Steve

Time for the Fed to Pause

There are more reasons for the Fed to abide by Neel Kashkari’s advice than he articulates in “Pause Interest-Rate Hikes to Help the Labor Force Grow (October 26, 2018).”  

EBITDA is not foolish

It is unwise for Jason Zweig to disparage additions and subtractions to EDITDA by describing them as "The Fanciful Alphabet Soup Companies Use to Fool You (WSJ, June 2, 2018)"."  GAAP accounting is encountering serious deficiencies in its ability to differentiate repeatable costs from investments in the future which should be capitalized, i.e., charged to the balance sheet n

Returning to the "Old Normal" 

In "Can America Grow Again?" (WSJ May 30, 2018), the four contributors to the debate missed perhaps the most important contributor to the decline in US GDP growth after the Great Recession:  The risk-free interest rate dropped to zero and stayed there for nine years.  Because M3 is $20 trillion, risk-free interest rates of 5% on deposits, checking accounts, and money-market

A Buying Opportunity in the Stock Market

Being an investor requires not just predicting outcomes of future events but also, far more often, predicting when the market will price in events that over time do not occur.  Last week was a classic example.  The market was buffeted by the rise of four major risks to the market, none of which however are likely to occur.  If these risks subside, discounts for them will disappea

The cause of the loan-growth rut

2017 is the worst year for business-loan growth since 2010, according to "Loan Growth is in a Rut” (WSJ, 11/27/17).  2017 also happens to be when the Fed rate hikes started taking hold.  Why would Fed rate hikes reduce loan issuance? 

The Crux of the Worriers' Fallacy

It is no coincidence that the dire warning signs of professor Robert Shiller’s cyclically adjusted PE (CAPE) have been a false alarm for the past five years and counting, as you point out in “Worriers (Usually) Get Market Wrong.” (WSJ, Nov 20, 2017)  As its name implies, cyclically adjusted PE is useful for analyzing valuations of cyclical companies.  The a

Why US growth is lackluster

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What is Driving the Trump rally? 

The stock market has stormed ahead under the administration of Donald Trump.  After a big run-up from November 8, 2016 to year-end last year, the S&P has risen another 8% this year while the Nasdaq composite is up another 15%.

Contemplating a limited military response to North Korea’s provocations

Ever since US nuclear technology was stolen by the post-war Soviet Union, the United States has avoided direct confrontation with nuclear-armed states out of fear of escalation into unthinkable nuclear warfare.

In a year, it may be time to short oil again

Second chances in life are a rarity.  But if you missed the opportunity to short oil in 2014, you may have another later next year.  The underlying dynamic that caused the 2014 oil price collapse—fracking--is still in full swing.  But OPEC and Russia, pinned in, are defying gravity for now.  They will not be able to do so forever.  Supply and demand eventually dic

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