Perspectives

Before the long weekend, we wanted to share additional thoughts on: Can the US avoid recession, and can the stock market deliver positive returns in 2025? Consumer Confidence If so much good news exists, why is the market down? What about China and the tariffs? Won’t that cause hyperinflation? Isn’t the US alienating its allies and trading partners? Won’t this open the door for China to step in? Because there is much to cover here, we’ve divided it into sections so you can ju… View More

Quantitative Easing was different during COVID than during the Financial Panic of 2008. During COVID, M2 growth soared, while it was held back during the Financial Panic by much tighter liquidity controls on banks. That’s why we were among the first and very few who predicted much higher inflation due to COVID policies. After that, we remained wary of loosening monetary policy too aggressively because we feared that, in spite of a drop in inflation, inflation remained above the Federal Reserv… View More

The Federal Reserve started raising short-term interest rates three years ago and the M2 measure of the money supply – what Milton Friedman said to focus on – soon started declining, hitting bottom in late 2023. One of the great mysteries of the past two years is why, given tighter money, economic growth didn’t slow down, much less hit a recession. One reason was that the federal government was engaging in the most reckless deficit spending in our lifetimes. Don’t get us wrong, we don�… View More

Trade partners lack options, prefer negotiation over retaliation China opens to talks, India and Vietnam prioritize negotiations EU considers retaliation, seeks new trade alliances U.S. trading partners have few good options in their trade war with President Donald Trump, other than to sue for peace. Hit by 10%-50% tariffs on their exports to the world's dominant economic superpower, most lack the firepower to hit back or the political will to slug it out, say government officials, econom… View More

President Trump announced what he calls reciprocal tariffs yesterday, but reciprocal means the same doesn't it? Simple Definitions: reciprocal: done, given, or felt equally by both sides. reciprocal affection: related to each other in such a way that one completes the other or is the equal of the other.   Full List of Countries Hit With Reciprocal Tariffs: You will note that the tariffs announced were at a 10% floor to meet most countries at Reciprocal as defined. The co… View More

We wanted to share an update on what’s happening right now in the markets. Yesterday, at the market’s close, President Trump announced his broad-sweeping tariff plans. The market’s initial reaction is negative, contributing to today’s market drop. The first thought we want to share is that it is not atypical nor unexpected for the markets to react negatively to “change,” especially when the change is of this magnitude. President Trump’s end goal is to rewrite the book on how the … View More

During the ten years prior to COVID, PCE inflation, the Fed’s preferred measure, averaged about 1.5% per year. Jerome Powell said it was too low and he wanted inflation to “average” 2% over time. Well, he got his wish, and more. PCE inflation has averaged 3.7% in the past five years and 2.6% over the past ten years. In other words, because of its misguided policies during COVID, the Fed has pushed inflation above both its short-term and long-term target. Any apparent success at bringing i… View More