The Rate Spike Will Damage the Recovery
Fed Intervention Needed There was quite a spike in interest rates the last week of February with the 10-Year T-Note spiking from a 1.36% level as of the close on Wednesday to as high as 1.60% intraday with a close of 1.55% on Thursday. Friday’s close was 1.45%. But, a lot of damage was done. […]
The Recovery Stalls; Fed Pledges “Lower for Longer;” Equity Markets Pause
With the Fed pledging to keep rates low even when (or if) inflation rises above its 2% target, it is hard to see why long-term Treasury yields (and those of other quality issuers) won’t move toward yields of similar debt in the world’s other industrial economies (i.e., Europe and Japan). The economic lull is now […]
2018 Preview and Assessment
Market valuations are high. Current consumption is being financed by debt. The housing data is mildly positive, but has been impacted by “rebuild” issues in the wake of natural disasters. Corporate balance sheets are strong and laden with cash. The world’s major economies are doing well and central banks are beginning to tighten policy led […]
“Normal” – It’s the Opposite of What the Media Says
I hear it every day on the business channels or see it in the business media print: “The economy has to get back to normal.” But normal means different things to different constituencies. Wall Street and equity investors certainly don’t want to see the stock market behave normally, if indeed, normal means that PE ratios […]
“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 […]
At Recession’s Onset, There is No Bell, Bugle, or National Anthem
From my reading of the business media, there are few business economists who believe, like I do, that the probability of a recession in the next 12 months is greater than 50%. A recession is generally viewed as two consecutive quarters of negative real GDP growth. Looking forward, a recession isn’t inevitable, as there have […]