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Tag Archives: economic growth

Will Markets React as the Trump Agenda Becomes Long-Term?

The failure to get health care reform through the House of Representatives highlights the difficulty that this President is having in bringing his legislative agenda to reality; one would think that markets would have a significant negative reaction – but, that has not been the case. For sure, the Trump rally, itself, has stalled (except in the tech sector), as the closing level of the S&P 500 on Thursday, March …Read More

Will the Fed Cause Another Recession?

The Fed raised the Federal Funds Rate by 25 basis points (a quarter of a percentage point) to 1.0%.  This is the anchor rate on the yield curve, and, most other rates respond to it, with shorter rates today responding more than longer rates.  It appears from their communications that they intend to hike rates several more times over the next 12-18 months. While I don’t see a recession over …Read More

Is Optimism a Key Ingredient in Economic Growth?

Most of the sentiment measuring surveys posted dramatically higher results after the election on optimism over what a Trump Administration might do for the economy. But, there is a big difference between hope and reality. Beginning in mid-December, the U.S. equity markets shifted into neutral, and have slowly drifted lower, perhaps waiting for the political changeover. The Fed is now in tightening mode. In my experience, the Fed tightens and …Read More

Are markets too exuberant?

Equity markets hit new highs during the Thanksgiving shortened week. Markets often move in anticipation of changes in policy. This post election market, however, appears to have instantaneously adjusted to what it perceives will be policy outcomes. Such outcomes, however, are by no means guaranteed; some outcomes may take several quarters, others years, if at all. This has been quite a stretch for markets where next month is considered “long-term.” There …Read More

The Topsy-Turvy Economy

The financial markets are hooked on easy money, low interest rates, and growth via debt issuance. Yet, it has become obvious to some market players, economists, and maybe even the Federal Reserve’s Federal Open Market Committee (the rate setting cabal), that current monetary policy is now hurting, not helping, the economy. Of course, monetary historians know that monetary policy was never meant to act alone, or in a vacuum, as …Read More

Painted into a Corner A Review of the Economic Environment Entering Q4/16

While Q3 started out much better than the very slow economy of the first half of 2016, August’s data was very weak although there was some bounce in September.  So, we enter Q4 with some serious concerns about the fragile state of the economy, where an outside shock or policy mistake could have serious consequences.  Unfortunately, the policy tools, or lack thereof, that are available should the economy slip into …Read More