Economic Updates, Advisor Training, Bull and Bear Tim Pierotti, Chief Investment Officer Economic Updates, Advisor Training, Bull and Bear Tim Pierotti, Chief Investment Officer

Global Capitalism’s Checks and Balances

In the wake of the recent “Red Wave” election results, one might be wondering if there are any restraints on the incoming administration. Republicans will control the White House and both the House and Senate. The Supreme Court is controlled by conservatives who have expressed an unprecedented view of the “Unitary Executive”. In some regards those concerns may be justified and we are likely to see a White House that is unrestrained relative to history. But when it comes to the economy, this administration will still have to answer to a higher authority: the bond market.

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Economic Updates, Advisor Training, Bull and Bear Tim Pierotti, Chief Investment Officer Economic Updates, Advisor Training, Bull and Bear Tim Pierotti, Chief Investment Officer

The Economic Realities of Illegal Immigration

The Postpandemic U.S. Immigration Surge: New Facts and Inflationary Implications, a new working paper from The Dallas Fed answers an economic question that has become a highly political one. Has the significant rise in unauthorized immigration exacerbated inflation? The answer, according to a team of economists led by Anton Cheremukhin, is no, nor has it been disinflationary. In summary, they conclude, “Contrary to the popular view, we find little effect on inflation, as the increase in supply was largely offset by an increase in demand.”

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Economic Updates, Advisor Training, Bull and Bear Tim Pierotti, Chief Investment Officer Economic Updates, Advisor Training, Bull and Bear Tim Pierotti, Chief Investment Officer

What if the Ayatollah Has No Clothes?

Oil is always the unknowable variable to those assessing the global economy. Perhaps the US and the Saudis will convince Israeli leadership not to attack Iran’s energy infrastructure in the near future, but from my perspective such an event is only a question of when, not if. And when it does happen, it will not be an event, but part of a paradigm shift that could change oil markets permanently.

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Economic Updates, Advisor Training, Bull and Bear Tim Pierotti, Chief Investment Officer Economic Updates, Advisor Training, Bull and Bear Tim Pierotti, Chief Investment Officer

Housing Bull and Bear in a Two Minute Read

We have often made the case that as the housing market goes, goes the US economy. Well that makes the outlook for the economy pretty damn murky given all the conflicting data in housing. We add up the below positive and negative factors and see an economy that is still slowing but not on the cusp of a recession. Ultimately, we still see more buyers than sellers in housing.

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Economic Updates, Advisor Training, Bull and Bear Tim Pierotti, Chief Investment Officer Economic Updates, Advisor Training, Bull and Bear Tim Pierotti, Chief Investment Officer

Unemployment, Recessions and Reflexivity

"Volatility is clearly rising and that means that investors who have enjoyed the incredible momentum of the last 18 months or so, should manage risk accordingly. While we remain sanguine on our economic outlook, we continue to see the risk/reward in equities as poor. Valuations are high. Expectations for earnings growth are also high at a time of slowing nominal GDP, which suggests that we are going to continue to see negative revisions on Wall Street to future earnings growth. No need to panic, but let’s be careful out there. Stops are always your friend."

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Economic Updates, Advisor Training, Bull and Bear Tim Pierotti, Chief Investment Officer Economic Updates, Advisor Training, Bull and Bear Tim Pierotti, Chief Investment Officer

Headline is Hot, but Markets See Cooling

Today’s CPI data looks promising, however our concern is that there will come a day when the market comes to the epiphany that inflation really isn’t transitory and that we are in a new world defined by secularly tight labor, tariffs, isolationism and commodity volatility all of which beget higher long-term rates, higher cost of capital and slower growth.

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