Bubble Monitor

Shouldn’t wages grow faster than prices? While that may be great for consumers, this would be inflationary as businesses pass on higher labor costs to their customers.

While everyone is focused on CPI, we have been looking at 2Q23 restaurant results & we like what we see.

Fitch’s rating downgrade of the U.S. reflects “the expected fiscal deterioration over the next 3 years” and now our government has the same rating as Taiwan which is plagued by the threat of a military invasion. While there maybe merit to our government’s downgrade, things are looking much more stable for our private sector.

If you agree with us that one primary reason the Fed has been raising interest rates is to defend the US$ (as opposed to fighting inflation driven by supply constraints), then we propose a much better method to achieve that end without wrecking domestic economic growth.

Investors thrilled about the prospect of a soft landing and an eventual cessation of rate hikes pushed stocks through the roof so far through the summer of 2023. Imagine what these bullish results would have looked like if bank stocks had not been roiled by such aggressive rate hikes.

Business cycles are believed to be inevitable, driven by periods of boom & bust. Sorry, there is nothing we can do about it – we all must suffer through it.

Commodity prices are finally coming down, but what about labor? The data suggests that employers are poised to get some relief at the same time employees continue to enjoy raises. 

The traditional way to assess a government’s leverage level is to calculate debt/GDP. We propose a new leverage ratio, government debt/household wealth to further assess the effectiveness of government spending.

While May’s CPI number looks tame, there are a lot of moving parts, and it is difficult to get an accurate read on a sustainable trend because of significant month-to-month volatility.

While wholesale food supplier, Sysco Corp, has been using a lot of its cash for dividends & stock buybacks, the market has punished its stock relative to its peers who have been less generous to shareholders. Sysco could better serve shareholders by investing more in its own business.