Blog

Election day is tomorrow and will bring results for key Senate, House, and Governors races from all around the country, plus local legislative races and more.  For the federal races, our projection is that the Republicans are essentially a slam-dunk to take back the House of Representatives (98% likely) and very likely to take back the Senate (about 80%).  

After nearly three years of the economic and financial market distortion due to COVID lockdowns, money printing, and massive government borrowing, some of these distortions are subsiding.  For example, the federal budget deficit in FY2021 was $2.78 trillion, but for FY2022 (which ended on 9/30), it fell to $1.375 trillion.

Most investors we talk to think the US is already in a recession or that a recession will start by the end of 2022.  We think they’re wrong on both counts.

"How's business going with everything going on in the markets these days?"

We've gotten that question more than a couple of times the last few months. And the truth is, it's an easy answer - business is booming.

"Well that's great to hear. Why do you think?"

Recent economic reports further undermine the politically-motivated argument from earlier this year that the US was already in a recession.  They also undercut the Fed’s hopes that inflation will soon subside.

We are not “recession deniers,” we just don’t think one has started yet. The distortions of economic activity from lockdowns, massive deficit spending, and money printing are immense. It’s hard to imagine the US can unwind these policies and not have a recession.

We had been bullish on stocks all the way back to March 2009, when mark-to market accounting was fixed and the Financial Panic started to recede.  At that time the S&P 500 traded as low as 677.  What a time to buy!

We know many people think we are beating a dead horse, but this horse is far from dead.  Instead, she’s in the middle of one of the most important races of her life. What we have been talking about – and will keep talking about until we think Americans understand it – is monetary policy and the Federal Reserve.