Markets ≠ The Economy: Confusing Them Can Cost You Money

Do not confuse markets with the economy they are not the same thing

Our human brains are wired to reduce complexities into simpler parts, from which we then draw linear conclusions. While this may have served us well from an evolutionary standpoint, it often misleads us when it comes to navigating financial markets.

The financial landscape is littered with many examples of this, the most enduring of which might be the “market as economy” paradigm, which always seeks to explain market moves with economic rationale.

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If Trillions Must Buy, How Important Is The Economy?

If trillions of dollars must buy stocks, does the economy matter?

When trying to understand the relationship between the stock market and the economy, it is important to consider how the market is structured. Who are the participants in the market, and how are they related? More importantly, how do the majority of participants affect market prices?

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Lumber: What Goes Up Must Come Down

What do lumber prices tell us about inequality?

After a historic rally post March 2020, the price of lumber in the US is down by about 50% from its May ‘21 peak. Even though this drop comes after a sixfold rally in prices from their 2020 lows, a 50% selloff in slightly less than 2 months does hint strongly at some kind of underlying change.

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Has Dr Copper Made A Move?

It is said that Copper has a PhD in economics because of how widely used it is across the economy, but is it's price always a reliable indicator?

Having soared to cycle highs in the wake of the first wave of global shutdowns and reopenings last year, copper prices have finally started to cool off.

Does this pullback tell us anything useful about the future?

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Fiscal Multipliers & Hamster Wheels

Fiscal stimulus without money supply growth cannot create sustainable economic growth

Do fiscal multipliers work? As usual the answer is not a clear cut yes or no. It’s an “it depends”.

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The Rally In Lumber & Inequality Part 2

What do lumber prices tell us about inequality?

For those lucky enough to retain access to credit, low mortgage rates have allowed them to participate fully in the housing market. This could be in the form of purchasing a newly constructed house, renovating an existing one, purchasing an existing home from its owner, or some combination of these activities. The net result of which is the ongoing strength of the US housing market, its resilience during the pandemic, and a robust demand for lumber.

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