Tag: fiscal debt

It Will Be Difficult To Ween The Market Off Of Easy Money

It Will Be Difficult To Ween The Market Off Of Easy Money

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

2021 Outlook: The Froth Will Continue

2021 Outlook: The Froth Will Continue

From Bubble valuations to zombie companies to Cleantech, 2021 is likely to deliver more of the excesses of 2020. Barring a negative event out of left field, it will take a meaningful interest rate hike and/or corporate tax increase to derail the asset bubble of 2020 that bled into equities, fixed income, home values, lumber, … Continue reading 2021 Outlook: The Froth Will Continue

Muted GDP Will Force Investors to Become More Selective

Muted GDP Will Force Investors to Become More Selective

"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

Poor Executive Management Must Be Held Accountable

Poor Executive Management Must Be Held Accountable

The airlines knowingly placed themselves between a rock and a hard place when they decided to gorge on cheap debt for the purpose of funding share buyback plans designed to boost executive compensation. The lack of financial wiggle room is of their own doing. It's time for the airlines to restructure, to shrink capacity to … Continue reading Poor Executive Management Must Be Held Accountable

A Nation in Decline: Total Federal Debt Is 136% of GDP

A Nation in Decline: Total Federal Debt Is 136% of GDP

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

China Is Not Bullish On The U.S. Economy

China Is Not Bullish On The U.S. Economy

Mainland China is not bullish on the U.S. Economy. China's U.S. Treasury holdings have generally declined since 2013 from a peak of approximately $1.32 Trillion (Nov-2013) to $1.07 Trillion as of Jul-2020. Charts and graphs are at the article's end Both the U.S. and China have interventionist fiscal and monetary policy. The difference is that … Continue reading China Is Not Bullish On The U.S. Economy

Credit Spreads Will Widen as Job Losses Mount and Supply-Side Costs Increase

Credit Spreads Will Widen as Job Losses Mount and Supply-Side Costs Increase

Credit spreads will widen in our view primarily driven by job losses and increases in the cost of goods and services. There is downward pressure on jobs as we usher in the fall season. Seasonal summer jobs essentially work their way to zero from Labor Day to Columbus Day. Government jobs around the U.S. Census … Continue reading Credit Spreads Will Widen as Job Losses Mount and Supply-Side Costs Increase

Real GDP Doesn’t Begin To Tell Inflation’s Story

Real GDP Doesn’t Begin To Tell Inflation’s Story

I mentioned to a friend last night that I expect 1% Real GDP growth once we normalize after this recovery that will last at least for the next several years. However, the traditional "Real GDP" calculation understates inflation due to its narrow definition of inflation - the CPI. The Bureau of Economic Analysis does not … Continue reading Real GDP Doesn’t Begin To Tell Inflation’s Story

One Big Step Closer To Fiscal Stimulus II

One Big Step Closer To Fiscal Stimulus II

If you regularly read these pages you know the last thing we want for the economy is another fiscal stimulus round. With today's downward step function in the markets - notably Tech - we are one step closer to Fiscal Stimulus II. President Trump values short-term market valuations far more than long-term economic health. Therefore, … Continue reading One Big Step Closer To Fiscal Stimulus II

Mustn’t Worry. A Fiscal Deal Is Coming.

Mustn’t Worry. A Fiscal Deal Is Coming.

Make no mistake, another fiscal "stimulus" deal is coming. Politicians won't pass on the opportunity to "rescue" the U.S. economy while funding a variety of pet programs in the process. Republicans and Democrats are undoubtedly haggling over the amount and nature of the pork that will be included in the next debt-funded stimulus stew. We … Continue reading Mustn’t Worry. A Fiscal Deal Is Coming.