Thoughts from the Front Line - I’ve often thought it would be fun to convene a therapy group of weather forecasters and economic forecasters. Both face the same frustration: Everybody wants a clear, simple answer they can’t possibly give, because they don’t know. Then they get blamed for being wrong anyway. In both weather and the economy, the best we can […]

Thoughts from the Front Line - A year ago, the US Consumer Price Index was rising at an almost 9% annual rate. The Federal Reserve was trying to change that trend with tighter policy. But it wasn’t just the Fed. All of us—businesses, consumers, everyone—responded to the pain. Good news: Our collective decisions seem to have had the desired effect. Annual […]

Thoughts from the Front Line - In economics we often talk about cycles. “Business cycle theory” is an entire academic sub-field whose basic idea is that economic history really does repeat itself. Not in every detail, of course, but as a recurring sequence of expansions and recessions. More broadly, some historians think human civilization goes through cycles. Often, they base this […]

Thoughts from the Front Line - “Crisis” is an overused word. Actual crises are those rare times when we are on the knife edge of disaster. It’s not a crisis when a bank fails, or Congress can’t agree on a budget. Those are annoyances (unless it’s your bank). While not good, they don’t spell immediate catastrophe. I’ve long been predicting a […]

Thoughts from the Front Line - Business media is famous for propagating buzzwords and phrases, especially if they produce more clicks. The latest is Artificial Intelligence. It’s everywhere and is now a fixture in earnings calls, too. Every CEO is getting asked how AI will fit into or affect their company. It’s not quite as bad as every CEO trying to […]

Thoughts from the Front Line - We often talk about technology’s influence on the economy. After the Strategic Investment Conference, though, I’ve decided that isn’t strong enough. It’s more correct to say technology is the economy. But when I use the word technology here, I’m not talking about the big, nifty eight tech companies that dominate today’s stock market. I’m talking […]

Thoughts from the Front Line - This year’s Strategic Investment Conference is wrapped up, but it’s not over. We spent five days thinking the unthinkable. I, for one, will continue not just thinking about it but meditating on it. I believe we got some serious insight into this decade’s fin de siècle. I’ve dubbed it The Great Reset. Others have different […]

Thoughts from the Front Line -   World economic growth is slowing. That’s so obvious, very few will disagree. I suppose there are people out there predicting imminent 1990s-like expansion, but they are few and far between. If recession begins soon, it will be the most anticipated one in history. This was a prime question at my Strategic Investment Conference, which […]

Thoughts from the Front Line - The week we’ve been waiting for is here. The Strategic Investment Conference starts Monday, and we have a jam-packed schedule. This year is clearly the best SIC we’ve ever had in 19 years—a wide-ranging set of topics dealing with the issues that are most important to each of us. You really should join us. You […]

Thoughts from the Front Line - Back before clocks went digital, you could say “a stopped clock is right twice a day” and even youngsters would know what you meant. A mechanism could be nonfunctional but occasionally correct. So it is with the Federal Reserve and its leaders. They make many mistakes but sometimes get it right. They are doing so […]

Thoughts from the Front Line - Spotting trend changes is the key to economic forecasting. They don’t happen often. Most of the time, this year will be similar to last year. The pace varies but the overall trend continues… until it doesn’t. Those who lived through the painful 1970s inflation developed a certain mindset. Similarly, the 2008‒2020 disinflation/low inflation period, accompanied […]

Thoughts from the Front Line - “Thinking the Unthinkable.” What does that phrase bring to mind? To me it suggests a situation that has become so stressed you are forced to consider undesirable solutions. Yet the opposite is possible, too. Thinking differently may reveal an immensely profitable and beneficial solution. I have been in and around markets now for well over […]

Thoughts from the Front Line - Remember when banks were small? Those old enough to have a bank account in the 1970s should. Back then, most people did their banking with a locally owned institution, often the First National Bank of (Your Town). These were fully independent banks, not branches of bigger ones. You could walk in and see the bank […]

Thoughts from the Front Line - Recently I saw someone share a clip from their weather app. It said, “Rain expected at 3 pm,” right above a little graphic showing a 30% chance of rain at 3 pm. What’s wrong with that picture? Well, if the calculated odds of rain were only 30%, then “expected” wasn’t the right word. The odds […]

Thoughts from the Front Line - “There’s an old saying: Whenever the Fed hits the brakes, someone goes through the windshield,” said Michael Feroli, chief economist at J.P. Morgan. “You just never know who it’s going to be.” (The New York Times, March 16, 2023) For years I’ve used a sandpile metaphor to describe complex systems like banking. Keep dropping grains […]

Thoughts from the Front Line - If a picture is worth a thousand words, this will be the “longest” letter I’ve sent you in a while, as there are quite a few pictures. It may also be the most wide-ranging. Every Wednesday my Over My Shoulder members get a PDF file with some of the week’s most interesting charts, all selected […]

Thoughts from the Front Line - If you read and pay attention to the world, you probably know the recent past pretty well. And if you’re a history buff like me, you also know something about the more distant past. In between, however, we often have a memory gap. Events from 5, 10, even 20 years ago slip out of mind […]

Thoughts from the Front Line - “Diamonds are forever,” according to the jewelry industry. That may be a slight exaggeration, yet diamonds will certainly outlive you and whomever you give them to. Debt isn’t forever but can definitely seem like it. That feeling is a clue you have too much debt. Wisely used, debt helps build income-generating assets that pay for themselves. The […]

Thoughts from the Front Line - Federal Reserve officials like to call their decisions “data dependent.” Business leaders say it a little differently, often “data driven.” The point, in both cases, is something like: “We consider relevant data when making important decisions.” All well and good but does anyone really say otherwise? “I prefer seat-of-the-pants guesswork” doesn’t typically impress investors. So […]

Thoughts from the Front Line - Remember National Lampoon’s Vacation? It was a 1983 comedy film in which suburban dad Clark Griswold (Chevy Chase) takes his family on a cross-country road trip to the fabled Walley World amusement park. Clark made one critical mistake, though. He assumed Walley World would be open and waiting for them. This was to be the family’s reward for […]

Thoughts from the Front Line - These weekly letters, of which I’ve now written well over 1,000 (plus 7 books and multiple papers and articles), are generally about two broad topics: the economy and the financial markets. While related, these aren’t the same. Good news for one can be (and often is) bad news for the other. I explained my economic […]

Thoughts from the Front Line - In stock investing there’s a management style called “growth at a reasonable price” or GARP. It seeks to achieve steadier results by avoiding both expensive growth stocks and beaten-down value stocks. We can apply a similar idea to economic growth. Everyone wants the benefits of higher GDP. How much inflation, unemployment, and market losses are […]

Thoughts from the Front Line - The world’s leading CEOs, politicians, and various do-gooders were in Davos, Switzerland, this week, discussing ways to solve our collective problems and create opportunities for their own companies. The most important conversations were off the record and many of the public speeches were simply performance art. (Sadly, I wasn’t invited even though I have a […]

Thoughts from the Front Line - The Federal Open Market Committee’s 12 voting members differ on where they think interest rates should go this year. But we know they’re unanimously against cutting rates until at least 2024—or at least they were as of December, according to that meeting’s minutes. That means one of the three possible directions (up, down, sideways) is currently […]

Thoughts from the Front Line - This will be my last letter of 2022. I want to use this letter as a set-up for my annual forecast issue the first week of January. That means we will touch on a variety of topics, kind of a snapshot into where my mind is today. Get ready to travel the world but let’s […]