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July 5, 2020 | The Blacker Swan

“A similar effect is taking place in economic life. I spoke about globalization in Chapter 3; it is here, but it is not all for the good: it creates interlocking fragility, while reducing volatility and giving the appearance of stability. In other words, it creates devastating Black Swans. We have never lived before under the […]

June 28, 2020 | A Recession Like No Other

We just spent the better part of a decade wondering when the next recession would strike. The last two months we stopped wondering. It’s here and a grand council of esteemed economists has confirmed it. On June 8, the Business Cycle Dating Committee of the National Bureau of Economic Research found monthly economic activity had […]

June 21, 2020 | Where We Go from Here

Predictions are difficult, especially those about the future. That old proverb (often attributed to Yogi Berra) is right but you can’t live without making certain presumptions. You presume your car will start, your refrigerator will stay cold, the lights will turn on when you flip the switch. In fact, you could argue this “predictability” separates […]

June 14, 2020 | The Stumble-Through Economy

We are on the horns of a dilemma, caught between the Scylla and Charybdis, a rock and a hard place, the devil and the deep blue sea, the anvil and the hammer. The walls are closing in. We’re in a tight spot. All those metaphors (I could list more but will spare you) fit the […]

June 7, 2020 | COVID-19: A Data-Driven Analysis

Should you wear a mask in public? This seemingly simple question immediately generates emotional, political, and social anxiety. It is just one of many provocative questions COVID-19 is forcing upon us. They should be simple, data-driven policy issues but many are not. Today’s letter is in a different format from the usual Thoughts from the […]

May 31, 2020 | Economics in Orbit

  The history of humanity, at least as taught in most schools, is really about two seemingly opposite forces: human innovation and human conflict. The same intelligence that lets us accomplish great things also sets us against each other. But sometimes, we rise above it. Last week I saw on Twitter (where you should follow […]

May 24, 2020 | Rewinding the Tape

We finished the Virtual Strategic Investment Conference yesterday. I can honestly say it was simply the best conference I have ever attended or been privileged to host. The ability to bring together so many exciting speakers, something schedules would not have allowed if we were holding a physical conference, offered a constant stream of thought-provoking, […]

May 17, 2020 | Reflection Week

I knew this letter’s topic months ago. It was going to be a review of the Strategic Investment Conference, which would have just concluded fabulously in sunny Scottsdale. Well, something intervened. Coronavirus precautions kept us from having an in-person conference. No one was more disappointed than me. I often say SIC is the highlight of […]

May 10, 2020 | Five Viral Lessons

We live in truly historic times. “There are decades when nothing happens, and weeks when decades happen,” says a quote usually attributed to Vladimir Lenin. It certainly fits now. For thousands of years, people who lived through what we call “history” didn’t realize it. We are the exceptions. We’re seeing history and we know it. […]

May 3, 2020 | The Figure-It-Out Economy

Market sentiment reflects human sentiment, which lately has been quite negative—understandably so, given the great uncertainty surrounding the coronavirus pandemic. A month ago, we didn’t know where all this was going but it was potentially serious. I can almost begin to sense sentiment changing. New drug therapies are being announced and dozens of vaccines are […]

April 26, 2020 | Viral Thoughts

We are looking at a world with parameters bounded by pure imagination; where we go from here is anyone’s guess. —Will Thomson and Chip Russell, Massif Capital Today’s letter will be another hop-around review of the crisis landscape. I’ll touch on several topics instead of going deep into a single theme. So much is going […]

April 19, 2020 | Repricing the World

The viral fog is starting to thin. US coronavirus case growth appears to be slowing, albeit at a tragically high level. Governments and businesses are thinking about the next stage. On the other hand, fog tends to return when the weather is right. Might this virus come back, as seems to be happening in Japan […]

April 12, 2020 | Bending the Inflation Curve

“Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. … A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth.” —Milton Friedman, […]

