To the extent to which forecasts on the financial markets have largely been reduced to our collective reactions to utterances of policymakers who may or may not know any more than the rest of us, we’ve decided to keep things simple – presenting our base case as well as some facts we believe you should know:  Base Case: Recession odds are 45% in 2025 due to increased uncertainty regarding global trade and concomitant impact on capital spending/deal-making Unemployment claims (low), co… View More
We’ve expected a recession for more than a year now. Simply put…the Era of Easy Everything is Over. Expanding deficits and easy money (that have lifted the economy since COVID) are no longer with us. At the same time, tariff negotiations have created an unbelievable amount of uncertainty. Add it all up and we expect 0.3% real GDP growth in the first quarter. Consumers and businesses were front-running tariffs in Q1, trying to get as many goods as possible into the country as soon as possibl… View More
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