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Risk Commentary

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Conestoga Conundrum, Assassin in our Midst (Feb. 09, 2024)

Automobiles are a major segment for most developed countries and are currently undergoing massive changes.

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Massive Sea Change (Feb. 05, 2024)

In the past, to be a sea power one required a navy. Likewise, to be a land power, one required an army.

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The Driver Of Returns – Installment II (Dec. 15, 2023)

This installment aims to suggest likely paths for all-important interest rates.

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Disney: Losing the Magic (Dec. 14, 2023)

Over the past year, DIS has been more or less flat while the SPX has been up nearly 10%.

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The Driver of Returns – Installment I (Dec. 12, 2023)

Beyond the cashflow or earnings performance of an individual firm, the next driver for nearly all investments are prevailing interest rates.

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Accidents Waiting to Happen (Oct. 4, 2023)

Outcomes often appear random, but closer analysis indicates that many were predicable.

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Emulating Mr. October (Sept 11, 2023)

Reggie Jackson, the superstar slugger for the New York Yankees earned the sobriquet “Mr. October” for his uncanny ability to score runs when the team was desperate.

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Dangerous Assumptions (Aug 24, 2023)

One of the greatest causes of pain (and conversely, gain) are assumptions that prove to be false.

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Technology Shifts (Aug 14, 2023)

While it is easy to miss, our world is rapidly changing, thus presenting a new landscape of risks and opportunities. The focus of this installment is to address some of the major current and pending shifts and related implications.

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The Widow(er) Maker (July 25, 2023)

In finance, the definition of a widow(er) maker is a trade which appears to be highly attractive, but for various reasons, turns out to be a major loser.

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Waiting for Godot (July 2023)

Samuel Beckett’s masterpiece was voted the "most significant English-language play of the 20th century” in a poll conducted by the British Royal National Theatre in 1998/99.

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The Killing Fields (July 2023)

A massive shift has occurred in cultural norms, leaving in its wake befuddled corporate managers and shareholders.

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The Sound and the Fury (June 2023)

It has been confirmed that the Wagner Group has reversed its drive toward Moscow and is returning to its bases.

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Mercenary Mischief, A Deadly Game (June 2023)

As of early afternoon, in a reported audio message, Prigozhin, head of the Wagner Group, stated "To avoid bloodshed we are returning our convoys to bases."

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Goldilocks and the Gorillas (June 2023)

The tale of Goldilocks is well-known; it basically involves the protagonist, Goldilocks, finding the ideal temperature for a satisfying meal.

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Central Bankers' Dilemma (May 2023)

Central banks have always had massive power. Over the past 15 years, as they battled the 2008 Credit Crisis, they were endowed with even greater powers.

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A Critical Hole in Understanding (May 2023)

Investment returns for both equities and fixed income are driven by prevailing interest rates (and corresponding valuation metrics such as P/E ratios and cap rates).

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Mobility Mayhem (Apr 2023)

Our Risk Commentary aims to provide sophisticated institutional investors with thoughts, ideas, and themes that are likely to materially impact prospective portfolio performance.

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China Challenges; Inflation Imbroglio; France being French (Apr 2023)

Countries, like companies, must adapt their behavior to address challenges. From the mid-1930’s to 1940’s, the U.S. supported the Republic of China to counter Japan's expansionary efforts.

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The Power Of Swing Voters (Apr 2023)

The indictment of Donald Trump yesterday has fueled greater political polarization. However, institutional managers must focus their attention not on political poles but rather on swing voters and voter turnout, which will determine the result of the 2024 election. 

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Managing Manic Market Conditions; Most Likely Outcomes; Likely FED Funds Pivot; Japan Watch (Apr 2023)

The markets have been dealing with the fallout of the failure of several US banks. With US federal support, the markets have stabilized.

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Emerging Massive Shifts (Mar 2023)

Just as machines has eased physical labor, we are seeing the rapid development of tools to ease some mental tasks. AI is at the forefront of that transition and is likely to have broad implications.

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Serving Two Masters; A Changing World (Mar 2023)

The adage that it is impossible to serve two masters is readily becoming apparent. The FED cannot both curb inflation by raising rates and keep the banking system solvent.

