A Journal of Independent Research, Analysis,
 Opinion and Insight

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When the Bubble Bursts
GMO's Ben Inker On Preparing For Value's Turn In The Sun
There’s no other way to put it, at least no other that springs to mind, than that it seemed like a perfectly good idea to start this year by interviewing GMO’s head of asset allocation, Ben Inker — a paragon of solid value investing principles and a deep thinker about ways to use the discipline to wring performance out of a market that’s been mostly hostile to its practitioners during this historic bull’s marathon run out of the depths of the Great Financial Crisis. 

Especially good, it seemed since, just in the last couple of months, there have been days, amid the record highs, hinting of a turn in the works. It is, Ben agrees — Jeremy Grantham concurred just before we spoke — and Ben was prepared with insights aplenty. What we forgot, alas, is that we also seem to have an uncanny knack for touching base with each other amid political chaos.

Waiting For The Last Dance
The Hazards Of Asset Allocation In A Late-Stage Major Bubble
1/15/21 8:00 AM
By Jeremy Grantham
Most of the time, perhaps three-quarters of the time, major asset classes are reasonably priced relative to one another. The correct response is to make modest bets on those assets that measure as being cheaper and hope that the measurements are correct.

Investing Amid Mania
Or Driving Prudently On The Market Autobahn
1/15/21 7:00 AM
By Dave Rosenberg
I get asked all the time how the stock market (and risk-on assets in general) can manage to keep rallying as they did given the horrific events in Washington last week. One can ask the same question around the pandemic, because the S&P 500 is actually 600 points higher with the health crisis than it would have been without it.

One-Party Government
Why U.S. Investors Should Welcome Democrats’ Narrow Win
1/15/21 6:00 AM
By Anatole Kaletsky
Do investors really prefer a divided US government? To judge by the market’s response to the Georgia run-off elections, the answer seems to be “no.” A preference for political unity is understandable, if one side of a divided government consists of the sort of people who rampaged through Washington on Wednesday the 6th, causing the suspension of Congress and delaying the final confirmation of Joe Biden as U.S. president and the final humiliation of Donald Trump as the ultimate sore loser (see After The Storming Of The Capitol).

Portfolio Challenges
How Keynesian Policies Will Complicate Investment Under Dems
1/15/21 5:00 AM
By Charles Gave
On Thursday, Anatole set out his view that undivided Democratic Party control of both the executive and legislative branches of the US government opens the door for unconstrained Keynesian stimulus, which will be highly positive for the U.S. economy and equities (see Investors Should Welcome An Undivided US Government).

Batting Average Effect
Blanchflower’s Insight Into Soaring Average Pay Amid Job Losses
1/15/21 4:00 AM
By Philippa Dunne and Doug Henwood
In 2007, the first quarter Quarterly Census of Employment and Wages report showed Trumbull County, Ohio to have had the largest increase in y/y average weekly wages, 22.3%, compared to a US average of 5.1%. The stunning increase the result of severance payments at GM’s Lordstown Complex, in the quarters that followed Trumbull showed massive declines.

Robinhood’s “Big” Fine
SEC Defines Best Execution, Implies Big Lots = Worse Trades
1/15/21 3:00 AM
By Sal Arnuk
We have been writing about Robinhood for almost five years, now. Yikes.

Leadership Change
In Market, It’s To EMs, Basic Industries & Commodities
1/15/21 8:20 AM
By Blaze Tankersley
Dear Dr Doom, we have re-installed the patient’s oxygen lines as requested. Sincerely and jointly signed, US Treasury and Fed. [More]

2000 Déjà Vu
Rotate Out Of Tech, Indices, Into Energy, Financials, Value Stocks
1/15/21 7:20 AM
By Michael Belkin
Our scenario for 2021 is a major extended rotation out of tech into energy, financials and other value stocks. So far it is working. [More]

Looking Back/Forward
Recommendations Still Working For 2021, Or Not
1/15/21 6:20 AM
By Andrew Addison
My work generated a Buy on the US Breakeven 10-year Yield @1.91% in the December 4th report. The rounding base breakout generated upside projections to 2.60-3.50%. [More]

Impeachment 2.0
DJT Charged With Inciting Capitol Insurrection Over Election Loss
1/15/21 8:00 AM
By The House of Representatives
RESOLUTION: Impeaching Donald John Trump, President of the United States, for high crimes and misdemeanors. [More]

Employment Mobility
The Belated Emergence Of The Black Middle Class
1/15/21 7:00 AM
By Joshua Weitz, William Lazonick, and Philip Moss
As the Covid-19 pandemic takes its disproportionate toll on African Americans, the historical perspective in this working paper provides insight into the socioeconomic conditions under which President-elect Joe Biden’s campaign promise to “build back better” might actually begin to deliver the equal employment opportunity that was promised by Title VII of the Civil Rights Act of 1964. [More]

GOP’s Rise in the South
How Voting Rights & Deindustrialization Fed 1990s Revolution
1/15/21 6:00 AM
By Gavin Wright
The Voting Rights Act of 1965 revolutionized politics in the American South. [More]

Acute Observations, January 15, 2021
Perceptive Commentary from January 1-15, 2021
1/15/21 8:00 AM
WSJ Editorial Board
As for Mr. Trump, to steal some famous words deployed in 1940 against Neville Chamberlain:
“In the name of God, go.”
The Disgrace on Capitol Hill
The Wall Street Journal — Opinion
January 7, 2021

Chris Mooney, Andrew Freedman and John Muyskens
Overall, climate scientists say the disasters of 2020 are but a preview of what’s to come if greenhouse gas emissions are not quickly curtailed.
“What keeps us climate scientists up in the dead of night is wondering what we don’t know about the self-reinforcing or vicious cycles in the Earth’s climate system,” said Katharine Hayhoe, a professor at Texas Tech University, in an email. [More]