TWIN DEFICITS: THE WORRIES ARE BACK

And why the 'tourist thinks the market has got it backwards

All right folks, strap in; this post will be heavy on economics, but I will make sure to bring it back to markets and show why much of the conventional thinking about the twin deficits is just plain wrong (or at least deeply flawed when it comes to the deficits’ relationship with financial asset returns).

Let’s start by answering a basic question, “what …