Jan 282016
Bill Longbrake

Bill Longbrake

This month’s letter features two separate parts: a review of the key 2015 topics along with the regular Longbrake Letter.

Bill Longbrake extracts discussions of major topics that were included in various 2015 letters. These discussions explained and examined deep-seated trends which continue to evolve and shape global economies, markets, social systems and political governance. He provides additional commentary and updates on each topic, which are identified in bold italicized print. Developments in the United States receive the most attention, but because we are increasingly interconnected globally what occurs elsewhere has impacts on what happens in the United States.

Markets began 2016 with a massive anxiety attack about the threat of a collapse in global growth. In this month’s letter Bill Longbrake explores whether recent developments are a forerunner of worse to come, including a U.S. recession? Or, is the market overreacting to “temporary” shocks? Part of the difficulty in assessing prospects has to do with the unprecedented and aggressive monetary policy intervention of central banks in all major developed economies to force down interest rates in an attempt to stimulate demand and increase inflation. Academic theories are supportive of these policies. But, the theories may turn out to be deeply flawed or flat out misguided. It’s a huge bet! The consequences could be quite dire, if the bet turns sour.



Dec 222015
Bill Longbrake

Bill Longbrake

In this month’s letter, in a series of tables, charts and commentary, Bill Longbrake provides long-term forecasts for 15 U.S. economic indicators for the period from 2016 through 2023. Bill shares the view of many that potential inflation-adjusted growth will languish in the vicinity of 2 percent. However, he expresses skepticism about the consensus view that inflation will rise to 2 percent over the next three years and explains why inflation might remain very low in the near term and take much longer to rise to 2 percent. Bill’s inflation view, if correct, has significant implications for forecasts of many other economic indicators.

Bill provides a final assessment of observations he made a year ago about how the U.S. and global economies might fare in 2015. He got some things right and many things wrong. The U.S. and global economies are dynamic and ever changing. Some trends are foreseeable. But, governmental policy intervention, whether it be political or economic, can alter outcomes and set in motion feedbacks that significantly affect economic developments. In this respect, 2015 was no different from any previous year. Such will also be the case in 2016. Nonetheless, Bill summarizes key U.S. and global economic developments that seem possible, perhaps likely, in 2016.

Read the full letter.

Nov 302015
Bill Longbrake

Bill Longbrake

As we enter the holiday season, the U.S. economy continues its slow forward march, with the exception of manufacturing which is struggling courtesy of a strong dollar. Much of the damage inflicted by the Great Recession has been repaired. The Federal Reserve is poised to take the first step to raise short-term interest rates after seven years of zero rates. Although the outlook is sanguine, most no longer expect robust growth. When the consensus coalesces around benign trends, it is especially important to listen to opposing viewpoints. The question we should ask is: what is different today that could result in unpleasant surprises? This month’s letter explores how the cumulative impacts of monetary policy might lead the U.S. into recession. Bill Longbrake also voices his skepticism about significant acceleration in wage rate growth.

Read this month’s letter.

Oct 262015
Bill Longbrake

Bill Longbrake

After a turbulent August and September, a semblance of calm has returned to global financial markets. Fears that China is on the verge of economic Armageddon have subsided. Policy makers have soothed markets by doubling down on monetary stimulus. The fundamentals were never as troublesome as the market feared. But they aren’t great either. Growth is slowing … everywhere, including the U.S. where soft third quarter growth is probable. Inflation is hard to find. Slow growth and low inflation is the order of the day. The only good news is that recession is probably not imminent. This month’s letter includes an examination of the impact of macroeconomic trends on long-term rates of return on Investments and discusses the consequences of a persistent low-inflation/low-growth environment and the challenges that will pose for fiduciaries who are responsible for pension funds and endowments.   Read the full letter.

Oct 092015

The prospect of a longer period of low interest rates from the Fed has calmed financial markets this week as most of the major indices ended higher. A report from Blackrock blamed rules designed to protect investors from market volatility backfired, instead hurting some investors during the August rout. Blackrock, along with other major ETF providers State Street Global Advisors and Vanguard, have held discussions in recent weeks to discuss how to prevent another August 24th.

Blackrock urges market shutdown if extreme turmoil occurs

Market stress puts focus on high-speed technology

Clinton’s plan for taxing HFT faces criticism

IMF warned fire asset sales in the emerging markets

IMF says policy upgrades needed to ensure financial stability

Dark Pools’ Governance Rules Also Dark, Says Nasdaq CEO Greifeld

ETF Firms Tackle Wall Street on Ways to Prevent Another Aug. 24