A crowd is gathered around the sickbed of the economic expansion. Among the multitude are the workers, consumers and business people who would be most impacted by its demise. There are political partisans too, some fervently praying for recovery, others quietly hoping for the opposite. At the foot of the bed are fiscal and monetary doctors, the former preparing a sugary solution to inject into the patient and the latter casting nervous eyes both on the patient and the fiscal doctors, concerned about a renewal of inflationary fever. Foreign governments and central bankers also stand vigil, from as safe a distance as they can manage, conscious of the infectious nature of the patient’s disease. And close by the door are investors, contemplating a quick exit from American assets but haunted by the memory of the many past remarkable American recoveries. There is a knock at the door. It is the last week in April and a battery of tests are in that should shed further light on the delicate health of the economic expansion.
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9:51
Recession Risks, Resilience and American Exceptionalism
Last weekend, I neglected to finish my Notes on the Week Ahead as I got caught up in watching the Masters. In truth, it was mostly a battle between Rory McIlroy’s emotions, which produced two double-bogeys in his final round, and his exceptional skill, which propelled his second playoff shot to within three feet of the hole. I was particularly happy to see his victory since he hails from the same island as myself, But I was also glad to see him win because, at 35, he is no longer in the first blush of youth. It is a sad truth that in athletics, as in life, no-one soars forever. Twenty years from now, McIlroy will probably still be a fine golfer – training and resilience should see to that. But he may no longer be exceptional.
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10:06
Tariff Turmoil and Investment Strategy
One clear advantage of getting older, (and I can attest to many of its disadvantages), is that you learn from experience. The financial market chaos, following the President’s tariff announcement, is different from previous market slumps. Every market selloff is. However, a common thread in all crises is that the best decisions begin with a structured approach to analysis.
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11:41
Fiscal Fudge
I may have mentioned this before, but as a young lad, I had a very healthy appetite. Consequently, when deciding on a hobby, I prudently elected to go with “cooking”. My experiments included making fudge and my mother dutifully supplied me with sugar, vanilla and helpful advice. However, we possessed no candy thermometer and, as anyone in the fudge-making business will tell you, getting the temperature right is essential. Too hot and you end up with toffee or hard caramel. Too cold and you end up with a grim sludge, which no degree of refrigeration can render palatable. Making fudge is a delicate operation.
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7:35
The Wait and See Economy
I was running along the roads of our neighborhood last weekend when I came upon a small herd of deer. I often see these beautiful but dopey creatures at dawn as they wander aimlessly in the middle of the road. When a car or truck bears down on them, they stop and stare. Perhaps they are pondering whether it would be more fun to hop into the woods to their right or gambol off into the field to their left. But, of course, the only important decision is to get out of the road. A “wait and see” attitude could be fatal.
South Africa