While the signs are ominous, they’re not yet suggesting an economic disruption as severe as the one that ended the 1970s inflation shock. A yield curve inversion, when rates for two-year US Treasury notes rise above those for 10-year notes, has preceded every recession since the 1960s. The first clear inversion in 15 years happened in July ...

The five other times in history when stocks and Treasuries both had double-digit real drawdowns, government debt securities went on to soar. Investors have had an unpleasant 2022, to put it mildly. Both stocks and bonds have dropped by more than 10%. On top of that, inflation rates at around 8.5% are the highest in four decades, reducing ...

Guessing the future can produce above-average returns, but prudent investors plan for being wrong as well as for being right. Once upon a time, Goldilocks saw inflation at 6.8% and knew the Federal Reserve would have to act. Worried about the value of her home and stock portfolio, she visited the Fed house. First, she saw Papa Fed Bear who was ...

Sure, some popular strategies have underperformed, but that just means it’s time to tweak the algorithms. The most revealing sentence in the anti-quantitative investing manifesto by Sanford C. Bernstein & Co.’s Inigo Fraser Jenkins is this one: “The rules are changing for investors to a degree we have not seen in decades.” In fact, it ...

Lockdown rules act like wartime rationing to curb civilian consumption. But when things open up, so do wallets. The U.S. government has spent $2.6 trillion to support the economy as the coronavirus pandemic spreads, and the Federal Reserve has about matched that amount in asset purchases. We’re not finished fighting Covid-19, so protecting ...

A Yale professor’s paper shows they have always been with us and challenges the notion of a normal level. A new paper by Yale professor Paul Schmelzing is a reminder that it ain’t what we don’t know that causes trouble, but what we know that ain’t so. 1 Two charts in particular refute conventional wisdom about long-term real interest rates. ...

U.S. inequality doesn’t look as dire if you study spending instead of income. There's simple narrative of inequality in which rich people monopolize the wealth and income, and do nearly all the spending, while poor people struggle for survival. But in the U.S. today, inequality is more complicated than that. Some people have wealth, others ...

The future of money is in play and Silicon Valley technocrats have just made a compelling move. Much of the commentary about Facebook’s proposed Libra coin has focused on its defects as a cryptocurrency – centralized governance, weak privacy protections – or as a payment processing system – low throughput, inability to handle multiple ...