This week marked a historic regime shift in American monetary policy. Chairman Kevin Warsh led his very first meeting of the Federal Reserve. Appointed with the explicit, public expectation from the current administration that he would aggressively lower interest rates, Warsh instead faced a cold reality. Wholesale prices and underlying price pressures since the middle of the first quarter have forced a major pivot. Rather than delivering the cuts the political apparatus demanded, the financial...
I am sure many of us have wondered whether Elon Musk would eventually become the world's first trillionaire. Thanks to the successful public market debut of SpaceX, that question appears much closer to being answered. Shares rose roughly 20% above the initial offering price, instantly placing SpaceX among the most highly valued companies in America. SpaceX may not be the last major technology offering we see. Additional public debuts are expected from artificial intelligence leaders...
Even though we are bombarded every single day with non-stop news about inflation, crumbling affordability, and historic lows in consumer sentiment, the stock market's core narrative remains completely unchanged. Equities are continuing to march toward records because of exceptionally strong corporate earnings, particularly from the market’s largest titans, fueled by immense investments in Artificial Intelligence infrastructure. Combined with massive corporate stock buybacks that systematically shrink the available pool of public shares, and an unwavering wave...
Inflation accelerated significantly in May, driven by lingering energy price spikes, the compounding ripple effects of the Middle East conflict, and aggressive trade tariffs. This combination triggered a sharp rise in long-term interest rates, causing a notable steepening of the yield curve. If this sounds like technical jargon, remember the narrative from 2022 through 2025. Back then, the financial media was obsessed with the inverted yield curve, constantly sounding the alarm that an imminent recession...
So much uncertainty surrounds the next 6 months to a year, let alone a year or more from now, that all possibilities remain open. Positive, negative, and everything in between. The question is not just whether AI changes the economy. It already is. The better question is whether the constant controversy, focus, and discussion around AI is causing us to forget everything else happening at the same time: inflation, affordability, the war with Iran, and...
Does the current economy feel like a contradiction? You are not alone. I have recently subscribed to the Financial Times, a fantastic publication—you likely recognize it as the “pink paper” found in international airports—which provides a vital global perspective on business and politics. One of my favorite journalists at the FT, Gillian Tett, recently highlighted three acronyms that help make sense of the erratic behavior we see in the markets today. To understand why the...
Staggering Sums: Record Highs and the Rule of Unintended Consequences All news seems to be good news as we finish April: Index Price April 1 Price April 30 April Performance Nasdaq 100 24,019.99 27,452.12 +14.29% S&P 500 6,575.32 7,209.01 +9.64% Dow Jones DJIA 46,565.74 49,652.14 +6.63% MSCI World Index 4,176.79* 4,625.50** ~+10.74% GDP growth for the first quarter was released at 2%, a little below expectations of 2.2%, but close enough. The economy is still...
Main Street is cratering. Wall Street is celebrating. Go figure. We are sitting in the middle of a global stalemate, gas prices are exploding, and the average American feels like they are underwater. According to the latest data, consumer sentiment did not just drop, it fell off a cliff. We are at a historic low of 47.6. That is lower than the Great Recession. Lower than the 2022 inflation peak. But look at the tickers...
The Familiar Echo of 2022–2024 Does this sound familiar? The stock market is carving out new highs, economic data looks “okay” on paper, and employment numbers remain steady. Yet there’s a massive disconnect. Those in charge of the economy are sounding optimistic, claiming everything is good, a sentiment we heard repeatedly between 2022 and 2024. Even though the top-line economy looks stable, many Americans are simply not feeling it. During the Biden years, the term...
Animal spirits can be scary and can work for both declines and advances in a very volatile environment. It is pretty easy to see the risks to the current economy, including inflation, global conflict, chaotic leadership, and questions about economic growth. As we have discussed before in Market volatility is head spinning, markets do not need much to become unsettled when uncertainty is already elevated. David and Goliath Is Not Dead You do not need...
The war continues and markets, although volatile on a daily basis, have reacted as if the war could end any day. And in fact, it could end any day. Problem is a unilateral declaration by the US is only part of the equation with Israel and Iran having a significant say. The Energy & Derivative Squeeze In the meantime, oil/gas prices continue to increase, and increases are happening in the many derivative products relation to...
As outlined in the newsletter a couple of weeks ago, we reviewed market movements during war and then 1 year later, demonstrating that investing based on wars is not an effective strategy. Given those results, we are only 3 weeks into the war with Iran, so we do not have the wisdom of 1 year later. Today the Nasdaq entered correction territory, meaning a 10% decline from the recent high. Index 2026 All-Time High Current...
