Paraphrasing a refreshingly perceptive Ben Sasse, first-term senator from Nebraska: Those of us in the investment management profession know people who appear to sincerely want our advice, but then resist when we tell them something they don’t want to hear. In all candor, I must admit to being on the receiving end as well. I have rejected sound advice from time to time, and I suspect you have too.[i] Such is the result of bias.Continue reading “‘Tell Me What I Wanna Hear’”
Just two words uttered by Fed Chairman Jerome Powell during a mid-day speech on Wednesday, November 28 sent the S&P up 2.3% by the close. The S&P 500 went on to notch an overall 2.8% gain for the week—despite lingering uncertainty surrounding the G-20 Saturday, December 1 dinner meeting between Presidents Donald Trump and Xi Jinping on the ever-mercurial Sino-American trade war. Continue reading “Hitting the Pause Button”
Our July 16, 2018, post “The Future of America’s Economy …” began with the phrase that headlined a Wall Street Journal feature on April 13. The Journal characterized Elkhart thusly: “From Bust to Boomtown: Life in a Comeback City.” The Midwestern city has risen from the ignominy of being singled out as having the nation’s highest unemployment rate of 22% in 2009 to having one of the lowest in 2018 at 2.7% in May of this year.
In our last post we alluded to the possibility that the technology-driven Fourth Industrial Revolution, for which many economists hope, will not be a panacea for enhancing productivity, in contrast to with earlier U.S. post-1870 industrial revolutions. Moreover, we addressed a complex structural factor, the slowing rate of increase in educational attainment, that insidiously depresses productivity growth. Continue reading “Productivity Growth II: Can the U.S. Economy Stay Airborne Without It?”
In our September 21st post, “Whatever It Takes,” we examined today’s low growth in productivity, which has accounted for about 50% of the substandard growth rate in GDP since the Great Recession of a decade ago. During his September 2018 speech at the annual Jackson Hole Symposium, Fed Chairman Jerome Powell offered some optimism in his hope for a “Fourth Industrial Revolution.” This is a common refrain that assumes the next several decades will see advances in 3-D printing, autonomous vehicles, robots, artificial intelligence, and robotics that will rekindle productivity growth.
There are some mixed signals coming from the Fed regarding unemployment.
This week Chairman Powell said, regarding FOMC projections from its September 26 meeting, that “From the standpoint of our dual mandate, this is a remarkable positive outlook…Since the 1950s, the U.S. economy has experienced periods of low, stable inflation and periods of very low unemployment, but never both for such an extended time as is seen in these forecasts.
With a promise like the one above from the likes of our nation’s central banker, why waste time picking through the economic flotsam in search of spoilers? Please indulge me as I lay before you a scenario that may test the efficacy of that pledge.
Guest post by Lane Miller, Martin Capital Management
To call Bitcoin a boondoggle is, admittedly, hyperbole. The crypto-currency has spurred a fascinating exploration into the relevance of “blockchain” technology for reorganizing financial services.
A currency untethered from central bankers is precisely what proponents of gold have advocated for decades. Conveniently, computer code is far easier to transport than metal. The blockchain could sideline whole departments of global banks as financial settlement could be near-instantaneous and immutable. There are potential benefits to the progeny of the Bitcoin revolution. “Investing” in Bitcoin itself, however, is a very different matter.
Blaise Pascal, the brilliant seventeenth-century French philosopher and mathematician, became a devout Christian in his later years. As one of the original probability theorists, he rationally explained the pious life using mathematics rather than simple faith. He argued that if heaven and hell exist as discrete outcomes in the afterlife and that the probability of each was arbitrarily assigned to be 50 percent, one must still choose the virtuous lifeHis rationale rested on the difference in the severity of the outcomes: He reasoned that an eternity of heavenly bliss was infinitely preferable to one of never-ending damnation. That, in a nutshell, is Pascal’s Wager.