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The Recession Scenario

The Recession Scenario | Speevr

Our baseline view of the world does not include a U.S. recession in the next two years. However, it is certainly possible, and investors would be well advised to consider what it might mean for their portfolios. With that in mind, it is worth thinking about what could cause a U.S. recession, the implications of such a recession for financial markets, inflation and monetary and fiscal policy and how assets would fare in its wake.

Shifting Fundamentals Still Point to Higher Rates

Shifting Fundamentals Still Point to Higher Rates | Speevr

There is an old and much-quoted saying by the Greek philosopher Heraclitus: “A man never steps in the same river twice” – because it is not the same river and it is not the same man. A very similar observation could be made about investors considering their portfolios as the pandemic, hopefully, begins to wane. Covid-19, and the policy choices it triggered, changed the economic and financial landscape in a significant manner. However, it also changed investors, leaving them, for the most part, with larger portfolios but also with portfolios that are more seriously out of balance.

Pumping the Brakes on the U.S. Economy

Pumping the Brakes on the U.S. Economy | Speevr

Growing up in Dublin, my parents were of the firm belief that the streets of the city were safer without David behind the wheel of a car.  Consequently, I first learnt to drive in my early 20s on the backroads and highways of Michigan, with my future wife, Sari, as my instructor.  There were a number of perils associated with this including my tendency to ignore all traffic signs when focused on the task of steering the car or my habit of stalling out due a chronic inability to synchronize the application of the clutch and the accelerator.  It didn’t help that Sari would burst into a fit of giggles at the moments when I put us in the greatest and most imminent danger and was in particular need of quick and level-headed advice.

The Fed turns more hawkish…for now

The Fed turns more hawkish…for now | Speevr

When our children were very young and they committed some transgression, we had a rule in our house. It wasn’t enough to say sorry. You had to say what you were sorry for. That way, we had some hope that they wouldn’t make the same mistake again.

The Great Worker Shortage

The Great Worker Shortage | Speevr

Despite a disappointing gain in non-farm payrolls in November, numerous recent data points show an extraordinary excess demand for workers.  This excess demand won’t persist forever.  However, it’s important to understand its causes as this can provide some guidance on two crucial questions, namely, how long might it last and how will it be resolved.  The answers to these questions can also help in assessing which asset classes could outperform in 2022 and beyond.

The Investment Implications of Omicron

The Investment Implications of Omicron | Speevr

Financial markets tumbled last week as reports spread of a new, highly-mutated variant of Covid-19 which could be more contagious than the Delta variant and which could evade some of the immunity built up around the globe over the past year through vaccinations and infections.

More Clarity and Less Stimulus from Washington

More Clarity and Less Stimulus from Washington | Speevr

The week ahead will, of course, be dominated by Thanksgiving, leading, appropriately, to less focus on financial markets. That being said, this should also be a week of greater clarity on fiscal and monetary policy. This clarity should reinforce the view that Washington aid will become considerably less generous in the year ahead, reducing inflation fears but posing some threat to recently very strong profit growth.

Why Inflation still looks mostly Transitory

Why Inflation still looks mostly Transitory | Speevr

Financial market commentary in the week ahead will likely center around the question of inflation.  The headlines speak for themselves.  CPI inflation jumped to 6.2% year-over-year in October, its highest reading in 31 years. 

My first summer job as a teenager was in the mailroom of a Dublin law-firm

My first summer job as a teenager was in the mailroom of a Dublin law-firm | Speevr

The more intellectual duties of this position involved substantial paper-folding, envelope-licking and a daily fight with the franking machine. However, the important part of the job was buzzing around Dublin on my 10-speed bike (with the dropdown handlebars), delivering the mail directly to various law offices and clients and thus eliminating the inevitable delays of the Dublin postal service.

The Pandemic and Financial Waves

The Pandemic and Financial Waves | Speevr

It feels like so long ago, but back in 2019, the economic and financial environment was remarkably placid. Real GDP growth was plodding along at 2.3% pace, unemployment drifted down to end the year at 3.6% and corporate profits were growing slowly from very high levels. Consumption deflator inflation was still running below the Fed’s 2% target and, in recognition of this fact, as well as market volatility at the end of 2018 and a sluggish global economy, the Fed cut the federal funds rate three times to end the year in a range of 1.50%-1.75%. While the political weather in America was stormy, the investment environment was remarkably calm.