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Tag Archives: interest rate

The Fed’s New Bubble

“Most valuation parameters are either the richest ever or among the highest in history. In the past, levels like these were followed by downturns. Thus, a decision to invest today has to rely on the belief that ‘it’s different this time.’ I’m convinced the easy money has been made.” (Howard marks, Oaktree Capital, WSJ, 1/29/18). The legendary investor, Baron Rothschild famously said, “I got wealthy never waiting for the peak.” …Read More

The Headlines Say Growth…

The headline numbers, for jobs and GDP, and most of the sentiment indexes, would lead one to conclude that the economy was robust and accelerating. Even the Fed agrees, as they upgraded their view of the economy to one now in “solid” growth mode. The reality is that much of the data was distorted by the hurricane rebuild effort, and Q4 data will also be plagued by distortions due to …Read More

Turning a Sow’s Ear into a Silk Purse

It wasn’t a big surprise that Wall Street advanced the narrative that the havoc wreaked by Hurricanes Harvey and Irma is actually a positive for the economy, now aided and abetted by the strangest employment report, perhaps of our lifetimes. (Conveniently ignored is Hurricane Maria, which completely wiped out Puerto Ricco’s economy, Hurricane Nate, and the California Wine Country conflagration.) The Recent Data Let’s begin with the most recent underlying …Read More

Q4: A Look at the Post-Hurricane Economy

As Q3 ended, the economy continued on its tepid growth path.  Unknown is the value of the economic carnage of two hurricanes that hit the mainland and a third that completely devastated Puerto Rico.  The bond and foreign exchange (FX) markets have a sense that all is not well, but, the equity indexes haven’t yet espoused that viewpoint. Meanwhile, at its last convocation in mid-September, the Fed’s Federal Open Market …Read More

“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