Publications

Reserve Currencies and the Investment Implications of "Exorbitant Privilege"
A "reserve currency" is one issued by a major central bank but held by a majority of other central banks, to back their own currency issues; such a currency is held mainly for safety, liquidity, and because central backs wish to hold the public securities denominated in it. Importantly, the issuer of a reserve currency enjoys a benefit that non-reserve-currency issuers do not: it sees a steady demand for its currency, which permits it to issue a far greater supply of it, and thus to obtain more real resources, without debasing it (i.e., causing inflation) as much as it otherwise might.

Financial Repression: Political Causes & Investment Effects
Financial repression," a term introduced decades ago,designates public policies devoted to helping deficit-spending governments borrow at artificiallylow costs – i.e., at low or even negative real interest rates.

Who's Paying the Taxes – and Why It's Not Enough
It's two months late, relative to what the laws requires, but the Obama Administration last week finally issued its federal budget proposal for FY 2014 (to cover the period September 2013 – September 2014).

The Roots of Wall Street's Mistaken Bearishness
The best way to forecast the business cycle and investment returns is by using forward-looking market prices which don't get revised retroactively, instead of relying on backward-looking (lagging) or even coincident and flawed accounting-oriented data. IFI uses...

The InterMarket Forecaster

The InterMarket Forecaster

Canada as a Fiscal Role Model
As Washington politicians gather to avoid an alleged "fiscal cliff" – which means: to make sure excessive federal spending persists and even higher tax rates are imposed – it's worth noting that better equity performance tends to arise from less, not from more government spending, taxing, deficits, and money-printing. Keynesians keep insisting that deficit-spending has kept economies afloat since the debacle of 2008-2009, yet everyone also seems to realize the fiscal profligacy and poor equity results of the euro-zone's southern nations. What about a positive fiscal role model? It exists in Canada, as we illustrate below. Sadly, the U.S. refuses to adopt this model.

The Coming U.S. Tax Hikes Shift Will Be Bearish
Barack Obama and his semi-socialist regime won reelection in America on November 6th, just as we predicted, and yet GOP sympathizers (and even some Democrats) still can't seem to believe it happened. We've consistently forecasted just this result for nearly a year, even while saying Romney-Ryan weren't as bad, and that their losing would be bearish.

The U.S. & Japan: Money-Printing vs. Money-Making
Tragically, U.S. policymakers still insist that political money-printing can ensure economic moneymaking, even though the two are by no means synonymous; indeed, the former tends to freeze or displace the latter. In this regard U.S., policymakers are merely copying Japan's policies, with a lag of about a decade, as we first noted in 2010,1 but at least the lag allows forecasters and investors to better anticipate the U.S.'s future.

The InterMarket Forecaster

High Public Debt Slows Future Economic Growth
As investors contemplate the outcome of next month's U.S. elections, what that outcome might mean for the so-called "fiscal cliff" in January,1 and the overall investment implications of the world's horrific political climate, it's worth noting that whoever wins in the U.S., and whatever happens abroad (for example in the euro-zone), since the Great Recession of 2008-2009, most nations have become bogged down with huge public debts – which is highly relevant to future growth.

Contrasting Two Recovery-Driven Elections: Reagan (1984) versus Obama (2012)
Barack Obama has little in common with Ronald Reagan when it comes to political ideology, but like Mr. Reagan in 1984, Mr. Obama in 2012 is running for re-election as an incumbent U.S. president who purports to have rescued America from a previous, economically disastrous administration – with Reagan overcoming that of Jimmy Carter (1977-1981) and Obama overcoming that of George W. Bush (2005-2009). In each case the economy was a more salient issue than foreign affairs. In each case the robustness (or lack thereof) of the economic recovery was heavily debated, as was the extent to which prior administrations were responsible (or not) for the pace and means of recovery. In 1984 Reagan won in a landslide against Walter Mondale (Carter's former vice president) Will Obama do the same in 2012? Even if he wins no landslide, will he still win marginally?

Why ECB Purchases of Government Bonds are Bullish
The ECB yesterday announced a bullish policy that we've anticipated for many months now, but apparently some market-makers did not: a policy to purchase even larger sums of sovereign debt than it has already, in the euro-zone secondary market, especially the more depressed- value (junk-type) debt issued by wastrel governments in Greece, Spain, and Italy.1 These bonds rallied materially on the ECB's announcement, but they already had been rallying for most of this year, despite all the doom-and-gloom we've all heard. We're still hearing this same gloom and doom today, from biased sensationalists like Nouriel Roubini and Paul Krugman, who insist the world is in a "depression," and yet, also, that Mr. Obama deserves re-election.

Note to U.S. Equity Bears: The U.S. Profit Revival is Real

The Widely-Ignored U.S. Fiscal Turnaround
Amid the just-released report on the U.S. federal deficit by an Obama-appointed commission, it's an appropriate time to review the state of federal finances since the U.S. recession ended in June 2009, and to note how the fiscal situation turned for the better last February and has since undeniably improved, despite every effort by Keynesian policymakers to spend the nation into oblivion and insolvency.

Latest European Debt "Crisis" Still Overblown
Six months ago, when the first wave of what we characterized as over-wrought fears of European sovereign debt troubles swept through financial journalism and market commentary, we downplayed the materiality of the risks Europe faced and reiterated our bullish case for continental stocks.1 Fears last spring mostly surrounded Greece, Spain and Italy, but now mainly surround Ireland. In both cases, we contend that the sensationalist and pessimistic accounts largely obscure many positive facts.