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The New Mercantilism Rates Race to the Bottom Currencies Depreciate

During the recent period of world growth, where nearly every country’s exports were rising, there was little incentive for governments to manipulate economic policies to foster even more economic growth. Getting back to “normal” seemed to be the universally adopted mantra, and that implied rising rates and tighter monetary policies. However, today, when world trade is contracting (some of which may be due to “trade wars,” but much of which is due …Read More

Where’s The Recession, You Ask? Reprise

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 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

Sources of Uncertainty (Resulting in Market Volatility)

Over the past several months, I have talked a great deal about volatility. The fact is, volatility increases in direct proportion to market uncertainty. So, today’s volatility is just symptomatic of the confusion and uncertainty now prevalent at least in the near-term outlook. The Trade Issue The talking heads on bubblevision would have you believe that the bickering over trade and tariffs, especially between President Trump and China, is the …Read More

A Perspective on Market Volatility

In my last several writings, I emphasized that, after the long tranquil up market in 2017, 2018 markets would display a great deal more volatility. No doubt I was correct on that call. Today’s increased volatility could be symbolic of a healthy correction in an ongoing economic up cycle. It also could be a prelude to something more sinister. Measuring Today’s Volatility Looking back at 2017, there was only one …Read More