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Unintended Consequences: Tempering Interest Rate Increases (Mar 2023)

When a problem is too large to be solved, it simply will not be solved. To break inflation, most developed nations have increased interest rates but with inflated debt levels, several countries have little ability to absorb the increased rates.

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Goldilocks Environment; The Inflation Witch; Ukraine Update; Super Cycle (Feb 2023)

Seth Klarman, chief executive of the Baupost Group, is one of the three investors who Warren Buffett would invest with if Berkshire Hathaway disbanded.

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Predicting 12 of the last 2 recessions (Jan 2023)

Financial writers and economists are under constant pressure for attention. The more attention, the greater the demand for their views and in turn, greater compensation.

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Inflection Points: Interest Rates, Recession, Ukraine, Europe and Japan (Jan 2023)

A key task for sophisticated risk managers is anticipating market developments and their impact on investments.

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MMT & Canaries, PI & Russia, and ESG & Petroleum (Jan 2023)

A key task for sophisticated risk managers is anticipating market developments and their impact on investments.

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2022 Progress, 2023 Risks, 2023 Possible Surprises (Jan 2023)

In this commentary, we review 2022 progress, major risks for 2023 and possible surprises.

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Myopia Mistakes: Darlings to Dogs, ESG Blow-ups, Sovereign Skepticism and Solace (Dec 2022)

It is easy to assume that the current conditions will continue and simply project forward. However, based on history, such an approach has the potential for disaster.

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Shifting Goal Posts, Putin Poker, and China Chaos (Dec 2022)

The purpose of this publication is to address those items that are likely to have the greatest impact on institutional investor risk managers. Our aim is to explain underlying causes for recent developments and where possible, predict outcomes.

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A Likely Inflection Point, Sovereign Ratings, FTX Fiasco, China Revolt, UK Weakness (Nov 2022)

Inflation and elevated interest rates have been major factors driving the market over the past 12+ months. (The irony is that as of 24 months ago, central bankers were hard-pressed to stoke any sort of inflation.)

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A Possible Inflection Point, Logistics, etc., A Painful Birth, A Race to the Center (Nov 2022)

The purpose of this publication is to address those items that are likely to have the greatest impact on institutional investor risk managers. Our aim is to explain underlying causes for recent developments and where possible, predict likely outcomes.

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The Old Lady, Quagmire, China Syndrome, Washington Reset, Transitory Inflation (Nov 2022)

The purpose of this publication is to address those items that are likely to have the greatest impact on institutional investor risk managers. Our aim is to explain underlying causes for recent developments and where possible, predict likely outcomes.
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Shock and Awe; Fear and Loathing (Oct 2022)

While Ukraine has made significant gains over the past couple of months, Putin has the ability and the motivation to reverse the Ukrainian gains and achieve a good portion of his objective. Lobbing a nuclear weapon into Kiev would suffice and would probably qualify for Colin Powell’s “Shock and Awe” suggestion for winning wars.
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Playing the Nuclear Trump Card, The .75% Solution, and Fiscal and Monetary Schizophrenia, The Method to the Madness (Oct 2022)

The objective of our Risk Commentary is to provide views on event which present significant risks and in turn offer some possible outcomes; the report is issued only when we have something cogent to add. Recent events require a higher level of awareness than is normally the case.
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Changing Times; Changing Risks and Opportunities (Sept 2022)

As conditions change, risks and opportunities change. While it might be difficult to anticipate shifting conditions, it is imperative to make adjustments. This installment addresses some emerging trends and possible outcomes.
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Sobering; Adjusting to New Realities  (Sept 2022)

While change is difficult and often painful, it is needed for maintaining balance. Institutional Risk managers are normally best served by anticipating and adjusting to changes of which there are many...
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The Mafia and Mattresses; The Basis for Heightened Conflict  (Aug 2022)

"The Mafia has a term for warring between different families and that is “Going to the Mattresses”, presumably because when battle is underway, the soldiers might be needed at any time and therefore place on hold their normal family lives..."
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Taking Measure of the Major Risks, Probabilities and Possible Impact (July 2022)

"It is incumbent upon risk managers to be knowledgeable of the major risk factors, the drivers of those risks, the likely outcomes, and probabilities. We review these factors on a semi-annual basis to provide at a high level, some of the challenges and possible impact..."
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