Be fearful when others are greedy and greedy when others are fearful. Warren Buffett People are always asking me where's the outlook good, but that's the wrong question. The right question is: Where is the outlook the most miserable? Sir John Templeton, The Principle of Maximum Pessimism I don't know if we're at the point of maximum pessimism yet but [...]
Jay Powell has had his mind changed for him. Why? Not even a year ago he was downplaying things like federal funds. The rise in that one anachronistic rate was inconsistent with a healthy financial system poised for the good times that come with serious economic acceleration. Quite the opposite, actually. To dismiss the obvious contrary signal, in very place [...]
The Federal Reserve published its latest update for Z1, the Financial Accounts of the United States (formerly Flow of Funds). That means we can update our valuation metrics for a good piece of the US stock market. Tobin’s Q starts with the premise that the value of any company is in many ways dictated by its accounting net worth. We [...]
The Federal Reserve updated the Financial Accounts of the United States (Z1) yesterday, meaning there is quite a lot of new data for the second quarter of 2017. It also means more than just that update, as each quarterly addition is often accompanied by revisions to past estimates. There were some substantial downward revisions to things like Corporate Net Worth, [...]
It is surely one of the primary reasons why many if not most people have so much trouble accepting the trouble the economy is in. With record high stock prices leading to record levels of household net worth, it seems utterly inconsistent to claim those facts against a US economic depression. Weakness might be more easily believed as some overseas [...]
Although he didn’t state it specifically in his November 2010 Washington Post op-ed formally justifying QE2, it was very clear that then-Fed Chairman Ben Bernanke intended it to work through lending and especially the bank channel. Though he doesn’t explain, nor has any official ever, why a second one was needed given that the first was “quantitatively” determined, Bernanke was [...]
We live in a non-linear world that is almost always described in linear terms. Though Einstein supposedly said compound interest is the most powerful force in the universe, it rarely is appreciated for what the statement really means. And so the idea of record highs or even just positive numbers have been equated with positive outcomes, even though record highs [...]
Household net worth in the United States surpassed $90 trillion for the first time in Q3 2016, according to the latest estimates from the Federal Reserve’s Financial Accounts of the United States (Z1). That’s up sharply from $67.9 trillion now estimated (with revisions) for Q3 2012 when QE3 was introduced. Despite a massive gain of just about a third, Nominal [...]
Last week the Federal Reserve updated its quarterly Financial Accounts of the United States Z1 (formerly Flow of Funds) meaning that we can recheck valuation levels of the stock bubble from alternate points of view (data). The most common valuation given by the report is Tobin’s Q which compares the estimated value of corporate equities (liability) to nonfinancial corporate business [...]
I have not yet commented on the huge revisions in corporate debt to this point (the revisions were released on September 18 with the regular update to the Z1 Financial Accounts of the United States, formerly Flow of Funds) because there was so very little information surrounding the changes. I had hoped by now somebody somewhere with a better perspective [...]
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