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Entries Tagged as 'Economy'

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

A Recession Is Looming

March 3rd, 2020 · Comments Off on A Recession Is Looming

It seems reasonable to assume that the coronavirus outbreak is morphing into a global pandemic and that the US will not be spared from community spreading. This will compound the economic damage already washing up from abroad through domestic disruption and worsening business and consumer confidence. Stimulus will be of little help as much of […]

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Tags: Economy

Brexit Exhaustion Brings A Binary Event And A Long Straddle Option Strategy Into Focus

September 16th, 2019 · Comments Off on Brexit Exhaustion Brings A Binary Event And A Long Straddle Option Strategy Into Focus

Brexit exhaustion led the new PM Boris Johnson to force the issue, but his efforts resulted in a backlash complicating things once again. Part of the collateral damage is that the Ulster DUP is no longer necessary to prop up the Johnson government, which has opened up the perspective of a negotiated exit. This is […]

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Tags: currencies · Economy

Ever-Higher Debt

May 28th, 2019 · Comments Off on Ever-Higher Debt

There has been a remarkable turnaround in the perception of the dangers of public deficits and debts. This has gone from extreme alarm at the beginning of the decade towards a remarkable relaxation in the worrying about public finances. While much of this relaxation is caused by politics, there is actually some sound economics behind […]

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Tags: Public sector deficits and debts

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

Sensible European Populism

December 17th, 2018 · Comments Off on Sensible European Populism

The economic and political situation in Europe is deteriorating pretty alarmingly, stocks are close to, or already in a bear market. Economically, there is the threat of a return of the euro crisis; politically, there is the threat of political disintegration. With sensible market reformers like Macron having run aground, it’s perhaps time for something […]

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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