What we’re reading (10/23)
“Investing In The Shadow Of A Recession” (New York Times). “Deep recessions are horrible experiences for most people, including investors. If you are living off your holdings, with no margin for error, you need safe, fixed-income assets. But if you are lucky enough to have a long horizon, of a decade or more, the best approach may be to keep buying and holding stocks and bonds, even if conditions worsen.”
“Early Earnings Reports Worry Investors Already Battered By Stock Selloff” (Wall Street Journal). “Early results from the third-quarter earnings season haven’t provided much comfort to jittery investors. While some corporate leaders noted glimmers of hope for consumers and the economy, many have reported a host of challenges to profits, including persistent inflation, rising interest rates and a generational surge in the dollar that has pressured revenue generated overseas.”
“Fed's Rx For The Economy Should Be A Tincture Of Time” (Calafia Beach Pundit). “As I've argued in recent posts, there's plenty of evidence to suggest the Fed has already tightened by enough to bring inflation down: the dollar is super-strong, real yields have risen sharply, the yield curve is inverted, commodity prices are plunging, and the housing market has run into a brick wall. Yet the Fed seems determined to tighten even more. I think they're driving by looking into the rear-view mirror. They're trying to burnish their reputation as an inflation fighter, after having fallen miserably behind the inflation curve in 2020 and 2021. And I think that the long-discredited Phillips Curve (which posits that unemployment must rise if inflation is to fall) still haunts the Fed governors' minds. It's all so unfortunate.”
“Here's Why The US Dollar May Be Closer To A Peak Than Markets Think, Even As Inflation Rages And The Fed Remains Hawkish” (Insider). “The US dollar could be closer to peaking than markets think, even as inflation rages and the Federal Reserve remains hawkish, according to Goldman Sachs. The greenback has soared this year, pummeling rivals like the euro, yen, and yuan, thanks to the Federal Reserve's aggressive rate hikes. The central bank has raised its policy rate by 300 basis points so far this year as it scrambles to get a lid on inflation and is expected to keep raising them until next year.”
“Vacancies Show A Hot Labor Market. But They Could Overstate How Hot.” (Washington Post). “For most of the past year there have been roughly two open jobs for each person looking for work in the United States. That’s good news for workers, millions of whom have found higher wages and new opportunities. But the dynamic also has kept the labor market unsustainably hot and fueled persistent labor shortages that have helped push inflation to 40-year highs.”
