Sunday, February 28, 2021

Chasing Peaks Is Dangerous

I'm looking at NASDAQ today... 

  • Since 1982 the index has had a compound annual growth rate (CAGR) of 11.8%
  • After reaching a peak in early 2000 during the dotcom bubble, it crashed 80%
  • It wasn't until 2016 that NASDAQ made it back to its 2000 high - a full 16 years !!
  • Since then its CAGR has been a torrid 29% 
  • Just a few days ago NASDAQ peaked at near 14.150
  • Reversal to the long term CAGR would bring back to around the 8000 level

But, hey!!, the Fed will keep printing money forever, right? What, no???

Saturday, February 27, 2021

Raise The Minimum Wage

The chart below shows the inflation-adjusted  federal minimum wage and makes obvious why it should be raised to at least $15/hr. Real minimum wages have been stuck at the same level for over 30 years, dealing a very raw deal to low income  Americans. The same chart also points out one of the driving forces of Trumpism: working class people have seen their living standards constantly deteriorate.


Friday, February 26, 2021

Die Bund Vigilanten

American Bond Vigilantes are travelling across the ocean.  The following chart shows the relative performance of US 10 year Treasurys and German Bunds: in lockstep since last November.  The ECB's Christine Lagarde is trying to talk the yields down but, just like the Fed's Mr. Powell, it's a losing battle. Better put your monetary policy where your mouth is, aka it's not what you say that matters, it's what you do.