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Latest UVA News Posts

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

Strong employment, higher inflation means slightly higher interest rates

For some, the Bureau of Labor Statistics (BLS) report that 271,000 net new jobs were created in October was a surprise. But readers of my reports should not have been surprised. For at least the last year, I have commented on the underlying strength of the consumer, the service sector, housing, and the labor markets. And in the latest employment report, we have finally witnessed the first recognition that wages, too, are …Read More

What a buying opportunity it was!

By the market action in October, it now appears certain that the nasty 12% market correction in August and September was just that, a “correction.” And if you ignored all the doomsayers, who finally had a down market after 4+ years, the correction proved to be a buying opportunity. Indeed, we can pretty well conclude what I said in the August and September columns that: •China’s slowdown isn’t going to …Read More

CPI Says “Deflation,” But U.S. Households Face Inflation

Angst exists in the capital markets over the “deflation” issue. Basically, the markets are worried about a lack of demand which forces prices down, causes consumers to wait longer for the prices to fall further before they purchase, and ends up in a downward price spiral which leads to recession or worse. I’ve read plenty of this lately. This is simply not the case. Oil prices are a result of …Read More

China slowdown won’t send US economy into a dive

Since China devalued its currency in late August, the capital markets have become volatile. The markets clearly fear that contagion from China’s weakening economy could somehow infect the U.S., a theme that has been way overdone. Market volatility wasn’t helped when the Fed irrationally delayed its long anticipated rate rise in mid-September. China’s Growth Let’s first talk about China’s growth and its possible impact on the U.S. Over the past …Read More

The Fed — deer in the headlights?

When they walked into the meeting on Wednesday, Sept. 16, it is likely that the FOMC members (Federal Open Market Committee, the rate-setting committee of the Fed) did not know the interest rate decision they would make on Thursday. We had Jeff Lacker (Richmond Fed), Dennis Lockhart (Atlanta Fed), and John C. Williams (SF Fed) all saying recently that they thought that interest rates should rise before year end. You …Read More