Below are some of the most interesting articles, quotes and charts I came across this week. Click here to subscribe to our free weekly newsletter and get this post delivered to your inbox each Saturday morning.
The markets and economy have suffered a “sea change” in recent years that has dramatically transformed the investment environment.
"Largely thanks to highly accommodative monetary policy, we went through unusually easy times in a number of important regards over a prolonged period, but that time is over." –@HowardMarksBook https://t.co/AySDApsjJr pic.twitter.com/H0rIPRwtus
— Jesse Felder (@jessefelder) October 17, 2023
But there is also a sea change now underway in a geopolitical sense that likely only exacerbates this secular economic shift.
'The Israel-Hamas war is another classic, unfortunate step toward a more violent and encompassing international war. In other words, it's part of a larger war dynamic such as that seen in the two years prior to World War I and II.' https://t.co/Ntk99g5FMV by @RayDalio
— Jesse Felder (@jessefelder) October 17, 2023
Already the foundation has been laid for a bigger inflation problem than we have seen so far.
"As economist Peter Bernholz has noted: 'In all cases of hyperinflation, deficits amounting to more than 20 per cent of public expenditures are present.' We've exceeded that level in each of the past five years." https://t.co/kF5nE4gySz by @hussmanjp pic.twitter.com/cjJWqDG2Y3
— Jesse Felder (@jessefelder) October 16, 2023
And markets may be starting to worry about how these geopolitical trends could make the Fed’s job far more difficult.
'While Powell said correctly that the rise in yields so far has not been primarily about rising inflation expectations, it's noticeable that the bond market's confidence that inflation has been beaten might be beginning to shake.' https://t.co/ahbFqfIc97 by @johnauthers pic.twitter.com/FssfUjFSd6
— Jesse Felder (@jessefelder) October 20, 2023
Because, even while inflation pressures persist, growing dispersion in the stock market sends a clear signal about where we are in the economic cycle.
'The concentration of gains among the biggest stocks is something that typically happens at the end of bull markets, not the start.' https://t.co/q2MBaaWjFi by @jmackin2 pic.twitter.com/b3r2fh0BEC
— Jesse Felder (@jessefelder) October 20, 2023
Thanks for reading and have a great weekend.
