Love your articles, well written with some interestng pics but as an old timer one lesson I WILL NEVER violate is " Don"t fight the Fed" They told you rates are going up and this rally since Oct 10 is not believing them. Retirees with decent accounts are better off now with 3 mo T bills paying 4.25 % and will go up again in Dec. when they renew. History tells us that the odds favor waiting going back into stocks untill the first time the fed drops rates after a time of long increases.
David, you mentioned you think its time to start nibbling at mortgage REIT's maybe. But then you mention commerical real estate could be a major problem going forward. I would think most mortgage REIT's would be exposed to commerical real estate?
Great edition thanks. Just one question - in section 3 you say that government revenues are not the problem. I see many commentators saying that they are a problem, and an increasing one, as there is undue reliance on asset prices, and revenues are decreasing of late. I’d be interested in why you view this differently.
Thank you for the report, excellent summary of some great posts. I am surprised that there hasn't been more catastrophies like the East Palestine train incident. The first thing I thought about when I heard the news was that perhaps it was a terrorist incident. I was working in kansas city area after 9/11. I worked for a major chemical manufacturing company with a plant near the downtown industrial hub on the Missouri River. The chemical plant is on the river and sits next to a power plant, a natural gas depot, a train hub which accepts bulk chemical inputs, and a major interstate intersection. The chemical plant came under FBI surveillance after they discovered a terrorist plot to blow up railroad cars filled with explosive chemicals. The terrorist organization had figured out if they blew up the right rail car at the right location they could shut down 3 interstates, the railroad, the electrical power plant, regional natural gas distribution, and the Missouri River. A lot of the infrastructure this country has in place today could not be rebuilt if it was to go away (regulation, shortage of technical labor). Most people don't realize how fragile our western way of life is. I am concerned about US debt levels despite enjoying a long peace dividend. I worry about how the general population might react if we actually have a real national crisis.
I feel like I have read literally hundreds of these doomsday articles about the USA debt situation for the last 20 years. And for years I thought there must be a "great reckoning" coming any day. But they just continue to endlessly kick the can down the road. I remember in 2010, 2011, 2012 with QE everyone was freaking out about hyperinflation, defaults, soverign debt crises. Yet they kicked the can for another 13 years. It reminds of the story of the boy who cried wolf. The boy has cried wolf for so many decades about a looming "soverign debt crises", that people have become desensitized to the insane levels of gov't debt. But someday the wolf might come.
"As we have seen in recent years, there exists within large swaths of the American populace an instinctive, and frequently unthinking deference to expertise (so often vaguely categorized)."
I think that's a much older tendency, and the more recent tendency is for people to believe whatever it suits them to believe, based on gut feeling, tribal affiliation or wishful thinking. This is a lot worse than deference to experts, and has led to a dangerous explosion in belief in election lies and other conspiracy theories.
"Once the Fed shifts gears, risk assets, like stocks and commodities, are likely to rip higher"... not stocks I am afraid... that is the case in disinflationary regimes, not in inflationary ones like we have today David. Michael Hartnett shows evidence of this. Thanks for your wonderful work.
I like the Friday Highlights format. But, you seem to have (ahem) a little confirmation bias in your selection?
Perhaps you might consider adding at least one well-thought out opposing opinion. About 1/2 of the market gurus out there are thinking we have a "soft landing" in the market even if we have a "hard landing" in the economy. After all, people adapt. Markets adapt. In droves (herds?).
As in, Lots of folks saw the inverted rate curve and started making adjustments BEFORE the recession, which may almost preclude the worst parts of the impending recession? This appears to be different from 2008 when everyone was still pooh-poohing the idea of a crisis. Different inputs get different outputs.
Another example. Many of my friends were only scared about 10% into cash last year, and they are just waiting for a dip to buy in. Fewer folks panic sold last year, but some increased their cash positions. The amount of cash on the sidelines is probably much, much higher.
Which writer to add?
Well, Warren Buffet has been telling us for at least 30 years to be greedy when others are fearful, and he's buying Oxy at $57-61. And after 4+ decades of Warren Buffet, lots of folks are not panic selling (some like me are buying OXY, when Warren is buying Oxy).
Love your articles, well written with some interestng pics but as an old timer one lesson I WILL NEVER violate is " Don"t fight the Fed" They told you rates are going up and this rally since Oct 10 is not believing them. Retirees with decent accounts are better off now with 3 mo T bills paying 4.25 % and will go up again in Dec. when they renew. History tells us that the odds favor waiting going back into stocks untill the first time the fed drops rates after a time of long increases.
