Last week, we discussed the “liquidity supernova” that has helped drive global stock market indices to new highs, even in the face of many potential challenges — new covid variants, dislocated labor markets, supply chain disruptions, ominous geopolitical events, growing cybersecurity risks, uneven growth recovery, fragile internal market technicals, mounting Read more
As many states have now ended the additional pandemic unemployment benefits provided by the Federal government, we are seeing in real time that those benefits were in fact serving to suppress employment and encourage workers to stay home; unemployment is falling faster there than in states that have maintained the Read more
Since the initial supernova of Federal Reserve and Treasury pandemic support for financial markets occurred last April, we have argued that this description-beggaring liquidity explosion was the single most important phenomenon for market participants to see and understand. Correct views and analysis of economic recovery trends and market theme and Read more
Our first note of 2021 made the case that the events of 2020 heralded the return of inflation. We made two main observations. First, the Fed’s adoption of average inflation targeting, which would give the central bank cover to tolerate persistent inflation above the 2% to make up for the Read more
Back in late August, the Federal Reserve announced a new policy framework. It pledged to target an average inflation rate of 2%, letting it run above 2% for potentially prolonged periods; and it said that it would not respond to an improving employment picture with pre-emptive rate increases. Around the Read more
There seem to be plenty of reasons for pessimism right now. Even just on the surface, so much disaster and risk: a global pandemic… political polarization at all-time highs… an election coming up so fraught that both sides are talking about civil unrest if the result is not immediately clear… Read more
In each earnings season, banks are among the first to report and help set the tone for what investors expect moving forward. We already knew that the second quarter of 2020 was going to be an earnings apocalypse — so much so that the quarter itself is largely irrelevant for Read more
We have been asked over and over these past several weeks when we thought the bleep was going to hit the fan, and the market take another big plunge. The economic and investing environments are confounding — the tape action has the appearance of a bull market, yet so many Read more
Even as the recovery of stock markets from the March and April decline continues and broadens, investors’ attention remains focused on Federal Reserve policy. As we described last week, Fed policy has been instrumental in preserving financial stability, not only in the U.S., but globally. With the initial crisis past, Read more
If you’re in lockdown, working from home, or otherwise practicing social distancing, we hope this letter at least offers the chance to think with us about the implications of current events for the economic, financial, and investing landscape. Perhaps it will even be able to briefly take your mind away Read more
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