Investment Letter
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I have degrees in mathematics, science, and education from the University of Toronto. My son is a PhD candidate in computer science at Oxford University.

By combining my 40-years of market experience with my son's youthful computer science knowledge, we produce a uniquely independent ... more

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Buy The Bad Profit News
Because the fiscal impulse has been greatly reduced--$3T down to $1T--, it is obvious we will see lower corporate profits. The stock market has already priced-in lower profits.
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A Checkup On The Screws Holding The Economy Together
The Fed's tightening cycle and the inversion of rate differentials has convince investors of an impending recession. We check on some of the "screws" that hold the economy together to assess the proximity of a recession.
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Corporate Taxes Predict Corporate Earnings
Corporate income taxes are a proxy for profits. Corporate income taxes, collected since since mid-April, are up 7% yoy. Stocks are priced for lower Q2 earnings.
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Obsess Over The Fiscal, Not The Monetary
The stock market follows the money. Monetary policy does not create money; fiscal policy does. As a stock market participant, you should be obsessing about fiscal policy more than monetary policy.
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Crimea In 2014 Can Inform Us About Ukraine In 2022
The following two charts show the Treasury net of outlays - receipts, the Treasury account balance, and the SPX. The first chart is from 2014 when Russia annexed Crimea. The SPX went sideways for a couple of months, but did not collapse.
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The Herd Inflation Ideology
Inflation is a supply issue, not a monetary issue. If monetary expansion caused inflation, then why didn't we see inflation in the aftermath of the global financial crisis?
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Comments

Latest Comments
Where Are We In The Market?
1 year ago

Thanks for reading and saying you liked it.

Money Fund Growth And The End Of The Expansion
2 years ago

It would be unfair to our subscribers to give away too much detail, but one reason is the record low equity hedging.

In this article: SPY, DIA, QQQ, IWM
MMT Heaven And MMT Hell For Chinese Investment And U.S. Fiscal Spending
3 years ago

Thank you for the clear explanation.

Study Discovers That If The Debt Machine Was Turned Off, The U.S. Would Immediately Plunge Into A Horrifying Depression
3 years ago

"The primary cause of 70s inflation was a continuation of Fed easy money that LBJ required."

Now you switch to Nixon and the gold standard removal?

The embargo caused a shortage which caused inflation, and because energy is such a basic requirement for the economy that the shortage stopped growth in its tracks...stagflation.

Twitter Terror
3 years ago

Ignore the Tweets. That isn't what drives markets.

In this article: SPX
Study Discovers That If The Debt Machine Was Turned Off, The U.S. Would Immediately Plunge Into A Horrifying Depression
3 years ago

In 1963, Fed rate was 3.5%. By the time LBJ left Office in January 1969, it was7.1%.

So I don't know what " Fed easy money " you mean? That was serious tightening.

Study Discovers That If The Debt Machine Was Turned Off, The U.S. Would Immediately Plunge Into A Horrifying Depression
3 years ago

By-the-way, I agree with the the premise contained in the title. Without debt-money from either the private or the monetary sovereign, the world economy would cease to exist. The world economy would be reduced to local bartering.

Study Discovers That If The Debt Machine Was Turned Off, The U.S. Would Immediately Plunge Into A Horrifying Depression
3 years ago

Yes, the oil embargo was the proximal cause of the inflation. Inflation is always because of a shortage of something. And oil is a key ingredient in the economy, so a shortage of it is guaranteed to cause inflation and stagnation at the same time. When you have a shortage of such a key element, and increasing its production is impossible in the short-term, nothing, not even deficit spending is going to fill that hole. And there was no way of avoiding it either because, unlike today, at that time the US was not self-sufficient in oil which was controlled by one agent (cartel).

Study Discovers That If The Debt Machine Was Turned Off, The U.S. Would Immediately Plunge Into A Horrifying Depression
3 years ago

The point is, the Federal deficit is not the problem. It, in fact, is always the solution. In both 2001 and 2008, it was too much private deficit, not Federal deficit, and it was the latter that had to be increased in order to pull the markets out of the fire.

Note also, that Clinton reduced the Federal deficit for five-years, leading to a Federal government SURPLUS...and a private sector DEFICIT that became too inflated to be sustained. Again, the point is that Federal deficits aren't what historically cause the problems.

Study Discovers That If The Debt Machine Was Turned Off, The U.S. Would Immediately Plunge Into A Horrifying Depression
3 years ago

One HUGE flaw (many smaller ones) in your argument:

Federal government budget deficits and the "debt" that they lead to, is NOTHING like household or state budget deficits. In fact, the work "debt" is a misnomer, and should be called the Federal government "funding of the economy".

It has been increasing for 80-years, as has the size of the economy. The Federal government will never run out of dollars...unlike you, me, and local governments.

1 to 10 of 21 comments
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STOCKS I FOLLOW

APPS Digital Turbine, Inc.
BZUN Baozun Inc
IWM iShares Russell 2000 Index Fund
JD JD.com
QQQ PowerShares QQQ Trust Series 1
SPXL Direxion Daily S&P500 Bull 3X ETF
SPY SPDR S&P 500
UVXY PowerShares Exchange-Traded Fund Trust II
VIX Volatility Index CBOE

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80% Correlation With SPX Local Top
Weekly, and 10-day MA of put:call ratio corresponds to local highs in the SPX.
Hedging And Senitment.
Sentiment can go either way in the short-term.
Money Funds And Recoveries
Money funds decrease during true market recoveries.
Gold: The Early-Winter-To-Late-Summer Pattern
Gold and bond pattern.
Stocks-To-Bonds Ratio Collapse
Stocks-to-bonds ratio drops to lowest the value since December 2018.
The Tariffs Won't Happen.
The tariffs on $300B of Chinese will never be implement, just like tariffs on Mexico were never implemented.

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