Thoughts from the Front Line - The Old Testament portrays King Solomon as the wisest of all men. In addition to recording his wisdom in the book of Proverbs while dealing with 700 wives and 300 concubines, he also became a chart-topping songwriter in the 1960s (some 3,000 years after his death) with a little help from Pete Seeger and the […]

Thoughts from the Front Line - My friend Neil Howe titled his latest book The Fourth Turning Is Here because, well, the Fourth Turning is here. It is no longer the decades-away crisis he and the late William Strauss described in their 1990s books. As noted last week, each “turning” is generally 20 to 25 years. We are in the last half of […]

Thoughts from the Front Line - We talk frequently about the way central banks and governments affect the economy. In the grander scheme of things, though, whatever the Fed does is more like throwing a hand grenade into a large building. Yes, you’ll make some noise and cause some damage. People may be hurt. But the building won’t care, and the […]

Thoughts from the Front Line -   While inflation is technically about general price levels, in practice we use it to describe living costs. That’s why the benchmarks measure consumer prices and personal consumption expenditures. These are where higher prices hurt because they apply to everyone. Other measures like the Producer Price Index have valuable information but are less immediately relevant to most people. But […]

Thoughts from the Front Line - The market, and maybe all of us, would like to believe the latest 3% annual CPI number was a harbinger of ever-lower inflation, and we are on the road to 2% inflation by year end. I would argue, “Not so fast.” Inflation is far from dead, and CPI will likely go slightly up between now […]

Thoughts from the Front Line - “A man hears what he wants to hear and disregards the rest…” —The Boxer, Paul Simon, 1969 One of the hardest parts of economic forecasting is separating what we expect from what we want. Actually, this is part of the human condition, genetically programmed into us and affecting every part of our society and lives, not just economic […]

Thoughts from the Front Line - National leaders are (or should be) reluctant to enter wars because, once begun, they are often hard to end. You could be bogged down for years, vainly trying plan after plan as the damage accumulates. Monetary policy works the same way. Central bankers think they can handle a situation and fire the artillery. It always […]

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 […]