Election

“You cannot escape the responsibility of tomorrow by evading it today.”

Newsletter /

The economy continues to expand and consistently exceed expectations across most data series. Yet confidence surveys continue to languish well below pre-pandemic levels; at the same time, investor bullishness has rarely been higher. This is unusual and should reconcile itself to some consistency. I would expect confidence to rise. Yet truthfully, it is fiscal dominance –¬ more so than monetary dominance ¬– that is the more significant issue. The debt ceiling is currently suspended. In January 2025, however, it will automatically come back into effect. This means that the U.S. Treasury will not be able to issue more debt until Congress raises or suspends the ceiling again. However, they still have spending obligations and are running structural deficits due to the policies Congress has implemented for decades. Thus, government spending could potentially be forced downward – depending on whether conservatives or liberals control Congress. If that happens, it would be a net positive for the economy.

“You cannot escape the responsibility of tomorrow by evading it today.” Read More »

“In the annual public surveys about trust and reputation, journalists and the media have regularly fallen near the very bottom, often just above Congress.”

Newsletter /

The economy continues to expand and consistently exceed expectations across most data series. Yet confidence surveys continue to languish well below pre-pandemic levels; at the same time, investor bullishness has rarely been higher. This is unusual and should reconcile itself to some consistency. I would expect confidence to rise. Yet truthfully, it is fiscal dominance –¬ more so than monetary dominance ¬– that is the more significant issue. The debt ceiling is currently suspended. In January 2025, however, it will automatically come back into effect. This means that the U.S. Treasury will not be able to issue more debt until Congress raises or suspends the ceiling again. However, they still have spending obligations and are running structural deficits due to the policies Congress has implemented for decades. Thus, government spending could potentially be forced downward – depending on whether conservatives or liberals control Congress. If that happens, it would be a net positive for the economy.

“In the annual public surveys about trust and reputation, journalists and the media have regularly fallen near the very bottom, often just above Congress.” Read More »

“If you do not know what port you sail to, no wind is favorable.”

Newsletter /

The S&P 500 touched yet another all-time high Friday at $5,505. It was up +0.6% on the week. The NASDAQ also hit another all-time high ($17,936) but could not break the big round number of $18,000 in two attempts. It was flat on the week. Friday was “Triple Witching” Options expiration – over $5t in options expired. and options were an enormous percentage of expired option contracts and may have contributed to the 10% hit on the shares of .

“If you do not know what port you sail to, no wind is favorable.” Read More »

“History’s cunning passages, contrived corridors & issues deceive us with whispering ambitions & guide us by vanities.”

Newsletter /

Perry Capital is positioned for slower growth and higher inflation into the Summer. The economy continues to be supported by above-trend consumer spending from asset owners and way-above-trend increases in government spending. The Fed, or the Treasury Department, does not need to stimulate the economy, but it may do so to bolster the present administration’s re-election.

“History’s cunning passages, contrived corridors & issues deceive us with whispering ambitions & guide us by vanities.” Read More »

“Any great power that spends more on debt service than on defense will not stay great for long.”

Newsletter /

Investors pushed U.S. Equities to all-time highs last week. This is an extraordinary momentum rally that appears to be attracting increasing amounts of investor capital in a sign that the economy can keep its momentum up to, and perhaps beyond, the election. This is a logical assumption based on the realization that the U.S. government is addicted to spending (there is no mention of cutting it by either party.) The rising cost of debt service seems almost an afterthought, and if the debt burden gets high enough to slow the economy, the Fed will increase stimulus. Higher bond yields do not appear to be part of any in-depth analysis. Except mine.

“Any great power that spends more on debt service than on defense will not stay great for long.” Read More »

“Everything we hear is an opinion, not a fact. Everything we see is a perspective, not the truth.”

Newsletter /

Economic data continues to surprise to the upside; the Citi surprise index was up again from last week (44.10 vs 39.0) and the January lows (0). It is above pre-pandemic levels, and the labor market is stronger, too. Unemployment is 3.7%, with claims falling and the number of available jobs rising.

“Everything we hear is an opinion, not a fact. Everything we see is a perspective, not the truth.” Read More »