David, you mentioned you think its time to start nibbling at mortgage REIT's maybe. But then you mention commerical real estate could be a major problem going forward. I would think most mortgage REIT's would be exposed to commerical real estate?
I look forward to your letters. useful and helpful
Great edition thanks. Just one question - in section 3 you say that government revenues are not the problem. I see many commentators saying that they are a problem, and an increasing one, as there is undue reliance on asset prices, and revenues are decreasing of late. I’d be interested in why you view this differently.
Thank you for the report, excellent summary of some great posts. I am surprised that there hasn't been more catastrophies like the East Palestine train incident. The first thing I thought about when I heard the news was that perhaps it was a terrorist incident. I was working in kansas city area after 9/11. I worked for a major chemical manufacturing company with a plant near the downtown industrial hub on the Missouri River. The chemical plant is on the river and sits next to a power plant, a natural gas depot, a train hub which accepts bulk chemical inputs, and a major interstate intersection. The chemical plant came under FBI surveillance after they discovered a terrorist plot to blow up railroad cars filled with explosive chemicals. The terrorist organization had figured out if they blew up the right rail car at the right location they could shut down 3 interstates, the railroad, the electrical power plant, regional natural gas distribution, and the Missouri River. A lot of the infrastructure this country has in place today could not be rebuilt if it was to go away (regulation, shortage of technical labor). Most people don't realize how fragile our western way of life is. I am concerned about US debt levels despite enjoying a long peace dividend. I worry about how the general population might react if we actually have a real national crisis.
Best economic summary I have read in years. Please continue.
This is good. Many thanks.
Really enjoy reading your insightful, broad based, relevant, and detailed analysis. Its top of my read list. Thanks. Thanks again.
Thanks for the work you do, I really like the new format. Brief and punchy, perfect for people who receive a lot of inbound information.
Succinct and relevant. Keep them coming. (But along with Haymakers as your time permits)
Fantastic edition and a quick enough read to make it one of my go-to publishers-You!
Ray
I feel like I have read literally hundreds of these doomsday articles about the USA debt situation for the last 20 years. And for years I thought there must be a "great reckoning" coming any day. But they just continue to endlessly kick the can down the road. I remember in 2010, 2011, 2012 with QE everyone was freaking out about hyperinflation, defaults, soverign debt crises. Yet they kicked the can for another 13 years. It reminds of the story of the boy who cried wolf. The boy has cried wolf for so many decades about a looming "soverign debt crises", that people have become desensitized to the insane levels of gov't debt. But someday the wolf might come.
Invest $10 in the kindle version of Edward Dowd's "Cause Unkown", spend two hours readings it. Reflect on employment data.
"As we have seen in recent years, there exists within large swaths of the American populace an instinctive, and frequently unthinking deference to expertise (so often vaguely categorized)."
I think that's a much older tendency, and the more recent tendency is for people to believe whatever it suits them to believe, based on gut feeling, tribal affiliation or wishful thinking. This is a lot worse than deference to experts, and has led to a dangerous explosion in belief in election lies and other conspiracy theories.
"Once the Fed shifts gears, risk assets, like stocks and commodities, are likely to rip higher"... not stocks I am afraid... that is the case in disinflationary regimes, not in inflationary ones like we have today David. Michael Hartnett shows evidence of this. Thanks for your wonderful work.
I like the Friday Highlights format. But, you seem to have (ahem) a little confirmation bias in your selection?
Perhaps you might consider adding at least one well-thought out opposing opinion. About 1/2 of the market gurus out there are thinking we have a "soft landing" in the market even if we have a "hard landing" in the economy. After all, people adapt. Markets adapt. In droves (herds?).
As in, Lots of folks saw the inverted rate curve and started making adjustments BEFORE the recession, which may almost preclude the worst parts of the impending recession? This appears to be different from 2008 when everyone was still pooh-poohing the idea of a crisis. Different inputs get different outputs.
Another example. Many of my friends were only scared about 10% into cash last year, and they are just waiting for a dip to buy in. Fewer folks panic sold last year, but some increased their cash positions. The amount of cash on the sidelines is probably much, much higher.
Which writer to add?
Well, Warren Buffet has been telling us for at least 30 years to be greedy when others are fearful, and he's buying Oxy at $57-61. And after 4+ decades of Warren Buffet, lots of folks are not panic selling (some like me are buying OXY, when Warren is buying Oxy).
Just a thought...