A Journal of Independent Research, Analysis,
 Opinion and Insight

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Angling With The Tide
But Doug Ramsey Is Also Hedging Leuthold Group's Bets
Doug Ramsey, the recreational angler pictured nearby — and chief investment officer of the Leuthold Group out in Minneapolis — was a clean-shaven relatively recent refugee from Ph.D. studies in The Ohio State’s econ department when I first interviewed him almost 15 years ago. Still based in Iowa, where he’d snagged his first portfolio management assignments, Doug talked about starting his intriguing and highly quantitative institutional research service, called The Behavioral Strategist. 

I’ll just stipulate that lots of water has passed over the dam since; lots of work by Doug, lots of pieces in this publication — including an April 2009 article he penned banging the table to (gasp) start buying stocks again — which helped secure for him the not-small- potatoes challenge of filling Steve Leuthold’s shoes. [More]
Another Houdini Act
Latest GDP Report Basically Another Masterful Illusion
8/02/19 8:00 AM
By Dave Rosenberg
Bottom line: Strip out the government sector and the drawdown in the personal savings rate, and real DGP growth was basically 0% in Q2.

But the rabbit out of the hat shows headline real GDP growth came in above expected at a +2.1% annual rate in the second quarter. [More]

A New Mediocre
10 Years Later, a $10,000 Hit To Per Capita GDP
8/02/19 7:00 AM
By Philippa Dunne and Doug Henwood
In June 59% of the states in our survey met or exceeded their forecasted sales tax collections, down from May’s 85%, while the percentage reporting growth over the year rose to 95% from May’s 87%. The average over-the-year percent change fell to 3.6% from May’s 6.5%, and the margin from forecast fell below the zero line to -0.4%, having been 3.9% in May. [More]

Fed’s Action, Explained
Bond Holders Beware, Duration May Be Very Underpriced
8/02/19 6:00 AM
By Richard Bernstein
The Fed lowered the Fed Funds rate for the first time since 2008. This move has confused some investors because the Fed’s dual mandate seems in order: unemployment is at a roughly 50-year low and inflation remains below the Fed’s self-defined 2% inflation target. [More]

U.S. FX Intervention
Just Call It “Diversification,” Like China, Japan And...
8/02/19 5:00 AM
By Douglas Borthwick
In foreign exchange the word “intervention” is frowned upon.

Over the course of my career I have seen it used to various degrees. [More]

We’re All MMT’ers Now
Fiscal Policy Is NOT In The Price Of Financial Assets Today
8/02/19 4:00 AM
By Ben Hunt
Why Trump swallowed a budget deal that bleeds red ink [Politico]

“The president asked Mnuchin to negotiate a deal. And Mnuchin went to Pelosi saying, ‘How much is it going to cost me to get a debt limit increase past the election?’’’ one former senior administration official said sarcastically. [More]

A Tale Of Two Dollars
A Tale Of Two Dollars Low Rates, Central Bankers And Zombie Companies
8/02/19 8:20 AM
By Andrew Addison
The lengthy period of ultra-low interest rates is keeping many companies on “life support.” While the Federal Reserve and their fellow central banks are attempting to support economic growth and spur inflation, to what degree are their policies making those goals less achievable? Increasing numbers of “junk rated” companies are operating as if they were characters in the movie “The Night of the Living Dead.” With overwhelming demand for high yield (or any yield) debt by pension funds, mutual funds, and individual investors around the world, a large swath of companies that would not have been able to finance their debt in “normal” times have gained access to almost unlimited capital. Companies that might otherwise have gone bankrupt are continuing to produce product(s), which increases the supplies in their industry. [More]

Deal With It
Solar Shines, Crushing Bears; Sticking With 5G Theme
8/02/19 7:20 AM
By Blaze Tankersley
The dominant narrative I read on the tape Wednesday seemed to posit that since the Fed isn’t on an extended easing cycle that the market was disappointed. The market did in fact appear to be disappointed, but the idea that an extended easing cycle is desirable is patently false. [More]

Personal Consumption
Consumer Spending Level No Proof Against Recession
8/02/19 6:20 AM
By Thomas R Peterson
Personal Spending: Since it peaked in 1975 it has been in a downtrend. The last few years it has essentially been going sideways. [More]

Epidemic Unmasked
Federal Data Tracks Where 76 Billion Opiod Pills Originated
8/02/19 8:00 AM
76 billion opioid pills: Newly released federal data unmasks the epidemic
By Scott Higham, Sari Horwitz and Steven Rich
America’s largest drug companies saturated the country with 76 billion oxycodone and hydrocodone pain pills from 2006 through 2012 as the nation’s deadliest drug epidemic spun out of control, according to previously undisclosed company data released as part of the largest civil action in U.S. [More]

Fighting Inequality
How It Would Strengthen The U.S. Economy
8/02/19 7:00 AM
By Dimitri B Papadimitriou, Michalis Nikiforos, and Gennaro Zezza
Senators Elizabeth Warren and Bernie Sanders, along with Representative Alexandria Ocasio-Cortez, recently proposed to increase the rate of taxation on very high incomes and net worth. [More]

Making Sense Of The Barro-Ricardo Equivalence
8/02/19 6:00 AM
By Lorenzo Esposito and Giuseppe Mastromatteo
The 2008 crisis created a need to rethink many aspects of economic theory, including the role of public intervention in the economy. [More]

Do Old Habits Die Hard?
Central Banks And The Bretton Woods Gold Puzzle
8/02/19 5:00 AM
By Eric Monnet and Damien Puy
Why did monetary authorities hold large gold reserves under Bretton Woods (1944–1971) when only the U.S. [More]

Acute Observations, August 2, 2019
Perceptive Commentary from July 14-August 2, 2019
8/02/19 8:00 AM
Blaze Tankersley
SPX moves in line with our thinking, swiftly retesting the 2954 level we have been working with and now the 50d MA, as I wrote yesterday (Thursday, Aug. 1). A powerful split tape sell signal was elected and long time readers will recall our discussions of the Hindenburg Omen over the years with respect to this. [More]