While headlines of bank failures and bailouts consume the media, few are contemplating the economic and financial aftershocks that will follow. Hockey great Wayne Gretzky famously commented, “I skate to where the puck is going to be, not where it has been.” Let’s take his advice and consider where the economic puck will be tomorrow. […]
With the collapse of Silicon Valley Bank, questions of potential “bank runs” spread among regional banks. “Bank runs” are problematic in today’s financial system due to fractional reserve banking. Under this system, only a fraction of a bank’s deposits must be available for withdrawal. In this system, banks only keep a specific amount of cash […]
Warren Buffett defended stock buybacks in Berkshire Hathaway’s annual letter, pushing back on those railing against the practice he believes benefits all shareholders. “When you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue (characters that are […]
The big question facing the Fed is whether they should increase the Fed Funds rate by 25bps or 50bps on March 22, 2023. If Jerome Powell cared for our advice, we would tell him to take the opposite approach of President Theodore Roosevelt. Speak loudly because your stick isn’t that big anymore. President Roosevelt’s […]
Is the recent correction a “bear trap?” Or is the bounce just a selling opportunity for a return of the bear market? “A bear trap occurs when there is a bearish correction or reversal amid an overall uptrend. A downward correction sees shorting temporarily overcoming buying pressure, leading to a short-term price fall. The decline […]
On Friday, February 24th, the most recent reading of the University of Michigan Consumer Sentiment Index was released. It came in at 67.0 for February, an increase from January’s reading of 64.9. As the name implies, the University of Michigan Consumer Sentiment Index measures consumer “sentiment” in the United States. Higher numbers suggest a more […]
Gen Zers, according to a recent Magnify Money survey, are overly optimistic about being wealthy. In fact, according to the survey, they are THE most financially optimistic generation. To wit: “Nearly three-quarters (72%) of Gen Zers believe they’ll become wealthy one day, making them the most financially optimistic generation.” But, interestingly, that optimism, as noted […]
As if the 2020s haven’t been strange enough, the United States military recently shot down several UFOs. Equally bizarre as the possibility of aliens, some investment analysts are projecting an economic no landing scenario. They believe economic activity will easily absorb significant headwinds and chug along. The last few years have been humbling for economists, […]
“Profit margins are probably the most mean-reverting series in finance. And if profit margins do not mean-revert, then something has gone badly wrong with capitalism.” – Jeremy Grantham While there are certainly many complaints that “capitalism” is broken, such is not the case. Yes, there are problems with economic inequalities, the majority of which can […]