Perspectives

TSP & Vanguard Smart Investor Posts

Doug Noland: Un-Anchored

The financial sphere is not driven by inflation, but “inflation expectations”. The Fed will say whatever it takes to attempt to manage expectations, but the market may not listen. Higher inflation pushes interest rates higher, higher interest rates will bring down stocks… and bubbles do not work in reverse. This is the risk of 2021.

Doug Noland: Generational Turning Point?

Everyone is prepared for unchecked monetary and fiscal stimulus as far as the eye can see. But is existing market structure sustainable in a backdrop of unrelenting non-productive debt growth, rising inflation, waning central bank flexibility and shifting political priorities?

TSP Investing: In a Mania

The central banks have no idea how to get out of the mess and distortions they have created. Which makes it real hard to predict what they will do next. So all I can do is point out the distortions and tell you that in the long run (10-12 years), the purchasing power of the stock market will be much, much lower than today.

Doug Noland: Fed Guessing

Our central bank has its heels firmly dug in. Monetary policy will remain ultra-loose, while their communications strategy at this point is little more than rationalization and justification. I can only assume they are fearful of the consequences of puncturing Bubbles. It’s been only 13 months since a near financial meltdown.

Doug Noland: Peak Monetary Stimulus

Over the years, I’ve relied upon a “Core vs. Periphery” model of market instability as a key facet of my analytical framework. Instability and financial crises typically emerge at the “periphery” – at the fringe where the structurally weakest and most vulnerable to risk aversion and tightening financial conditions – reside.

TSP Investing: The Last Dance

Probably the most surprising part of credit-driven market tops is how long they take to play out. The early crash, the central bank pushes back, the highly-leveraged speculative melt-up, then the initial blow ups (Archegos) that force banks to pull back.