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Digital Shiny Objects

Financial crises are really about trust. They tend to occur when people lose trust in assets, institutions, or people they had thought trustworthy. Whether the lost trust was a consequence of the crisis, or its cause is a different question. But they do seem to go...

Recession Thoughts

Early this week, with the severe inverted yield curve and other signals flashing recession, I planned to use this letter to delve into the data. Then Thursday’s CPI data convinced markets to blow the all-clear whistle. Lack of any “green shoots” would have been out of...

Dangerous Assumptions

Historically speaking, this phase of life we call “retirement” is a new concept. The idea you could stop working at a certain age was unknown until quite recently. People worked as long as they physically could, then died quickly unless they had family or servants to...

Turning Bullish on Energy

I literally grew up in the oil patch: Wise County, Texas, 60 or 70 miles northwest of Fort Worth in a little town called Bridgeport. The two first-generation Greek immigrant brothers who became Mitchell Energy talked old man Christie into funding Christie, Mitchell...

Pension Sandpile

Sandpiles can be fun. Nothing beats taking kids to the beach (or being a kid!) and watching their creativity blossom into all kinds of magical shapes. The problem with sand construction is it doesn’t last. I have it on good authority that building your house on the...

Where Are the Workers?

By now it should be clear Federal Reserve leaders intend to keep hiking until the economy breaks. Their recent speeches and interviews all underline this. Specifically, they want to reduce the strong consumer demand that has been keeping goods and service prices...

Currency Crescendo

Big problems usually begin as small problems. We see that in nature, where small disturbances become hurricanes, and we see it in the economy, too. So, it shouldn’t surprise us if the economic disturbances of the last years compound into something bigger. Going into...

Notes on Inflation

We were a bit preoccupied here in Puerto Rico this week. Hurricane Fiona decided to camp out over the island, bringing mind-boggling amounts of rain. I am sure you have seen the flooding pictures. The entire island lost power and much of it is still down. Our...

Inflation Sinks In

Remember when inflation was going to be transitory? Good times. I was in that camp myself early on, as were some serious analysts I greatly respect (and still do). Then the data began to show core inflation would be stickier than expected, and I turned in my Team...

Labor Mysteries

Politicians talk about “jobs, jobs, jobs” because a steady income keeps people happy and (mostly) voting for incumbents. Carville once told us, “It’s the economy, stupid,” and it always has been. Economies in recession are usually bad for those in power. Economists...

Your Inflation May Vary

People who think about the economy are a non-random subset of the population. Most folks aren’t like us. Worse, we aren’t always like us. Hence the endless arguments. Currently our subset is debating whether we face inflation or recession. In my view, it’s...

Curving Toward Stagflation

The latest data shows inflation is still with us at an 8.5% annual rate. That means we can expect the Fed to keep tightening, trying to reduce demand and relieve pressure on consumer prices. At the same time, we’ve seen declining GDP growth the last two quarters. Some...

Weirdness Factors

It’s a recession! No, not yet! I see these arguments everywhere and I’m already tired of them. For those who believe it is not yet a recession, I will make a deal with you. The third quarter is likely to be negative. When we have three quarters of a recession in a...

A Weird Recession

Professional economists, perhaps tired of being asked, years ago formed a committee to officially mark the beginning and end of recessions, the NBER (Nation Bureau of Economic Research) committee considers a variety of data, but its final decision is subjective. Many...

Hubris at the Fed

Finding just the right word brings great pleasure to writers like me. As I think and write about the Federal Reserve, the word “hubris” keeps coming to mind. The Merriam-Webster dictionary defines hubris as “exaggerated pride or self-confidence.”...

Forgotten Lessons

“Those who cannot remember the past are condemned to repeat it” is a well-known quote that’s also incomplete. You can remember the past vividly and still have to repeat it. This happens when, for instance, powerful people forget (or ignore) important lessons that...

Earnings At Risk

Administrator Note The family and I are on vacation this week to visit our son who lives in Germany. Due to the Covid pandemic lockdowns and restrictions, we have been unable to see him for almost 2-years. So, we organized a quick trip to meet up in Maiori, Italy for...

John Bull and Two Percent

The economics profession has long had a vigorous academic argument over “natural” interest rates. What would rates be if we could somehow remove all the subjective actors—central banks, commercial lenders, government agencies—that conspire to set them? What would...

Time Has a Price

One benefit of human progress is the way we gain “common knowledge” that was once anything but common. We observe basic facts—for example, water boils if placed over a flame—and then build on them. Boiling water took us to steam engines and then much more. But that...

Gradually Worse

This time last year, the great debate was whether inflation would be “transitory.” That question is now settled (Narrator: “It wasn’t transitory at all.”), we have moved on to debating what the Federal Reserve will do about it… and can do about it. The experts at the...

No Soft Landings

“There’s no soft landing when you’re this far out of equilibrium.” —Tom Hoenig My last four letters featured highlights from the Strategic Investment Conference. I told you they would build toward a conclusion that might not be obvious. Today we’ll lift that final...

Rock and a Hard Place

Two weeks after SIC ended, I’m beginning to assimilate everything. Different pieces are connecting in my head. I’d like to tell you I have a vision for uninterrupted peace and prosperity. Sadly, that’s not the case. Good things are coming, but not just yet. For now,...

Hardening of the Economies

Atherosclerosis, or hardening of the arteries, occurs when substances like cholesterol accumulate and impede your blood flow. This keeps your body from delivering nutrients where needed. Left untreated, it usually doesn’t end well. Something similar is happening to...

A Little Harder

The Strategic Investment Conference wrapped up this week with another wave of strong, fascinating speakers and panels. I gave you some highlights in last week’s Soft Now, Hard Later letter. Today I have more to share and, as you’ll see, the plot thickened...

