How to Triumph in 2021 or Die Trying

Posted on January 1, 2021 by MN Gordon

“We had seen God in his splendors, heard the text that Nature renders.  We had reached the naked soul of men.” — Ernest Shackleton

One Essential Insight

Welcome to 2021!

The New Year’s edition of the Economic Prism is a place of wild conjecture.  This is where we squint our eyes and peer out 12 months through our proprietary prism and report back what we discover.

Make no mistake, 2021 will be the year where everything under the sun happens precisely as it should.  Some good.  Some bad.  Each day shall unfold before you with reciprocal imbalance.  You can bet your bottom dollar on it.  But what else?

Will gold top $3,000 per ounce?  Will bitcoin hit $100K?  What about the S&P 500, the yield on the 10-Year Treasury note, and the price of oil?

Will collateralized loan obligations (CLO) be roiled by mass corporate defaults?  Will Walmart run out of toilet paper?  Are we fated for complete social distortion?  Did WWIII just commence in the South China Sea? Continue reading →

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What To Do When The Planets Diverge

Posted on December 25, 2020 by MN Gordon

Planets Jupiter and Saturn came into closer alignment than any time since 1226 this week.  Yet the planets in Washington did not align.  The federal government was unable to ‘Christmas tree’ its stimulus bill.

At the 11th hour, President Trump called bull pucky on the contents of Congresses hideous creation.  Too much pork.  Not enough relief.

Congress will return next week and attempt to salvage a deal.  Likewise, we’ll save fiscal stimulus and its consequential economic distortions for reckoning with another day.

It’s Christmas, after all.  We’d prefer to delve into the esoteric.  Thus, today, for fun and for free, we seek meaning through numerology and astrology.  Where to begin…

Not long ago, if you recall, a Dow Jones Industrial Average (DJIA) above 30,000 was impossible.  Nothing could touch it.  But here it is, in the flesh, a DJIA that’s a peppermint stick above this “sacred” number.

A DJIA above 30,000 is, indeed, quite impressive. Continue reading →

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Grantham’s ‘Real McCoy’ Bubble in a World Gone Mad

Posted on December 18, 2020 by MN Gordon

Right now happens to be an attractive time to do something stupid.  What’s more, everyone’s doing it.  Maybe you are too.

Stock valuations and corporate earnings growth no longer appear to matter.  Why not buy an S&P 500 index fund and let it ride?  Or, better yet, why not buy shares of Nvidia?

The semiconductor company’s up more than 170 percent over the last 9-months.  Perhaps it’ll double again from here.

Of course, there’s nothing like an epic stock market bubble that warms the hearts and softens the minds of men to ideas that would otherwise be impossible.  One idea du jour, for example, is that low interest rates justify high valuations.  Another is that the Fed can permanently inflate stocks using its seemingly unlimited supply of credit.

These ideas, and many others, are nearing their expiration date.  As they turn from ripe to rot, investors that are counting on there always being a greater fool will discover what happens when you overpay for a stream of future cash flows.  In short, future returns stink. Continue reading →

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The Viral Assault On Small Businesses

Posted on December 11, 2020 by MN Gordon

This year, fear of a deadly pandemic triggered the ruling class to spread authoritarian lockdown orders.  The god of science, like a burning bush, told them to remove their sandals and deliver policies of regression.  A paranoid public was quick to comply.

Humans have been battling viruses since well before the wheel was invented.  According to archaeologists, a fast moving epidemic roughly 5,000 years ago wiped out a prehistoric village in what is today northeastern China.  Dead bodies were stuffed inside a dwelling – the Hamin Mangha – that was later burned down.

Another mass burial, the Miaozigou site, took place about the same time and in the same general area.  Together these discoveries suggest there was a rapid outbreak of an acute infectious disease.  An epidemic ravaged the entire region.

The viral spread of submicroscopic pathogens has the potential to alter the flow of history.  Soldiers returning to the Roman Empire after war against Parthia in 165 AD brought back more than the spoils of conquest. Continue reading →

Posted in Economy, MN Gordon | Tagged , , , , , , | 24 Comments