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Does 2.3 percent economic growth justify Dow 20,000?

A survey of 53 economists by Blue Chip Economic Indicators forecast 2.3 percent economic growth for 2017, up from an estimated 1.6 percent in 2016. While better, 2.3 percent is still low by post-World War II standards. Consensus found that inflation would tick up to 2.4 percent, industrial production would begin to grow again (+1.6 percent) after stagnating in 2016, business investment (+2.7 percent) would finally be positive (after several …Read More

Why Helicopter Money and Unconventional Monetary Policies Won’t Help the Economy

The equity markets continue to flirt with record highs while the yields on fixed income instruments are at or near all-time historic lows.  Generally, those two market movements are not compatible.  Everyone feels a high level of anxiety about the economic future.  Ben Bernanke visited the Bank of Japan in early July to help them set up a new experimental monetary policy dubbed “helicopter money.”  And we are living in …Read More

Assessing the market now that recession fears have disappeared

With recession fears now nowhere to be found, the market averages have raced their way back to a positive return for the year, a much-welcomed development considering where they were on Feb. 11. The bears have retired to their caves, and the negativism in the media has all but disappeared. The rising price of oil It is counterintuitive to look at the rising price of oil as a positive for …Read More

The Possibility of Negative Interest Rates on Your Deposits – Part I

The very concept of negative interest rates appears, at least at first blush, to be an oxymoron.   What rational entity would “loan” money and expect, under the contract, to get less back than loaned?  If you think “no one would,” think again!  In this two part narrative, I explain how this is possible, how it is actually occurring in Europe, and what consequences there might be for the American saver/investor. …Read More

Bonds Got It Way Wrong, Economy Is Accelerating

First published at Seekingalpha.com http://seekingalpha.com/instablog/27843163-robertbarone/2967823-bonds-got-it-way-wrong-economy-is-accelerating In the financial marketplace, the bond market usually signals first and reflects the magnitude of a changing economic environment. The equity market, on the other hand, is often late, or at least later than the bond market in recognizing oncoming changes in economic conditions. So, the worries now rampant on Wall Street and reflected in a pessimistic media over equity valuations are understandable given that …Read More