RealClearMarkets Articles

This week, Wall Street's patience finally snapped. Following a disappointing round of earnings from several technology giants, investors abruptly shifted their attention from artificial-intelligence dreams to a far more mundane question: cash flow. For several years, markets largely treated AI infrastructure spending as self-evidently virtuous. Suddenly, they are beginning to ask whether the demand justifies the cost. In agricultural economics, this moment has a name. The "hog cycle" describes a predictable, self-defeating rhythm. High prices encourage producers to expand production. Because...

The parsimonious in Washington won’t always remain in power. Which is a weak attempt at humor, or irony. Still, let’s assume for fun not just major spending cuts by a few thrifty politicians, but also a concerted effort to pay down the national debt with the money not spent. If so, see this opinion piece’s opening sentence. Power in government is a moving target. Consider the changing face of power alongside a shrunken national debt. The latter would simply free the legislators of the future to not just spend money saved on a smaller budget with greater ease, but also borrow...

Headline Index Eases to 45.1 After July's Surge; Personal Financial and Federal Policy Components Reach Highs Not Seen Since March as the Six-Month Outlook Retreats and Financial Stress Rises 3.0% Consumer sentiment held near its recovered level in August as the RealClearMarkets/TIPP Economic Optimism Index, the first monthly reading of U.S. consumer confidence, eased to 45.1 from 45.5 in July, a slight 0.4-point (0.9%) decline. After July's sharp rebound, the near-flat reading suggests consumers are consolidating last month's gains rather than extending or reversing them. The index has...

The next time a candidate promises that greater government control will make life safer, fairer and more secure, Americans should remember 2020. They should remember the closed schools, shuttered businesses, restricted churches, isolated families, arbitrary mandates and government checks intended to compensate people for livelihoods government had interrupted. COVID was not socialism in the strict textbook sense. Government did not nationalize most businesses or formally abolish private property. But the pandemic gave Americans a revealing glimpse of the governing instinct behind socialism:...

Trade reports are like oceans. Much of the action happens beneath the surface.  That is the lesson of the June trade report. On the surface, the headline number improved. The U.S. goods and services trade deficit fell by $4.4 billion, or 5.6 percent, to $73.3 billion. The goods deficit fell to $102.1 billion, while America’s services surplus rose to $28.8 billion.  That is welcome movement in the right direction. But the deeper story is more important: America’s high-value services engine is strong, its energy strength remains strategic, capital and advanced-technology...

The people running corporate health benefits have spent more time thinking about prescription drugs in the past two years than in the prior ten, mainly because of the skyrocketing popularity of GLP-1s. The weight-loss drugs that began as a diabetes therapy have become among the most disruptive line items in the pharmacy budget. Nearly eight in ten employers say GLP-1s are driving up their health costs, and three-quarters of large employers report that managing that spend is a top priority. The questions consuming benefits committees are all variations on the same theme: Do we cover these...

On July 12th,, European Commission President Ursula von der Leyen issued a statement calling for a European Union (EU) wide identity verification system for all social media users. Like many infringements on liberty and privacy, the proposal to force EU residents to verify their identity is being implemented in order to protect the children. The mandatory verification system is necessary to enforce, “age-appropriate restrictions to platforms.” According to President von der Leyen, “while ultimately it is up to parents to decide when children get their first smartphones, what...

Last Saturday, I strolled over to the St. Stephen's Farmers Market. I never buy anything. I eat all my meals out, but it's usually a good venue to walk around and spot nice-looking, nubile women buying something at the fruit stand. This gives me the opportunity to walk up to them, scour the top half of their feminine form, and then say something clever: "Wow, what nice melons!" If they give me "the look," I can always feign indignation. "I was referring to the cantaloupes over there. Geez!" While examining "cantaloupes," I ran into my buddy, Ames Russell. Ames is happily married to Carrie....

Chip stocks shed a trillion dollars in a single week at the end of July. Nvidia dropped almost five percent in one session. The trigger was not a collapse in demand. Alphabet supplied it: the company beat on revenue, grew its cloud business 82 percent, and then raised its capex for the third time this year, to as much as $205 billion. Investors sold anyway. That reaction is the story. The dominant explanation is that the AI bubble is deflating. That reading is lazy. What broke in late July was not faith in demand but the belief that spending on frontier models converts cleanly into profit,...

