Operating at the Intersection of Technology and the Capital Markets
Tag: fiscal deficit
Americans fear for their bank deposits. Your deposits are safe. However, you should fear the remedy. The Fed bail out from last Sunday could result in $1-2 trillion of additional public debt assuming that the Fed marks up the assets of and extends loans to all U.S. banks except J.P. Morgan, Bank of America, Wells … Continue reading We’ve Got It All Wrong
Core CPI accelerated month-to-month to 0.5% (from 0.4% in January), as "Shelter" accelerated to 0.8%. Our view is that the Fed will continue to hike rates but may slow the pace of QT, particularly as it relates to Treasuries. The Fed says it will maintain interest rate hikes as the Banking sector stumbles. More importantly, … Continue reading Price Inflation Persists. Now What?
Short-term Treasuries look attractive. The 1-month T-Bill offers a 4.67% yield. Beats cash and beats holding an equity index fund or ETF. I'm always a fan of owning Quality companies at an attractive price. However, I don't value equities as most investors do - I don't bucket stocks into "Value" "GARP" and "Growth" buckets. I … Continue reading Short-Term Paper, Quality Names and Gold
The debt crisis is America's greatest threat. Not China. Not nuclear war. Not identity politics. Larger than the U.S. Economy and growing. Public Debt outstanding is approximately $31.4 trillion, significantly larger than the U.S. economy as fiscal spending far outpaces Real GDP growth. Public Debt outstanding will almost certainly continue to grow as fiscal deficits … Continue reading Debt Crisis
The $250 billion Semiconductor Spending Bill (United States Innovation and Competition Act), means the Fed will be printing money, expanding its balance sheet and maintaining low interest rates in order to keep the gravy train running while the fiscal deficit expands and public debt outstanding grows. This is a recipe for more inflation, not less … Continue reading The $250 Billion Spending Bill Portends More Money Printing & Low Rates
To celebrate Independence Day we give you Milton Friedman's 10-part "Free To Choose" video series. Free To Choose – Vol. 01: “The Power of the Market” https://youtu.be/dngqR9gcDDw Free To Choose – Vol. 02: “The Tyranny of Control” https://youtu.be/CWgNe8v6KFc Free To Choose – Vol. 03: “Anatomy of Crisis” https://youtu.be/fKz6KrMGj3I Free To Choose – Vol. 04: “From Cradle to Grave.” https://youtu.be/ysf-5MdWDt0 … Continue reading Independence Day Edition
Our view is that the Fed will reset its 2% inflation target approximately one year from now if it wants to salvage the last vestiges of its credibility. While April's CPI number may come down some due to the retreat in the price of oil, we could continue to see core inflation march higher for … Continue reading The Fed Will Reset Its 2% Inflation Target
The CPI data category "Owners' Equivalent Rent" ("OER"), uses data derived from surveys of homeowners in select markets rather than real world data. This technique allows the BLS and the Federal Reserve to understate price inflation. OER understates CPI by 1% or more. September's 5.4% CPI increase was understated by at least 1% per our … Continue reading How The CPI’s Fuzzy Math Understates Inflation
The Fed's "Fed Funds Rate" forecast for the next several years is not realistic. Our view is that the Fed will move to raise its Fed Funds Rate more quickly than its published forecast (see page 2 of 17). The Fed anticipates median Fed Funds Rates of 0.3%, 1.0% and 1.8% in 2022, 2023 and … Continue reading Fed Funds Rate Will Increase Faster Than Fed’s Forecast
The Atlanta Fed's real GDP estimate of 3.7% is well below inflation as measured by the Fed (CPI of 5.4%) and well below any real world price inflation measure. We do not subscribe to the Fed's theory that price inflation is transitory. Our view is that price inflation will grow from here. If real GDP … Continue reading It Is Beginning To Look Like Stagflation
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