Are You Prepared for a Hard Landing?

Posted on January 6, 2023 by MN Gordon

The New Year brings both optimism and hope.  A chance to start fresh.  To turn over a new leaf.

The sentiment is welcome.  The outcome, however, can be a grave disappointment.

If you recall, 2022 was supposed to be a year of redemption and prosperity.  After the ugly coronavirus fiasco, the economy was finally reopening.  The general belief was that the resurgence of economic activity was going to bring a new boom and a new cycle of prosperity.

But then something unexpected happened.  On the first day of market trading, January 3, 2022, the S&P 500 hit a closing peak of 4,796.  Yesterday, just over a year later, the S&P 500 closed at 3,808.  Down over 20 percent.

Over this duration, the yield on the 10-Year Treasury note spiked from 1.66 percent to 3.70 percent.  In other words, Uncle Sam’s borrowing costs have more than doubled.

At the same time, transitory inflation proved to be enduring.  And gross domestic product (GDP) went negative for the first two quarters of 2022. Continue reading →

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One Great Big Nasty Prediction for 2023

Posted on December 30, 2022 by MN Gordon

Welcome to 2023!

The New Year’s edition of the Economic Prism is a place of wild conjecture and rough suppositions.  A place where abstract thinking is celebrated.  Imaginative cycle theories, deep metaphysics, fractal wave patterns, happy accidents, and amateur fortune tellers of all stripes are invited too.

Today, with perfect 20/20 vision, we set our sights on the year ahead.  After all, the New Year’s here.  What better time than now to peer out 12 months through our proprietary prism and report back what we see?

On the periphery, we find new dreams, new directions, and new delusions, swirling about like storm clouds interspersed with warm radiant light.  We see opportunities and contretemps.  We see doom and despair.  And we also see hope and redemption.

But what else?  What are the essential insights you should take along as you set out to make another pass around the sun?

What does the New Year have slated for stocks, the 10-Year Treasury note, gold, oil, bitcoin, and everything else?  Will junk bonds be roiled by massive corporate defaults? Continue reading →

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Your Government Hates You

Posted on December 23, 2022 by MN Gordon

“Fate is nothing but the deeds committed in a prior state of existence.” – Ralph Waldo Emerson

Capital Consuming Gluttony

Did you know that in fiscal year 2022, federal tax receipts as a share of gross domestic product (GDP) hit a near record high of 19.6 percent?

According to the U.S. Treasury, in FY 2022, total federal tax receipts and additional federal government revenue topped $4.90 trillion.  Yet, over this time, Congress spent $6.27 trillion.  The difference, the 2022 deficit, was $1.37 trillion.

The difference, of course, was made up with debt.  And year after year, decade after decade, these deficits have stacked up into a mega pile of debt.  Presently, the U.S. national debt is over $31.4 trillion.  As a reference point, in December 2000, the national debt was $5.6 trillion.

In other words, over the last 22 years the U.S. national debt has increased 460 percent.  U.S. GDP over this same time, however, has increased just 157 percent, from about $10 trillion to 25.7 trillion. Continue reading →

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The Do-Re-Mi of Treasury Notes

Posted on December 16, 2022 by MN Gordon

This week brought forth new data points for two of the world’s greatest economic contrivances.

These data points are important not so much because they provide a truthful depiction of reality.  But rather, because in today’s centrally planned economy they can be big movers and shakers for the stock and bond market.

On Tuesday, the Bureau of Labor Statistics released the latest inflation data.  According to the government’s aggregate data fabricators, consumer prices, as measured by the consumer price index (CPI), increased at an annual rate in November of 7.1 percent.

After peaking in June at 9.1 percent, the CPI has steadily declined.  Wall Street was initially delighted on the news.  The S&P 500 quickly jumped 155 points to an interim high of 4,145.  From there it slid over 122 points to close the day at 4,022.

Investors, for their part, thought they’d spotted a clue in the CPI report.  The whole herd of them knew just what the Federal Reserve would do on Wednesday at the conclusion of the December Federal Open Market Committee (FOMC) meeting.  That is, the Fed would increase the federal funds rate by 50-basis points (i.e., 0.5 percent). Continue reading →

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