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I just talked with one of the most successful hedge fund managers in the country (in terms of returns over the last four years). He will not allow me to use his name. But I can tell you he is a raging bull. He believes the stimulus that we already had plus what we will get—coupled with a major infrastructure bill, plus extraordinarily easy monetary policy, combined with significant new technology innovations—adds up to a new bull market. This is someone with 5X returns over the last four years with a very diverse portfolio. So it could pay to pay attention.

overstimulation risk will far exceed the “output gap” shown in the latest Congressional Budget Office economic projections. What is an output gap? Gross Domestic Product measures (or at least tries to) economic growth. Economists also calculate “potential GDP,” which is how much the economy  could grow, if every available worker and other resource were fully employed. Inflation tends to occur when actual GDP exceeds potential GDP because the economy is “running hot.” An output gap is when it goes the other way, with the economy operating well below its potential. That’...

The Case Against Inflation :: The Market Oracle ::

The Gripping Hand Holds Inflation :: The Market Oracle ::

That day will come. For now, the economy depends on the coronavirus. Both have cloudy forecasts. The best case: Vaccines, combined with previous infections, immunize enough of the population to let the previously normal economy return. We’ll travel, gather, and meet face to face without fear, and without pesky precautions like masks. That could happen, maybe even by mid-year,  if everything goes perfectly. More likely it would be late 2021 or early 2022. Unfortunately, the vaccine campaign is not off to a good start. In the US, according to the CDC vaccine tracker, some 3.2 million peopl...