EPB Macro Research Blog
The national savings and investment identity provides a critical framework to understand the flow of financial capital and determine the possible implications of increasing budget deficits.
Over the past decade, the heavy hand of central banks and the ubiquitous coverage of Fedspeak has formed a compelling narrative surrounding the deviation of stock prices from fundamentals. Despite this ingrained justification for rising share prices, a historical analysis of the data argues that stock prices are still closely associated with fundamentals, namely earnings per share “EPS.”
A long history of recessions, dating back to the founding of the republic, has allowed us to create a template for a typical downturn in the economy. The COVID recession, mostly thanks to unprecedented government action, has distinct differences from the historical recessionary outline.
In the final part of this trilogy, we discuss long-run economic growth potential and suggest that real growth is going to fall materially short of consensus expectations at the Federal Reserve and the Congressional Budget Office.
In Part II of this three-part series, we continue to explore three main factors that will continue to push Treasury rates lower, possibly near 0% on the long-end of the curve.
The inflation vs. deflation debate remains one of the more hotly contested ideas in the marketplace today. The inflation hawks argue precious metals are a one-way street higher while cash is trash, and bonds are worthless. The deflationary crowd continues to play with the multi-decade trend arguing that interest rates are not done falling, and more gains are left with nominal Treasury bonds.