Jonathan discusses some of the more pressing topics of current market and economic activity in his annual Halftime Report. Fundamentals have not changed (much) since this presentation was given live to clients in late July 2015. This being said, the volatility that has been missing for over 3 years has finally returned… you can see Jonathan discuss renewed market volatility here. In these 3 short videos, Jonathan discusses the 5 critical issues facing today’s investor.
- Forecasts & Forecasters usually get it wrong… though this NEVER stops them from trying. It seems that no matter how often we experience a market pundit completely punting a forecast, we still really want to believe that someone, somewhere knows what is going on. The sooner we recognize the limits of our knowledge, the better investors we can become.
- Minimum Wage Increases Vs. More Progressive Taxation – which is better for small businesses that generate jobs? Vastly increasing the minimum wage makes it more difficult for the already heavily troubled small business sector. A combination of a more (perhaps much more) progressive income tax and some massive improvement in job training programs would, in my view, be a better alternative.
- Greece is an unmitigated Disaster, but not threat. It is a wonder that Greece was ever allowed to join the European Union. However, now that they are in, The EU cannot let them out and MUST make them suffer to set a precedent for others. Thankfully, Greece has been well quarantined for some time. Greece is too small to have any big economic influence on the global economy and Greek debt is largely owned by the EU and the IMF so banks are not much at risk of Greek default any more.
- China must balance its slowing economy with its global aspirations as it moves to a less infrastructure driven and more consumer driven economy. China has to slow its economic growth down from a long-term over 10% pace and has targeted a 7% growth rate. This was never going to be a perfect process given the size and relative immaturity of China’s economy. Always remember how important they want to be on the international stage.
- There are specific headwinds to US growth. There are cyclical forces (rising dollar and falling oil revenues that are causing problems today for US economic growth. But, perhaps more importantly, there are simple demographic trends that suggest the average annual 3% growth rates are a thing of the past in the US. This doesn’t mean that growth will go away… it just means that we should moderate our expectations.
In an effort to provide as much transparency to our investment process as possible, Jonathan has been recording his market and economic insights twice a year for many years. You can see what he has been thinking most recently below: