We are often asked whether the current bull market in stocks has turned into a meltup that could soon be followed by a meltdown. That’s a risk we currently give a 25% subjective probability. Relatively high stock valuations are

The rally in the S&P 1500 has certainly broadened in recent weeks as the Fed started to cut the federal funds rate (FFR) by 50bps on September 18 and again on November 7 by 25bps. The S&P 400 MidCaps

The week ahead will provide important updates of housing and manufacturing indicators. The latter should show that economic growth may be broadening to include the goods sector, which has been relatively flat since the Fed started raising interest rates.

Fed Chair Jerome Powell is an accomplished danseur. His pirouettes are masterful. He did another such pivot on Friday in prepared remarks for a speech [starts at 19:00] to business leaders in Dallas. He said that “the economy is

We’ve been bullish on the dollar since the summer. Since the Fed’s September meeting, the US Dollar Index (DXY) is up 5.8% (chart). Roughly half of that move has occurred since last Tuesday’s US elections. The strong dollar confirms

Today’s CPI report suggests that inflation may be getting stuck north of the Fed’s 2.0% target. The headline and core CPI inflation rates rose 2.6% and 3.3% y/y during October. Goods prices are still deflating. But supercore inflation, rent

The NFIB survey of small business owners was released today showing a record high in their uncertainty index during October (chart). That’s not surprising since the polls showed that the presidential race was too close to call, raising the

Executive Summary: The new tariffs likely under Trump 2.0 could be means to great ends for the US by increasing the US’s trade negotiating leverage—or they could backfire and cause a trade war that curtails global economic growth, which is

Over the past three years, most American economists believed that a recession would be necessary to bring inflation down to 2.0% in the US. While the US economy managed to avoid a downturn, those predictions may have been right.

Just after Donald Trump won the presidential race on November 8, 2016, we observed that the economy and stock market were charged up with “animal spirits,” a term coined by John Maynard Keynes meaning spontaneous optimism. Animal spirits are

The week ahead will provide updates on inflation, consumer spending, and manufacturing. We expect inflation might have stalled in October, interrupting its decline toward the Fed’s 2.0% target. We still expect a solid increase in inflation-adjusted incomes last month,

The Federal Open Market Committee (FOMC) cut the federal funds rate (FFR) by 25bps today as widely expected. We expected it as well, though we still believe that the now 75bps cut in the FFR since September 18 is

Donald Trump’s win and the Republican sweep of the House (probably) and the Senate (certainly) is consistent with our Roaring 2020s scenario. Indeed, it increases the odds that the good times will continue through the end of the decade

We may or may not know tonight who will be the next president, but we should know which party will win a majority in the Senate and the House. It appears that Republicans are likely to do so. In

Investors often rejoice when a stock they own is selected to join a major market index. Index funds collectively have trillions of dollars in assets under management and must buy the stock in bulk, giving a boost to its