Today I’m going to highlight some speakers who added an equity market perspective to their big-picture views. Getting both right would be much easier if more investors behaved rationally. Alas, they don’t, which is why stock prices do incomprehensible things. Fortunately, you can succeed without catching every twist and turn.
My next few letters will share some initial thoughts from SIC organized around the major topics. Today we’ll start with inflation, and specifically the sharply different views of David Rosenberg and Jim Bianco, then balance them with some thoughts from other speakers.
This is the story of how we got to a moment in history defined by global and national crises. It is the story about how a radical geopolitical transition is taking place as old socio-economic and institutional cycles in the US end and new ones begin.
I’ve been writing about tariffs for a couple of months now, focusing mostly on the macroeconomic harm and the costs they impose on small businesses. Today I want to consider something else: the new risks they are adding to the financial system alongside the old risks.
Economic data can be soft or hard. “Soft” data reflects attitudes, expectations, opinions, and feelings. It’s a step removed from the “hard” data reflecting actual events. Soft data is still valuable because future expectations shape the hard data that follows.
I don’t believe the current level of tariffs will be maintained. I think most of them will be walked back, and the country will adapt to, say, a 10% tariff here and there. The Chinese (and a few other countries) tariffs are different in that they will have a more significant impact.
Today we are going to look at some of the uncertainties in our world and then explore some ways to gain a little certainty.
You probably noticed we are having one of those “weeks when decades happen.” Notice also, however, that we are still here. Your investments and businesses may be bruised but you’re still in the game.
Good news: Tariffs will not make the world end. American businesses will do what they do best, which is adapt. While the probability of a recession has increased, we always get through it and the best businesses thrive. Unless directly affected by tariffs, don’t change your personal plans that much.
Today I’ll try to cut through some of this fog and look at why the US has a trade deficit. As you’ll see, it is a built-in, necessary feature of our money. Plus, it is time to start watching for a recession. Let’s jump in.
The theme among so many writers seems to be “vibe shift.” And indeed, there is a concern the economy is slowing and may even be in a recession.
Understanding actual inflation – instead of what the media’s narrative tells you it should be – is critical to your investment planning. It is one thing for a pundit to say this or that, but it is another to look at the actual data for yourself.
I will again join forces with Ed Easterling of Crestmont Research to explore this data more deeply. Currently we have several powerful trends that have combined to create a nirvana-like market.
Today we are going to revisit that matrix updated through 2024. We will see what we got right and wrong, what further inferences we can now make and why I think it confirms my general shift in market strategy over the past few years.
None of us outside Trump’s inner circle know what the real goals are. What looks like needless chaos might lead to benefits that outweigh the costs. One potential benefit is revenue. Could the tariffs produce significant tax revenue that would help reduce the federal debt? The president seems to think so.
Trump Confusion Syndrome, or TCS, is distinct from Trump Derangement Syndrome in which afflicted people feel outrage about everything the president says or does. TCS isn’t about agreeing or disagreeing. It’s mostly about understanding. And then when something still seems wrong, feeling free to say it out loud.
Today we’ll talk about Trump, tariffs, cycles, and DOGE. Jumping right in…
This is not about China. I applaud the creativity of the DeepSeek developers and especially their ability to drive down costs. I am amazed they made it truly open-source and revealed everything.
The Second Trump Era has begun. If you are confident about what it will bring (either good or bad), I would like to gently suggest you reconsider. None of us should be sure what is coming.
Last week in my 2025 forecast letter, I predicted A Partly Cloudy Year, generally mild but with occasional storms. Today we’ll talk about the second half of that sentence. What could go wrong and lead to a worse-than-expected year? In short, what are the main risks to my forecast?
Rough times are coming, yes, but I think we have at least 12 good months before the worst gets here. Let’s look at some of the reasons why things should be okay and then look at some of the potential problems.
Most people don’t pay much attention to the political process, either local or federal. This year I think it is something we should all be paying attention to as it might affect our various lives.
I expect three major innovation cycles to dramatically affect our world in the next decade, with impacts comparable to steam engines, electricity, automobiles, and even the internet. Every new invention helps us explore even further.
I must confess, I have been aware of quantum computing for quite some time, but it was one of those things that always seemed far off. It’s now getting much closer.
Energy is everything. Or, if Einstein was right, you and I are just energy in material form. Accelerate us to lightspeed squared and we might become something else.
Whether you want to buy or rent, finding an affordable, comfortable home can be extremely difficult, if not impossible.
