In spite of its questionable fundamental foundations, the current rally continues, demonstrating clearly that psychology, not fundamentals, is often the most powerful near-term factor governing market action. There is certainly an element of short-covering at work, besides relief, wishful thinking, and the anticipation — misplaced, we believe — of an Read more
In keeping with our perpetual motto, that “earnings are the mother’s milk of stock prices,” we are listening to a lot of earnings calls and digesting a lot of companies’ commentary about their current environment and their anticipation of future developments. We are also looking more broadly at market- and Read more
It was a head-scratcher for us that Fed Chair Powell indicated in last week’s press conference that he believes the Fed funds rate is near a “neutral” level. Looking across the inflation landscape, that seems a quixotic view and not one with which we agree. We believe the Fed funds Read more
You have probably seen many graphs like the one below, illustrating the inexorable rising cost of healthcare to the American consumer. Given how much healthcare has outstripped the price increases for other categories, how much it has outstripped wage gains, and how important health care is as a necessity of Read more
On our ongoing theme of the revenge of the real, the most recent edition of The Economist was devoted to a critique of “big ESG” — the use of “environmental, social, and governance” metrics to grade and construct investment portfolios and indexes. It’s not a condemnation — the magazine is Read more
The Federal Reserve, as expected, delivered another 0.75% rate increase, bringing the Fed funds rate to 2.5%. Markets were buoyant in response — perhaps concluding that a Fed pivot or declaration of victory is closer than feared, or that too much pessimism had been baked in about the likelihood, and Read more
The general economic deceleration visible in the U.S. and global economies is causing investment analysts and corporate managements to begin anticipating a coming recession. (As we’ve noted before, we believe it is already here, though its duration and severity remain to be seen.) While food and housing inflation remained elevated, Read more
In recent letters, we’ve commented on the new prominence of real assets of all kinds in the new, inflationary, deglobalizing post-pandemic world, where “just in time” logistics have reverted to “just in case” — and where for many investors and speculators “return of capital” is remembered to be worth just Read more
So Bad, It’s Good? We highlighted Bank of America’s 0.0 bull/bear ratio several weeks ago — noting that the absolute nadir of bearish sentiment is not a sell indicator.The global fund manager survey (above) from the same analytical team, showing managers to be even more pessimistic than they were the Read more
Inflation Bites Another month, another sky-high CPI print: at 9.1%, the highest year-over-year inflation since 1981. Of course, the methodology of constructing this index has changed over the decades; if the methodology employed in 1990 were used today, the reported rate would be 17.3%, according to ShadowStats. Even this is Read more
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