Soft Now, Hard Later

The Strategic Investment Conference is in full swing. This is our 18th consecutive year and the third in an all-online virtual format. In 2020 we had to make that transition quickly, yet somehow the team pulled it off. Now we are getting the hang of it—though I do...

The Fed Is NGMI

We found out this week that the first quarter was recessionary: GDP down 1.4% when the expectation was that the quarter would be up 1%. Rather large miss! Even so, the quarter-over-quarter comparisons were difficult so I believe the Fed will look past it and a...

Into the Fire

If you haven’t noticed—perhaps because you live on Mars—inflation is here. Not just in the US but almost everywhere. Prices for everyday goods and services, including necessities like food, are climbing rapidly. The US Consumer Price Index rose 8.5% in the 12 months...

Other Possibilities

An old Danish proverb, later attributed to everyone from Mark Twain to Nostradamus to Yogi Berra, says, “Predictions are difficult, especially about the future.” I would refine it a little: Predictions are actually pretty easy. Accurate predictions are very difficult....

Curve Ball

“I would not interpret the currently very flat yield curve as indicating a significant economic slowdown to come.” (and subprime is contained.) —Ben Bernanke, March 2006 Evidence continues to mount that a recession is coming soon. The latest was this week’s “inverted...

Things Are Getting Better

In these letters, I look at the economy and tell you what I think, for better or worse. Recent missives were mostly negative. I regret being the bearer of bad news but sometimes that’s just reality. I often say that I am the most optimistic man in the room, and it’s...

Another Strange Recession

Back in the good old days, recessions were simply the unpleasant part of the business cycle. Consumer choices, exuberant businesses, and monetary policy would periodically generate growth contractions. We debated the timing, but recessions didn’t come out of the blue....

Change Squared

“How did you go bankrupt? Two ways. Gradually, then suddenly.” - Ernest Hemingway, The Sun Also Rises Change usually comes slowly. But every now and then, events like Pearl Harbor, September 11th, and COVID-19 come out of nowhere and change everything. We can look at...

Inflation Thoughts

But mouse-friend, you are not alone In proving foresight may be vain: The best-laid schemes of Mice and Men Go oft awry, And leave us only grief and pain, For promised joy! How much inflation is okay? People have different answers. I think it should be very low, but...

Financialized Everything

Interest rates—the “price of money”—have been unusually low for most of this century, particularly since the 2008 crisis but going back to Greenspan’s era. The wisest people I know differ on exactly why. Was it purely a policy choice, or the result of larger,...

Time to Rethink the Fed

“In many important ways, the financial crash of 2008 had never ended. It was a long crash that crippled the economy for years. The problems that caused it went almost entirely unsolved. And this financial crash was compounded by a long crash in the strength of...

So Goes the Year?

You’ve heard the old stock market adage, “As goes January, so goes the year.” If so, 2022 will be a wild ride. Of course, in this context “wild” doesn’t necessarily mean a loss. But it could, and given the well-documented human tendency to buy high and sell low,...

NASDAQ Could Fall Another 13%

This article was written exclusively for Investing.com The NASDAQ Composite has fallen sharply to start 2022, down nearly 13%. But don't expect the index to race back to record highs anytime soon. The index faces a battle on two fronts, higher rates, and falling...

Beijing’s Dilemmas

Ranked by population, the United States is the world’s third largest country, behind China and India. But the gap is greater than the ranking implies. According to Worldometer, as of 2020 China had 1.44 billion people, India 1.38 billion, and the US 331 million. In...

Year of the Bookends

If you are a booklover like me, you probably have many shelves. On some of those shelves you probably have bookends holding the books in place. They come in opposing pairs—similar but reversed. What if the COVID-era economy has bookends? I think that may be what’s...

Coming to America

This week is a little bit different than your usual Thoughts from the Frontline. It is Christmas Day as this is sent out, so not the time to ramble on about inflation and the markets. Instead I’ll share a story from my good friend Vitaliy Katsenelson. He immigrated to...

Inflation by the Numbers

Milton Friedman famously said inflation is “always and everywhere a monetary phenomenon.” He was right but that short statement doesn’t fully explain how inflation works. It has other causes, too. The period in which he did his most famous research showed inflation...

What Really Caused Inflation

You won’t be surprised to know I disagree with recent Federal Reserve policy choices. The Fed’s future choices are more important, though. Debating what they should do is one thing. Anticipating what they will do is critical. Today we’ll “war game” what the Fed is...

Back up the Truck to buy INVU shares

“Back up the truck to buy INVU shares” has been exclusively available to ShinyPennyStocks.com subscribers since November 29, 2021. “Back up the truck” is an old saying that is used by professionals on Wall Street on rare occasions.  Another is “buy it with both...

Capital Excess

Why do we invest? Everyone has their reasons, but funding retirement may be the most common one. Whenever the time comes, we want to relax in comfort and security. Yet this whole “retirement” idea is really quite new. For most of human history, almost everyone worked...

Blowout quarter for Investview

Investview (INVU) reported their financial results for their quarter ended September 30, 2021.  The blowout results were, as I had anticipated.  Operating and free cash flow results came in as expected.  For more highlights covering financial results see Investview...

Worth a Thousand Words

Happy Thanksgiving! I hope everyone had a good holiday. I’m writing this issue early in the week while enroute to join family in Dallas. Today will be different and I hope you like it. The charts and comments below are drawn from the “Clips That Matter” feature of...

Shortages Are Relative

In some simplistic economic theories, shortages never happen. Supply and demand for any particular good are always perfectly balanced in a given time and place. If you can’t get what you demand at that moment, you pay a higher price or you demand something else. But...