Operating at the Intersection of Technology and the Capital Markets
Tag: GDP
Whether it is the Wall Street Journal, Bloomberg or CNBC, the business press fails to mention price inflation as a primary factor behind the economic slowdown as measured by Real GDP of 2%. Supply chain bottlenecks and the Delta variant are not exclusively responsible for the stagflationary period we are about to embark on where … Continue reading Inflation Is A Primary Driver Behind The Economic Slowdown
The Atlanta Fed updated its model for Real GDP ("GDPNow"). The Atlanta Fed's 3.2% Real GDP estimate as of today is down from 3.7% as of September 21st. We have previously written that real GDP growth may very well be zero percent or even negative as we believe the Federal Reserve underestimates true price inflation … Continue reading Real GDP Growth Remains Muted
The Atlanta Fed's real GDP estimate of 3.7% is well below inflation as measured by the Fed (CPI of 5.4%) and well below any real world price inflation measure. We do not subscribe to the Fed's theory that price inflation is transitory. Our view is that price inflation will grow from here. If real GDP … Continue reading It Is Beginning To Look Like Stagflation
The punchline is that a significant percentage of new money creation over the past year was allocated to non-productive use cases. "Helicopter" money to individuals and non-performing firms are two examples. When capital is deployed for non-productive use (acquiring cryptocurrencies for example), that capital invariably bids up prices causing asset price inflation. Conversely, recipients that … Continue reading Rewarding Non-Productive Activities with New Money Leads to Price Inflation
The U.S. Bureau of Labor Statistics ("BLS"), publishes the Labor Participation Rate each month. The Labor Participation Rate accurately reflects the state of labor in the United States. The same government agency also publishes the Unemployment Rate each month (due Friday June 4th). We view the latter as a Government marketing metric as it significantly … Continue reading Labor Participation Outlook: June 2021Premium
It is difficult to imagine a scenario in which the U.S. economy does not experience stagflation. Record debt levels, low labor participation, muted long-term Real GDP growth, persistent inflation and the fact that the Federal Reserve is limited in its options to fight inflation leads us to believe that stagflation is imminent. Our premium TEK2day … Continue reading Stagflation Is ImminentPremium
The three-headed Hydra of low labor participation, increased debt levels and higher taxes will cripple U.S. long-term Real GDP growth for decades. Labor participation is not going back to December 2019 levels. To believe that scenario is wishful thinking. For starters, 25% of restaurants and bars are permanently closed. Those jobs are not returning. Second, … Continue reading Brace for Anemic Long-Term Real GDP Growth
Whether one measures EV/Revenue multiples, EV/EBITDA multiples, Stock Market P/E multiples or various other measures there is no doubt the market is frothy and that certain sectors are firmly in bubble territory. Two trends are troublesome. The first is that the Market Cap to GDP ratio (measured by the Wilshire 5000 index to Nominal GDP) … Continue reading Stocks Are at A High. Labor Participation Is at A Low.
"There is nothing more permanent than a temporary government program" - Milton Friedman. First is was the financial crisis of 2008 that "forced" the Fed to perform unnatural acts. It was at this time that the Fed introduced Quantitative Easing ("QE"). QE was to be a "one-and-done" program. That program remains part of the Fed's … Continue reading Muted GDP Will Force Investors to Become More Selective
U.S. policymakers have increasingly utilized debt to fund various spending initiatives without a thought as to the consequences (reminiscent of the last days of the Roman Empire). U.S. reserve currency status and endless monetary expansion have supported this debt addiction. At this rate U.S. reserve currency status is in jeopardy. The chart below depicts total … Continue reading A Nation in Decline: Total Federal Debt Is 136% of GDP
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