Wednesday Reading List

Why Is the Economy Still So Strong? by Apollo

The article shares two reasons (and some great charts) the economy is still strong despite higher rates. The first is lower interest-rate sensitivity given that most borrowers are still carrying lower interest debt, and there are still economic tailwinds from fiscal stimulus programs, excess savings, immigration, and easy financial conditions.

A Slow but Steady Path by Jeremy Siegel

The market’s strong performance recently makes sense to Professor Siegel given that rate hike fears were overblown and have now corrected, and the labor market news is more balanced and showing some weakness which is good for inflation and future cuts.

The Worst Bond Bear Market Ever Marches On by A Wealth of Common Sense

Rate hikes have hurt bonds, with longer-term bonds bearing the brunt of it. Investors aren’t jumping ship because yields now are attractive and current yield drives future returns. Rather than avoid them, be smart about what you own and get help if you need it.

They Just Wanna Sell You a Bond Fund by Bill Gross

The bond king doesn’t want you to buy bonds based on the theory that rates will decrease, so total return (yield plus price appreciation) will be great. He believes rates will move higher because we will have to issue lots of Treasuries and yields will have to go higher to entice buyers. “Those that argue for lower rates have to counter the inexorable upward climb in Treasury supply and the likely Sisyphean decline in bond prices.”

The Recession Has Ended by Charles Schwab Asset Management

Europe’s mild recession is over, with growth expected to continue. Valuations for eurozone stocks remain attractive, offering the potential for further price appreciation.

Decaf coffee might be banned in the US (here’s why) by The Street

That old Seinfeld joke about how they remove the caffeine from decaf coffee actually has a health warning attached to it that I wasn’t aware of until this article. One common method is not a natural process and involves using a carcinogen. This article explains and shares some brands that have been tested and found not to have trace amounts of the chemicals.

Three Questions to Ask About Your Financial Plan by Heritage Financial

People think that just because an “advisor” has run some financial projections for them that they have a financial plan. In reality, the plan is not the finish line, it’s the start of a dynamic conversation that helps you stay on top of your wealth. Here are three questions to ask your financial advisor about your financial plan. If your advisor can’t answer these, then they aren’t serving you well.

Podcast Recommendation

Richmond Fed President Tom Barkin on Getting Inflation Under Control – Odd Lots

Ever wonder where the Fed’s 2% inflation target came from? This short episode digs into that and so much more. At the end of 2023, there was a lot of optimism that the US economy was on that glide path to a soft landing. But at least in the first quarter of this year, inflation has come in hotter than expected. So is this just a speedbump on the way back down to 2%? Or is this a new trajectory for inflation that will make the Federal Reserve rethink its existing approach? On this bonus episode of Odd Lots, we caught up with Richmond Fed President Tom Barkin in Mount Airy, North Carolina, to get his assessment of the latest data, and what it means for policy. He explains why he thinks policy is still restrictive, and why he doesn’t see evidence yet of overheating demand.

Latest Book Recommendation

James: A Novel by Percival Everett

A good friend and loyal reader recommended this retelling of the Adventures of Huckleberry Finn from Jim’s point of view. It’s an excellent book.