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January 13, 2019 | Something Wicked This Way Comes

For a couple of years now, the economic narrative has shown a comparatively strong US against weakness in Europe and some of Asia (NOT China). The US, we are told, will stay on top. I agree with that, as far as it goes… but I’m not convinced the “top” will be so great. Americans like […]

January 6, 2019 | The Year of Living Dangerously

Double, double, toil and trouble; Fire burn and cauldron bubble. …By the pricking of my thumbs, Something wicked this way comes. – William Shakespeare, Macbeth, Act IV, Scene I, 1606 Remember when it was a January ritual to fill in the new year on your blank checks? If you’re under 50, probably not. That we […]

December 30, 2018 | Bear Markets, Fed Mistakes, and Quick Shots from John

A winters day, In a deep and dark December… “Wait, it doesn’t feel like winter. It’s not deep and dark, and it’s actually warm, and the sun is shining. Toto Shane, I don’t think we’re in Kansas Texas anymore.” Yes, we have actually moved from Texas to a new location. I’ll explain why and where […]

December 23, 2018 | Powell, the Third Mandate, the New Fed and Crawdads

We have reached the best time of year, when we can look to the future with hope. We can stop wondering what will happen in 2018 and look forward to 2019. The investment industry always does this enthusiastically, as you will see in forecasts everywhere the next few weeks. Not wanting to be left out, […]

December 16, 2018 | The Misunderstood Flattening Yield Curve

Everybody is suddenly talking about the inverted yield curve. They’re right to do so, too, but alarm bells may be premature. Inversion is a historically reliable but early recession indicator. The yield curve isn’t saying recession is imminent, even if it were fully inverted, which it is not. What we see now is really more […]

December 9, 2018 | European Threats

Someone asked recently how many times I had “crossed the pond” to Europe. I really don’t know. Certainly dozens of times. It’s been several times a year for as long as I remember. That makes me an extremely unusual American. Most of us never visit Europe, except maybe for a rare dream vacation. And that’s […]

December 2, 2018 | Pyramids of Crisis

In an increasingly divided world, we all share one great desire: self-preservation. Not just humans, either. The survival instinct exists in almost every living thing. Humans simply have greater ability to do something about it. In fact, we have been doing something about it for many thousands of years. An inverted pyramid of geniuses and […]

November 25, 2018 | Double Debt Problem

The selloff in GE is not an isolated event. More investment grade credits to follow. The slide and collapse in investment grade debt has begun… (and later) Don’t be fooled by bond prices holding up, because trading volumes are down. There are fewer bids in the market, and the dispersion of bids is wider. It […]

November 18, 2018 | Seventh-Inning Debt Stretch

Science tells us energy can neither be created nor destroyed within a closed system. Whatever amount is there will stay the same, though it might change form. If only the same were true for debt. Within the closed system called Earth, we are much better at creating debt than eliminating it. But when we have […]

November 4, 2018 | Economic Brake Lights

But, like Cinderella at the ball, you must heed one warning or everything will turn into pumpkins and mice: Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are […]

October 28, 2018 | Debt Alarm Ringing

Is debt good or bad? The answer is “Yes.” Debt is future spending pulled forward in time. It lets you buy something now for which you otherwise don’t have cash available yet. Whether it’s wise or not depends on what you buy. Debt to educate yourself so you can get a better job may be […]

October 21, 2018 | The Real Cost of Low-Fee Funds

Today, rather than tackle some big macroeconomic issue, we’ll go back to this letter’s roots and look at market timing and portfolio construction issues. I expect this will get both enthusiastic support and at the same time, make a number of readers uncomfortable—if not annoyed. Why? Because I am going to take on a number […]

October 14, 2018 | Red Hot China Mailbag

An odd aspect of being a writer is you never know in advance what will excite readers. I’ve written letters I thought very provocative only to draw mostly yawns. Last week’s trade deficit letter lit some fireworks. The response was immediate and, in many cases, quite passionate in both directions. I got emails from old […]

October 7, 2018 | The Trade Deficit Isn’t the Boogeyman

  I have to confess something: I run a huge trade deficit. It’s not with China or Mexico, but with Amazon. I buy all sorts of goods from them and Jeff Bezos has yet to spend a penny with me. It’s just not fair. Sound ridiculous? That’s exactly what it is. Totally absurd. I like […]

September 29, 2018 | The Trump Trade War Recession?

“A conservative is someone who stands athwart history, yelling stop, at a time when no one is inclined to do so, or to have much patience with those who so urge it.” —William F. Buckley, Jr., 1955 I will never compare myself to Bill Buckley, as a writer or anything else. He was one-of-a-kind and […]

September 23, 2018 | China for the Trade Win?

With all the trade war talk, we all ask the obvious question: Who will win? President Trump says the US will win. Chinese business leaders say no, we will win. Free-traders on both sides say no one will win. Few stop to ask, “What does a ‘win’ look like?” This makes discussion difficult. People are […]

September 16, 2018 | Chinese Growth Spurt

Economic reality isn’t black and white. At any given time, both good things and bad things are happening. Ignoring one side because it doesn’t fit your preferred outlook is an excellent way to go badly wrong. So it is with China. We hear a lot about that vast country’s problems and challenges. They are very […]

September 9, 2018 | China’s Command Innovation

Hardly a day passes without some sort of China news in the financial headlines. There’s a good reason, too. China is the global economy’s 600-pound gorilla, second in size only to the US. Yes, it was largely a copycat business economy up until the early 2000s, but Chinese entrepreneurs have really taken charge in the […]

September 2, 2018 | The Growing Economic Sandpile

“How did you go bankrupt?” “Two ways. Gradually, then suddenly.” ―Ernest Hemingway, The Sun Also Rises As you may have noticed, I’ve been in a pensive mood lately. I’m re-thinking a lot of things as I process economic developments, personal issues, and the clock ticking as I reach birthday number 69 in a few weeks. Many […]

August 26, 2018 | Revolutionary Future Ahead

Back in 1936, in Esquire magazine of all places, F. Scott Fitzgerald wrote something profound. “The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.” As someone privileged to have met some of the world’s greatest thinkers, […]

August 19, 2018 | The Good News Economy

In my business, there is a fine line between standing by your conclusions and being unwisely stubborn. But no matter what I say, people will still label me a perma-bear or perma-bull—often at the same time. It’s an occupational hazard to which I am accustomed. It’s really a lot more fair to characterize me as […]

August 12, 2018 | The Maine Surprise Was Time

I’m back from Camp Kotok. As always, it was both rejuvenating and enlightening. The Maine woods, lakes, and general environment encourage more candor than I see most places. This, combined with David Kotok’s talent for assembling a diverse group and the always-marvelous Maine hospitality, made it another great success. It helps that David aggressively enforces […]

August 5, 2018 | The Distribution of Pain, Redux

This week I have something special for you: an update of “The Distribution of Pain,” one of 2017’s most popular letters. I say “popular” just in terms of feedback and reprint requests. It was thought-provoking but also sobering. I started with the original version, re-edited to clarify a few points, and added some new comments. […]

July 28, 2018 | Endgame Strategizing

We are all on a debt-filled train that is eventually going to crash, and if you are on it, it won’t stop to let you off first. Jumping at the last minute is not a good option, either. So what do you do? You take action now, while you have time. Last week I gave […]

July 22, 2018 | How to Dodge the Debt Train

Standing in front of a speeding train is rarely a good idea, but most investors are doing it right now. They survive only because the debt train is still way down the tracks. It is nonetheless coming, and you will want to move before then. But which way? – Bull or Bust? Limited-time special event […]

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