The “Fake Tight” Labor Market. Is the job market tight, or not? We think the best way to describe it is “fake tight.” ...The key problem with the labor market right now is that the government is still giving out unemployment benefits far in excess of what the situation demands.
Taper Tantrum Two? However, with so much liquidity in the financial system, we are skeptical that a policy shift toward tapering would create the same kind of market response for a few reasons. First...
There’s Nothing Normal About this Recovery... In fact, trying to compare the current rebound to historical events minimizes the pain that COVID-related and government-mandated economic shutdowns have caused...At the same time, giving credit to government spending for creating the current "recovery" is simply not true.
Inflation Revisionism...the "revisionists" say that the inflation of the 1970s was good for many people. They argue that home-ownership rose, student debt got wiped out, and inflation reduced the value of the national debt. In other words, if you can see these benefits, why don't we do it again?
A Question for the Fed It's not a surprise. Inflation is running hot. But, is it transitory and temporary, or is it real and here for the longer term. How hot will the Federal Reserve let it run, and for how long? When does transitory and cyclical become "secular" and "serious"?
Unsustainable. The problem is that the massive government “stimulus” checks have put the economy in a strange position, where retail sales are far above where they would be if COVID had never happened, even as the production side of the economy remains relatively weak.
Biden and Powell vs Summers and Dudley...it's between policymakers who want to go full steam ahead with as much fiscal and monetary "stimulus" as possible and center-left economists who worry about the economic effects of over-stimulating the economy.
Resisting the Budget Blowout....The best bet now is that spending and taxes both go up, but not nearly as much as President Biden or the far-left has asked for. Hold onto your hats, it's going to be a wild ride.
The Sugar High Economy. Add it all up, and we get 7.0% annualized real GDP growth for the first quarter. That’s very high by historical standards, but the economy has much further to go to reach a full recovery.
Yes, Stocks Are Still Cheap...While the market won’t move in a straight line, and a correction is always possible, as the economy opens up, those sectors of the market that fell behind in the past year (because of shutdowns and limited global trade) will be a source of strength.