Operating at the Intersection of Technology and the Capital Markets
Tag: debt
Perhaps that recommendation is a bit harsh and unexpected coming from me, someone who is a staunch advocate of strategic M&A. However, the fact is that interest rates are historically low and valuations will remain historically high until such time as interest rates begin to rise. As we recently wrote, equity valuations have the looming … Continue reading Put Your Strategic M&A Team On Ice
Personal Income is on the rise not because U.S. Productivity is increasing, but because the Federal Government decided it was a good idea to print Dollars and distribute them to Americans. This does not make for a sustainably strong economy. Many of these new pandemic "entitlements" (i.e. welfare) are not going away. Mid-term elections are … Continue reading Federal Transfer Payments To Americans Don’t Equal Economic Strength
The three-headed Hydra of low labor participation, increased debt levels and higher taxes will cripple U.S. long-term Real GDP growth for decades. Labor participation is not going back to December 2019 levels. To believe that scenario is wishful thinking. For starters, 25% of restaurants and bars are permanently closed. Those jobs are not returning. Second, … Continue reading Brace for Anemic Long-Term Real GDP Growth
Over the past 11 months and as recently as Tuesday the Federal Reserve has consistently reiterated its mission to get the U.S. Economy back to full employment. We are not there yet. The labor participation rate remains below 2008-2009 financial crisis levels. Let me know your thoughts on the below (particularly if you are on … Continue reading Is The Fed’s View On The Relationship Between Interest Rates and Jobs Wrong?
Weening the market and Americans off of easy fiscal and monetary policy will be no easy task. The Biden Administration's proposed $1.9 Trillion COVID relief package is the first of two multi-Trillion debt-funded "stimulus" tranches to come in 2021. Between zero interest rate policy, debt-funded fiscal stimulus ($1,400 in direct payments to Americans plus extended … Continue reading It Will Be Difficult To Ween The Market Off Of Easy Money
The deal for Australia's Link Group (tkr: LNK) is a competitive one, insofar as Link Group has disclosed. The competing prospective acquirers include SS&C Technologies (tkr: SSNC), and a pair of private equity firms - Sydney-based Pacific Equity Partners (Link's former owner) and Carlyle Group (tkr: CG) whom are bidding together. Our best guess is … Continue reading We Like The Prospective Link Group Acquisition for SS&CPremium
Polling should show a Biden lead going into Tuesday's general election given that Democrats have historically participated in early voting in significantly larger numbers than have Republicans. Too Close To Call We believe that Tuesday's election between two fiscally irresponsible parties will be closer than many voters anticipate. Various polls show an early lead for … Continue reading Tuesday’s Election Will Be Closer Than What Polls Show
An effective recipe for crowding out innovation consists of companies taking on massive amounts of leverage coupled with a Federal Government that has a negative bias toward mergers and acquisitions. We are experiencing this phenomenon now with corporate debt & loans at approximately 56% of GDP (as of Q2, chart below) and a DOJ that … Continue reading High Debt Levels and Negative M&A Bias Are Crowding Out Innovation
"There is nothing more permanent than a temporary government program" - Milton Friedman. First is was the financial crisis of 2008 that "forced" the Fed to perform unnatural acts. It was at this time that the Fed introduced Quantitative Easing ("QE"). QE was to be a "one-and-done" program. That program remains part of the Fed's … Continue reading Muted GDP Will Force Investors to Become More Selective
U.S. policymakers have increasingly utilized debt to fund various spending initiatives without a thought as to the consequences (reminiscent of the last days of the Roman Empire). U.S. reserve currency status and endless monetary expansion have supported this debt addiction. At this rate U.S. reserve currency status is in jeopardy. The chart below depicts total … Continue reading A Nation in Decline: Total Federal Debt Is 136% of GDP