The question on “everyone’s” mind, whether the back or the front, is where will the stock market be in two, three, six years?
Politicians and think-tank wonks of all stripes love to condemn government “waste, fraud, and abuse.” But saying it isn’t hard. Who is the opposition? No one says we need more waste, fraud, and abuse. We’re all 100% agreed all three are bad.
Two weeks ago, I opened this letter by noting the election uncertainty, once over, would give way to a different uncertainty about what comes next. That’s where we are now.
I went to bed “early” on election night, around 10:30 pm. We are in the five months of the year where Puerto Rico is one hour ahead of Eastern time, and nothing I was seeing made me think it would be an early night. And by that I meant 3 or 4 am.
Anyone else ready for the election to be over? This uncertainty is exhausting, no matter how you want it to end. But sadly, it won’t really end. We will just transition to a different uncertainty over what will happen next. I will offer my thoughts on the election at the end of this letter, after setting the stage.
We don’t talk about China enough. I suspect this is for several reasons. First, because the country is so incomprehensibly big and populous. Second, it has been an economic miracle. Many Chinese enthusiasts just see a straight line projection of their growth. To the moon, Alice!
Housing prices matter to everyone, even if you aren’t trying to buy, sell, or rent a home. They are the key to inflation, which drives Fed policy and interest rates, which drive financial markets. We’re all part of this, like it or not. Today we’ll review what is happening.
Everything I’ve learned and experienced in 50+ years of watching the economy tells me not to expect a soft landing. But maybe that’s because I’ve never actually seen one.
It’s my birthday week and I have guests and family gathering in the next room, so this will hopefully be a quick letter as well as ending with what will likely be controversial food for thought.
Two weeks ago, I began reviewing Martin Gurri’s important book, The Revolt of the Public. Rather than try to do a general review, I am going to liberally quote from Gurri’s book and interviews, trying to let him explain himself in his own words.
I’m moving up a letter I was planning to share with you on my birthday weekend in two weeks. The story about sandpiles and the financial system may be the most popular letter I’ve written in the last 25 years. It is one we should all re-read every few years to remind us how change happens slowly, then suddenly.
In my cycles book I’m reviewing the forecasts of Neil Howe, Peter Turchin, George Friedman, and Ray Dalio. For different historical reasons and patterns, all see a crisis culminating at the end of this decade. Some readers have legitimately pushed back, saying no one knows the future.
We are entering a time I think will include a deep crisis. We are going to need each other. We really do need to “find our tribe.”
I asked my great friend and business partner David Bahnsen, who is about as politically wired as anyone and one of the truly great economic and investment minds, to reflect on the intersection of politics and markets. It is a quick, balanced, and reasonable read...
This week we take a not-so-random walk through the data, trying to simplify what is actually a fairly complex subject. I think it is quite fun, but also important. Let's dive in.
Head fake is a trading term, too. Some bit of information convinces investors a market is going to move a certain way. They reposition their portfolios accordingly… just in time to find out the information was wrong. Oof.
I can't let this month pass without noting a significant anniversary: This is the 25th year I’ve been writing Thoughts from the Frontline. You can visit the archive and see every issue since January 2001.
The Federal Reserve is between the Rock of Gibraltar and the Rocky Mountains. The data they use to explain their policy choices is in apparent transition. A self-aware analyst, seeing the conflicting data, knows that the right policy choice will only be understood in hindsight.
Progress toward a goal usually isn’t linear. The first 50% isn’t too bad, the next 40% is harder, and the last 10% consumes most of the effort and resources. Business strategists call this the “last mile” problem… and it applies to inflation, too.
The inflation picture is getting better but we still have too much of it. Inflation is going but not gone, and probably won’t be gone anytime soon. Today I’ll tell you why.
We are in the time of year when Americans pack transatlantic airliners for their European vacations. I had actually hoped to be one of them. That didn’t work out but we can still talk about events in Europe. And we probably should, because potentially major changes are happening.
Long-time readers know I have not been a fan of the Chevron deference. I think it was one of the worst decisions of the last century. I've been aware of it because I'm in a regulated business.
The giant federal debt we’ve been talking about isn’t just borrowed money. It is also lent money. Loans are two-party transactions. One side receives temporary use of cash which it agrees to repay with interest. The other gives up the current use of that cash in exchange for receiving interest. Ideally, it works out for both… but not always.
The old saw about doing the same thing and expecting a different result is less simple than it seems. Sometimes you need a few attempts to get it right.
