Market Trends & Outlook

After 40-years of economic erosion, there are still deficit deniers. The belief that debt and deficits “don’t matter” primarily stems from the basis the economy hasn’t collapsed and become a historical equivalent of Weimer, Germany. However, the rather elementary view fails to distinguish that dropping a frog into boiling water or slowly bringing the water to a boil equates to the same outcome. That latter just takes longer to get there.

After 40-years of economic erosion, there are still deficit deniers. The belief that debt and deficits “don’t matter” primarily stems from the basis the economy hasn’t collapsed and become a historical equivalent of Weimer, Germany. However, the rather elementary view fails to distinguish that dropping a frog into boiling water or slowly bringing the water to a boil equates to the same outcome. That latter just takes longer to get there.

For years environmental extremists have campaigned with increasing success for less investment in fossil fuels. The logic has been that as CO2-emitting sources of energy become harder to access and more expensive, the world would increasingly turn to renewables.

For years environmental extremists have campaigned with increasing success for less investment in fossil fuels. The logic has been that as CO2-emitting sources of energy become harder to access and more expensive, the world would increasingly turn to renewables.

As the third quarter slowly winds down, economic data announcements remain front page stories as the economy recalibrates amid the Delta variant. Even though labor markets and supply chains remain challenged with a less linear recovery and supply bottlenecks, the consumer price index (CPI), an inflation gauge, slowed its’ growth with the smallest gain in seven months as consumer prices increased only 0.3% (0.1% less than consensus).

Gold. What’s wrong with it? From spiking inflation, falling real interest rates, and massive money printing, it seems logical that gold, a touted inflation hedge, should be rising. Yet, so far this year, gold has done little.

I talk to Advisors and consumers every week. What do I hear a lot these days? “The market has to go down, it can’t keep going up like this forever…I’m raising some cash to take advantage of the pullback when it comes…”. All of these comments are thoughtful and prudent and a correction can come at any time.

The question of Japanization in the U.S. continues as the S&P 500 tracks the Nikkei of 1980. An email question I received recently is worth discussing in more detail.