The narrative is that the “soft patch”, now so evident in U.S. data, is temporary, related to factors like weather, the government shut-down, and/or trade/tariffs. The Atlanta Fed, where GDP forecasts always seem to come out on the high side, put Q1’s real GDP growth at just +0.3%. And, the N.Y. Fed’s model says +0.9%. In any case, even the most ardent bulls have at least recognized that current data …Read More
The Amazon (Tesla) Controversy
Nevada had to give Tesla tax concessions in order to induce them to put their mega-factory west of Sparks off of I-80. Concessions are a fact of life when it comes to attracting mega-businesses to a community. I do remember that then Governor Sandoval was criticized by some for “giving away too much” in the form of tax credits to Tesla. I also remember asking a question in this column that went something like this: …Read More
The Rocky Road to “Normal”
The terms “normal,” “normalize,” and “neutral” are common in today’s economic discussions. But, does anybody really know what “normal” is? When the Federal Reserve (Fed) says that it wants to “normalize” interest rates, do they have a rate scheme in mind? Does it mean that rates will be similar to what they were 10-20 years ago? That’s what most people believe “normal” is. The truth is “normal” is significantly lower. The current …Read More
Markets Have Recovered, But Charts Look Like Niagara Falls
In January, the equities markets bounced from significantly oversold conditions at the end of December, on the hopes that a) the Fed stopped it tightening cycle in time, and b) the halt to the government shut-down occurred in time to avoid negative Q1 GDP growth. As I have stated in prior blogs, “hope” is not a good investment strategy. But wait! The “hope” regarding the Fed doesn’t even make sense. …Read More
In the Face of Hard Data & Market Selloff, the Fed Blinked
The incoming data, both sentiment indexes and the actual hard numbers, continue to show growth deceleration in the U.S. and worldwide. In post-Fed meeting appearances, the Fed Chair and other FOMC members have walked back their hawkish positions taken in the immediate aftermath of the December 19 (rate hike) meeting. The oversold markets, having thrown the biggest December tantrum since 1931, responded positively and, at this writing, have recouped about …Read More
December’s Petulant Children: Trump, the Fed, Markets
Surely, this was a December to remember, but due to financial pain, not joy. Prior to December, markets were uneasy, and this showed up in a downward pricing bias and significantly increased volatility. As measured by the intraday swings on the Dow Jones Industrial Average (DJIA) between high and low [(high-low)/prior close], volatility more than doubled between September (0.67% per day) and October (1.55% per day), as markets became concerned …Read More
