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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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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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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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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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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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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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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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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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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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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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