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AI Productivity and the Promised Land

This is the first in a series of the opportunities and threats to productivity. I begin the series with a focus on the productivity effects of AI adoption.   There has been a lot of excitement over the productivity-enhancing promise of artificial intelligence. From a policy perspective, productivity is important as it defines the rate...

25 or 50 Next Week?

Mid-week market update: The combination of the Quarterly Census Employment and Wages (QCEW) weakness and a soft PPI report has moved the market to expect to at least a quarter-point rate cut at the FOMC meeting next week. There are even whispers that the Fed may even move by a half-point, though the odds is...

Seasonal Weakness Ahead?

Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The “Ultimate Market Timing Model” is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade.   The Trend...

Waller’s Gambit

In the wake of the August Payroll Report, let’s review the Fed’s dilemma and the views of Fed Governor Chris Waller, one of the frontrunners to be the next Fed Chair.   Is monetary policy restrictive? Yes, by a number of measures. The Cleveland Fed recently published a study that estimated r-star, or the neutral...

The message from gold’s generational breakout

Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The “Ultimate Market Timing Model” is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade.   The Trend...

Uncharted investor waters: From soft to hard power

Markets were rattled by policy under Trump 1.0 by his unpredictable and chaotic nature. Trump 2.0 promises to be more of the same. Other than the transactional nature of Trump’s deal making, what’s his ultimate end game?   It’s to undo the effects of globalization. The political backdrop can be explained by Branko Milanovic’s famous...

A change in market tone

Mid-week market update: The stock market’s relief rally arrived this week when the WSJ reported over the weekend that Trump’s “Liberation Day” reciprocal tariffs due to be announced on April 2 will be narrowly focused. The S&P 500 rallied to regain its 200 dma. The index pulled back below the 200 dma when Bloomberg reported...

How to trade the momentum reversal

Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The “Ultimate Market Timing Model” is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade.   The Trend...

Making sense of market uncertainty

The latest FOMC statement and subsequent press conference were full of references to “uncertainty”. Most notably, the FOMC statement changed the language related to the Fed’s goals being “roughly in balance” to “uncertainty around the economic outlook has increased”.     Not only is uncertainty elevated, but also the risks to inflation, GDP growth and...