April 5, 2020 | Notes from Lockdown

  In times of change learners inherit the earth; while the learned find themselves beautifully equipped to deal with a world that no longer exists. —Eric Hoffer Greetings from Puerto Rico, where this frequent traveler is evidently home for an unusually long time. I want to start today by thanking everyone for your kind wishes […]

March 29, 2020 | Postcards from the Frontline

Unprecedented events are happening so fast, I barely know where to start. But let’s begin with a small one, noticeable perhaps only to me. Over the years I’ve received thousands of reader emails responding to my letters. I read and appreciate them all, even the critical ones. Often the readers mention where they were when […]

March 22, 2020 | The Beacons Are Lit

In the film version of Tolkien’s Lord of the Rings: Return of the King, there’s a three-minute scene you should watch or re-watch. It is relevant to our situation today. Gondor needed to light the beacons for aid. Click here for video. At the other end of the beacons, no one is sure whether the […]

March 20, 2020 | Coronavirus Is Not an Emergency. It’s a War.

This is a short midweek note, something I haven’t done for years. But as we all know, these are very special and difficult times. Below, I’ll give you two links. They describe the nature of the new coronavirus pandemic and its potential consequences. I have run this past the best medical professionals I know, and […]

March 15, 2020 | Coronavirus Helicopter Money

I write this letter early Friday morning after a week in New York visiting with many fellow market participants. And lots of phone calls, both to analysts and medical experts. I had originally planned a completely different letter but circumstances changed. Humility is a good thing to have when you’re forecasting the economy or markets. […]

March 8, 2020 | Chinese Coronavirus Changeup

In baseball, there is a kind of pitch called the “changeup,” designed to look like a fastball while actually going slower. The deceived batter swings too soon and misses. Strike, you’re out. The world has thrown a wicked biological changeup at the global economy. This is kind of how coronavirus fear is spreading from China […]

March 1, 2020 | COVID-19: A Crisis the Fed Can’t Fix

For the last 3+ years, I have maintained it would take an “exogenous” event to send the United States into recession. Historically suboptimal growth? Sure, but sub-3% growth isn’t a recession. The coronavirus obviously qualifies as an exogenous event. But that doesn’t mean a textbook two-quarter recession, although it certainly may. Financial markets aren’t waiting […]

February 23, 2020 | Why Americans Want Socialism

As I write this, a self-proclaimed “democratic socialist” is leading the race for one of our major parties’ presidential nomination. The fact that so many Americans (especially young Americans) support Bernie Sanders ought to tell us something. A Quinnipiac poll out this week showed Senator Sanders with 54% support among Democrats age 18–34. Meanwhile, 50% […]

February 16, 2020 | Depending on the Undependable

The welfare of a nation can scarcely be inferred from a measure of [GDP].” —Simon Kuznets (who developed GDP), 1934 At the risk of restating the obvious, production should result in a product the producer can recognize. That’s the case even for intangible products. Artists know their songs even if hearing a pirate copy. This […]

February 9, 2020 | The Hits to GDP

Economists and investors are rightly obsessed with growth. We always want more of it. We worry it won’t come or, worse, might turn into contraction. Economists of all stripes, from Paul Krugman to Lacy Hunt, recognize economic growth cures all manner of ills. Yet, exactly what is growth? We think we know, but in reality, […]

February 2, 2020 | Dismissing the Experts

Regular readers know I often criticize so-called “experts,” usually economists or central bankers whose flawed decisions are punishing the rest of us. I find their expertise is not nearly as reliable as they seem to think. At the same time, I rely on experts whose judgment I respect. I know they aren’t perfect—usually because they […]

January 26, 2020 | Nose Blind to Inflation

The human brain excels at taking shortcuts. Processing all the information our senses collect takes a lot of energy, so repetitive data gets lower priority. Things we see often fade into the background so we can notice new stuff. This is where we get phenomena like “nose blindness.” We stop perceiving familiar smells like our […]

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