Happy Friday,
Making some homemade wings this weekend and watching the Super Bowl. I’m cheering for the Rams. It’s hard not to like Matt Stafford.
He sounds like an amazing dad and husband, and he’s incredibly tough (go to 3:30). After suffering all those years playing for the Dumpster-Fire Lions this guy deserves a ring!
Once again, the Ruff family is playing in the office Super Bowl squares. I buy the squares. The deal is that if we win, I take the kids out for ice cream. Usually that means that we win like $10 and then I have to spend $25 on ice cream. I never come out ahead.

By Charles Ruff, CFA

Quantifying Inflation… Alternative Data

John Williams’ Shadow Government Statistics Analysis Behind and Beyond Government Economic Reporting

Previously, we covered a key difference in how CPI is probably understated because of how the cost of shelter is computed.

  • Previously, home prices were taken into account.
  • In 1999, the Bureau of Labor Statistics (BLS) began using Owners Equivalent Rent (OER) to compute the cost of shelter.
  • The end result is that inflation numbers before and after 1999 are not equivalent. With the media drawing numerous comparisons between the 1970s and current inflation, it’s important to keep this fact in mind.

Another major change is that the CPI basket is not computed to maintain a standard of living. Continue adjustments swapping higher priced items out for lower priced items puts constant downward pressure on CPI.

  • When Jerome Powell cites inflation, is he talking about CPI? Or does he consider other factors?

The Bezzle

Why the Bezzle Matters to the Economy

Yes, Snoop is performing at the Super Bowl halftime show. No, this has nothing to do with him.

When someone embezzles money, they gain wealth. The person they stole it from, typically won’t realize it for some amount of time (months, years). During this period of time, both individuals, in aggregate, feel better off because the loser hasn’t noticed/realized the loss!

  • Like many people, when I log into my TD account or 401k, I feel pretty good these days. This was not the case in March 2020!

This psychological wealth creation can happen without crime. For instance, quantitative easing and its impact on asset prices.

    “But when asset prices increase for reasons other than real increases in their productive capacity, something very different happens. The overall economy is no better off because there will be no corresponding increase in the productive capacity of that economy. The owner of such assets, however, feels richer—although only temporarily—because over the long term, asset prices eventually converge to a value that represents their real contribution to the production of goods and services.”
  • It is impossible to quantify but this “wealth effect” is profound and impacts our economy and financial markets in numerous ways
    • Feedback loop: Higher confidence, higher risk tolerance, higher asset prices, higher wealth, higher confidence…
    • Strong performance of asset prices helps justify low capital costs, further fueling the cycle
  • I think of bitcoin and cryptocurrencies. There is certainly a wealth effect for these newly minted millionaires. How “real” is this perceived wealth?
  • “Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works”

I Simply Don't Understand Anti-Trust Law

Treasury wants to stir up U.S. alcohol market to help smaller players

REMINDER: Mentioning a stock is not a recommendation to buy. See full disclosure below.

I’m far from being an attorney but I see the entire application of antitrust law as illogical and inconsistent.

Anheuser Busch InBev (BUD) and Molson Coors (TAP) find themselves in the regulatory crosshairs yet have been hemorrhaging drinkers to competitors like local breweries, spirits, and hard seltzers.

  • If you ask me, the regulators are using BUD and TAP as a punching bag to justify their existence

If BUD and TAP are monopolies, they’re pretty bad at it.


If a company was exerting undue influence on a market to capture excessive profits, I would expect their stock chart to look more like the below…


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