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“Normal,” It’s Not What You Think!

Most readers remember the pre-recession days of 4% GDP growth, interest rates at levels where savers had return choices worth pursuing (e.g., the 10 year T-Note at 4%), and workers could count on annual real wage growth.  Today, many refer to this as “normal,” and there is a desire, if not a movement, to return the economy back to such a state. You can see this in the political arena.  …Read More

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

Market Melt-Up: Caution – Sentiment in Nosebleed Territory

Since my last column, the Dow Jones Industrial Average (DJIA) did indeed hit 20,000 and has since gone well beyond.  Most of the post-election run-up initially appeared to have occurred in the November 8th to December 20th period when the index went from 18,333 to 19,975, a rise of 1,642 points (7.9%).  Over the next 44 days, until February 2, the DJIA was flat, actually losing 116 points.  But since …Read More

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

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