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Fiscal Policy

The Recovery Stalls; Fed Pledges “Lower for Longer;” Equity Markets Pause

With the Fed pledging to keep rates low even when (or if) inflation rises above its 2% target, it is hard to see why long-term Treasury yields (and those of other quality issuers) won’t move toward yields of similar debt in the world’s other industrial economies (i.e., Europe and Japan). The economic lull is now showing up in both the labor market (Initial Claims) and in retail sales, likely because …Read More

A Strange New World: Economic Slowdown, Liquidity Issues

The world’s slowdown continues. China’s growth rate is the slowest in years. Exports there are down as are imports, and pork prices (their protein staple) are up 40% due to swine flu. India, formerly the fastest growing economy in the world, had their manufacturing sector grow +0.6% (stagnation for them and the slowest growth since 2012), and auto sales there are down 41% from year ago levels (hard to believe!). In the world’s third …Read More

Reconciling a 1-percent economy with record market highs

The recovery from the Great Recession has been the most sluggish in post-WWII economic history.  This is vividly displayed in the nation’s recent GDP report.    The Commerce Department estimated that the economy grew at a snail’s pace over the last 3 quarters: 0.9% in Q4, 0.8% in Q1, and 1.2% in Q2.  Yet, all of the major U.S. stock market indexes recently closed at all-time highs.  For many, warning lights …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

Quarterly Economic Outlook: Q3/2016

The “Brexit” caused market swoon on Wall Street turned out to be a nasty 5.3% two day dive (S&P 500) that was all but reversed in the next 4 trading sessions.  The reason was clear early on – despite forecasts of immediate worldwide economic doom and gloom, the non-binding referendum was mostly a political statement about bureaucratic government, and the referendum split along demographic lines (older vs. younger, and rural …Read More

Anti-growth policies hurt investors

The stall-out in the U.S. economy and in most major world economies has baffled policymakers. No matter what they try in today’s economic environment, it hasn’t worked for more than a short period of time. Quantitative easing appeared to work when first tried during the Great Recession, but now, as Japan and Europe have found, there appears to be significant diminishing returns with these unconventional tools. Europe, for example, will …Read More