Secular Trends: Monetary and Fiscal Policy
We are often very vocal about our concerns regarding the poor policies in this country. Here is a tidy little opinion piece from the Fellows at Stanford University’s Hoover Institution. It is a good summary of the existing headwinds coming out of our political class. WSJ.com – Opinion: The Magnitude of the Mess We’re In .. read more
Secular Trends: Trade Wars
When times get tough, there is a tendency to get territorial and nationalistic. This finger pointing and these attempts to stir up emotion in one’s constituency are mostly detrimental to everyone. More politics in the form of economic warfare is a trend we don’t want to see emerge. WSJ.com – Opinion: Importing Jobs From China .. read more
Tactical Update
Prior to the Federal Reserve’s policy decision on Thursday we took some preemptive action. Here are our thoughts on the economic backdrop, possible paths for the economy and implications of the Fed’s actions announced on the 13th. At his speech in Jackson Hole, Ben Bernanke signaled likely policy intervention forth coming from this past week’s .. read more
Distorted Hayekian Triangle Reality
In 1935 Friedrich A. Hayek presented the following diagram of the productive stages of an economy’s production. The insights drawn from this depiction of an efficiently allocated economy form the basis of Austrian Business Cycle Theory. A voluntary decrease in consumption and commensurate increase in savings lowers the slope of the hypotenuse, thus the .. read more
I have to call this out. Representing this move as an intelligent, strategic corporate decision looks, from the other guys point of view, like you’re spitting in his face. Via Reuters: Facebook has crystallized its blunder of an initial public offering with a stock buyback. Mark Zuckerberg’s social network will essentially cut its outstanding share .. read more
Tactical Update
A trend or perhaps out-performance can sometimes be deceiving. You’ve heard me say it before, you must be wary of time horizon. Know what you are analyzing and then look from a different perspective, discern the necessary details. We tend to like visual analysis and it will often paint a very vivid picture. Take, for .. read more
Tactical Update-Fixed Income Duration
Is there an interest rate bubble? Has the bond market topped? It is something that has been on our mind for the past year and especially at the long end of the curve during Operation Twist. If and when bond yields normalize, the capital risk to investors is large, about 8.25-8.5% risk per 1% increase .. read more
Macro Themes – Don’t Fight the FED
When contemplating the FED, one needs to be aware that monetary policy is not an exact science. The FED will definitely try to effect policy; but, to a great extent, they are a reactive bunch. The FED attempts to stay ahead of the curve and anticipate if/when the broader economy needs restraint or accommodation, but .. read more