The latest ISM manufacturing report delivers a simple message: America’s factory floor is continuing its robust tariff- and tax cut-induced renaissance.  The July ISM Manufacturing PMI jumped 2.3 points to 55.6, well above market expectations and comfortably above the 50 line that separates expansion from contraction. This was the seventh straight month of expansion and the strongest reading since May 2022.  That is not noise. That is a trend.  For years, America’s industrial base was treated by Washington’s globalist class as a museum exhibit: something to...

To hear the financial commentariat tell it, Kevin Warsh’s decision to strip forward guidance from the FOMC statement is nothing short of monetary heresy. Cue the rending of garments, the gnashing of teeth, and the apocalyptic warnings that markets will collapse without a central banker tucking them into bed with explicit rate forecasts every six weeks. How did we ever survive before central bankers started doodling their musings about the future economy in the "dot plot"? The outrage misses the point. For fifteen years, central bank communication hasn’t been...

The fundamental flaw of socialism is a profound category error regarding human nature. It is an economic blueprint designed for a completely restored, flawless humanity—which means socialism can only exist in Heaven. In a realm completely purged of envy, ego, and deceit, a system of pure collective unity could function perfectly. There, you don’t need competitive markets or strict guardrails, because the impulse to exploit simply does not exist. But trying to run that blueprint on Earth ignores the reality of human nature as it is. When an economic system is built on the fantasy...

Affordability is a key issue in Washington, and taxes are a major factor.  Americans pay more in taxes than they do for food, clothing, and shelter combined.  But taxes keep going up, and pressure is growing to increase taxes even more. According to a recent Treasury report, individual income taxes increased $136 billion in the first nine months of the fiscal year, a 7% increase.  Total federal taxes were $4.2 trillion in the first nine months, on track for a record high $5.6 trillion in taxes for the full year.  Even with the Republican tax cuts in 2017 and 2025,...

When prices rise, the search for someone to blame usually begins immediately. During the pandemic, many politicians pointed to "corporate greed" as the culprit, arguing that businesses simply took advantage of consumers by charging more. But higher prices, by themselves, tell us remarkably little. Before assigning blame, we should first ask a more fundamental economic question: What changed? Imagine a hurricane destroys half of Florida's orange crop. Orange juice prices double almost overnight. Most people wouldn't conclude that orange growers suddenly became twice as greedy. They would...

AI will do more to elevate capitalism in the eyes of the young than any other advance. See Elon Musk to understand why. It turns out his teachers in South Africa thought he was touched. What to take from such a foolish analysis of Musk? It speaks to arguably the biggest problem in education. It’s not bad teachers, or not enough home schooling, or insufficient vouchers to free kids from “government schools.” The biggest problem with education today is the popular notion of what a “good education” is. The experts believe it’s rooted in learning math,...

When they were young, I used to give my daughters little bags of chips.  Turns out, my oldest would take some of her sisters’ stash.  This coincided with chip-makers putting fewer in each bag.  Shrinkflation. When I cut the number of bags I handed out, she would actually demand more from the other girls. If this sounds too unfair to be true, that’s because it is.  I made it up.  The scenario is analogous however, to those playing out in cities across the country this municipal budgeting season.  Faced with deficits in the hundreds of millions of...

A day at the ballpark is a classic American story – a story of community, tradition, and pure joy. It’s a story written not just on the field, but by a vast, unseen network of infrastructure, commerce, and ingenuity that makes such a day possible. Take a day at Yankee Stadium – from buying tickets and booking flights to grabbing coffee, riding the subway, lighting the stadium, and even buying a hot dog, life insurers' investments fuel that diverse network and help make gameday possible. And what's true at the stadium is true across the country: life insurers' capital quietly...

Everyone sucks at something. In a baseball sense, that’s why “five tool” players are paid so well. They can not only hit for average, but they can also hit for power, run the bases with great speed, they can field with great skill, and throw long distances accurately. The five tool players are rare, and then when someone like Shohei Ohtani comes along of the six-tool variety (yes, he can pitch), we watch in awe. Baseball is one way to look at the AI future that Mark Zuckerberg described this week in an excellent Wall Street Journal opinion piece. Zuckerberg crucially wrote...

Our Founders did something that the Kings and Queens of Europe never did, something that made America the country it is today—they gave us a patent system that anyone could benefit from. In England, writs of ownership were given to the friends of the King, but in America anyone could receive a patent. That lit a fire under our economy that helped America grow into the greatest nation on Earth. However, our government has grown and grown, as has its regulatory bureaucracy, and today our engine of innovation is seemingly coming to a halt under the slow stranglehold of bureaucratic...