask a few questions.

Where Will We Get the Cash?

Thoughts from the Frontline

February 10, 2018

Last week’s turbulence shined a harsh spotlight on the stock market. Appropriately so, if that’s where your investments are. But in the hubbub many investors are missing the deeper and far more urgent bond market issues.

Kill the Quants

Outside the Box

February 7, 2018

In the past few days we have heard endless explanations for the market’s big “Oops!” and the return of volatility. The commentary has centered on the Fed and its sister central banks as they begin to batten down the hatches on inflation and trim their balance sheets (prematurely, in my view).

In the midst of all the hoopla – and for a long time before the recent Day of Reckoning – my good friend Doug Kass has been something of a voice shouting at us from the wildnerness, with the resounding...