Towards the tail-end of July, the Commerce Department reported that Gross Domestic Product (also known as GDP), or the total value of goods and services produced in the US, increased at an annual pace of 4.1% in this year’s second quarter. As expected, President Trump took a victory lap around these numbers, which were the highest GDP growth results since 2014. (However, lost in the fanfare was the fact that the first quarter GDP number was revised down from 2.9% to 2.3%.)
A recurring theme in various EVAs over the years is the importance of the yield curve. Sorry, I know a term like that can literally throw non-professional investors—i.e., those with a real life—for a curve. But, unlike with so many human relationships, it’s NOT complicated.
Zero interest rates have made a great many people a great deal richer. But paradoxically they have strangled wealth creation. The reason for this is that enterprise is overwhelmingly a phenomenon found among smaller companies. Among big companies it is a rare quality.
Long-time EVA readers know that I am an unabashed admirer of my friend and partner, Charles Gave. Recently, I had a chance to chat with him in Whistler at the annual Gavekal retreat and, even though he is knocking on the door of the three-quarter century mark, he has not lost his wit nor his willingness to challenge prevailing orthodoxies.
The “I” word. The word “impeachment” has been thrown around several times in the history of American politics. The first sitting president to be formally impeached was Andrew Johnson, in 1868, for abuse of power. Over a century later, Bill Clinton was the second US president impeached for perjury and obstruction of justice. Both were acquitted in the Senate, but their names will be forever associated with that long, humiliating “I” word.