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A Failure Of Epic Proportions

April 7th, 2020 · Comments Off on A Failure Of Epic Proportions

Most Western democracies fumbled in their response to the coronavirus outbreak despite having two months to prepare. A number of Asian countries have shown that it was possible to nip an outbreak in the bud and/or contain one when a serious one materialized. Investors are suddenly faced with a whole new landscape to navigate. A […]

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Tags: Economy

The Mother Of All Cash Flow Retreats

April 7th, 2020 · Comments Off on The Mother Of All Cash Flow Retreats

With corporate debt levels higher than before the financial crisis and the quality of much of this pretty low, the last we need is a sudden retreat in cash flow. But that is exactly what is happening and this could lead to a financial crisis and a Fisherian debt-deflationary spiral. Under certain specific circumstances it […]

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Tags: Economy

Unanswered Coronavirus Questions, Now Is Not The Time For Heroics

March 5th, 2020 · Comments Off on Unanswered Coronavirus Questions, Now Is Not The Time For Heroics

The good news is that the situation in China is improving albeit at exorbitant economic cost, and the virus spreads mostly through family. However, experiences from South Korea show that under unfortunate conditions, few infected people can wreak havoc. On a world scale, we’re only as strong as the weakest links, and there are many […]

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Tags: The Markets

When Hard Money Men Turn Soft

July 16th, 2019 · Comments Off on When Hard Money Men Turn Soft

On the right, economic orthodoxy (sound money, sound public finances and free trade) which was defended vigorously a decade ago when it was less helpful are shredded with amazing ease. On the left, always more open to forms of stimulating the economy, many embrace MMT and a really ambitious increase in public spending. When even […]

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Tags: Economic Policy

When A Country Doesn’t Trust Its Own Money

May 11th, 2019 · Comments Off on When A Country Doesn’t Trust Its Own Money

Argentina’s biggest economic problem is the lack of credibility of its currency. At the first sign of trouble, it tends to plunge. A peso plunge is liable to set all sorts of self-reinforcing mechanisms in motion, basically acting as a giant self-fulfilling prophecy. There is no easy remedy for this structural situation, but from time […]

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Tags: Economy

Peak Economy, Peak Earnings

November 21st, 2018 · Comments Off on Peak Economy, Peak Earnings

The tax cuts produced a boom in economic growth, but the effects look set to peter out. The tax cuts also unleashed some headwinds that could gather force, like rising rates and yields and a rising dollar, a pretty dangerous cocktail for the world economy. Earnings are set to peak and even if we avoid […]

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Tags: Economy · The Markets

Unemployment And The Markets

November 7th, 2018 · Comments Off on Unemployment And The Markets

Unemployment is at multi-decades lows and this has already got the Fed into a preemptive tightening cycle, and getting this right matters a great deal for investor returns. However, the expected wage inflation spilling over into prices and/or decreasing margins has really been unusually modest, given the tight labor market. There are those who seem […]

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Tags: Economy

Patients Versus Shareholders

October 17th, 2018 · Comments Off on Patients Versus Shareholders

There is a critical distinction between market friendly and business friendly deregulation but this is almost never made, with sometimes terrible consequences. Perhaps the best example of the latter is the US healthcare system, where insiders rule and investors rejoice, but at the expense of patients and the rest of the economy.Investors often benefit from […]

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Tags: Economy

The Feel-Good Economy

October 3rd, 2018 · Comments Off on The Feel-Good Economy

While the economy is booming, it’s hard to detect a real break in the post-financial crisis recovery in hard data covering growth, job creation, and wages. The high growth in Q2 was substantially boosted by fiscal stimulus and one-off factors, and we don’t think 4%+ growth is sustainable for very long. There is a positive […]

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Tags: Economy

All That New Technology, Why Doesn’t It Boost Productivity Growth?

August 6th, 2018 · Comments Off on All That New Technology, Why Doesn’t It Boost Productivity Growth?

It seems that we’re once again in a Solow Paradox world where we see incredible new tech all around us, apart from the productivity statistics. We look at three different explanations, not all of which we find convincing. At a micro level, change is happening and investors can seek out companies with high investments in […]

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Tags: Economy