Every indexed document

food inflation has been a large contributor

and it is not clear to us that China is about to end its various inflation control policy measures.

and that it will drop steadily from here. But last week’s headline inflation release of 6.4% hit a three year

most China research maintained that the tightening cycle is close to its

the lack of a sufficient OPEC supply response

and will be closer to $2 trillion than $4 trillion. While it’s possible that another dose of fiscal

future debt) dwarfs the existing debt. That’s why there’s so much talk about a

which is why the government will probably run out of money some time in August.

around 75% has already been used up. There’s not much leeway

securities and borrowing capacity of government employee retirement and other funds.

and only the second time since the debt ceiling was established in 1917

part 1: Limited room for fiscal policy to invigorate the US recovery

compared to where we would normally expect to be 2 years after a recession. We walk through 4 instances

questions about the large but shrinking public sector toolkit knock 10%-15% off of our equity

given their reliance on weak labor compensation

the China advantage will disappear within the decade. Some of these assumptions seem aggressive to apply in perpetuity.

and to provide recommendations to those who

Empirical Research Partners. Past performance

S&P 500 profit margins increased by ~1.3% from 2000 to 2007. There are a

profit margins have reached levels not seen in decades. The challenge