When it comes to Technology stocks we are firmly in the Speculation Era. It is likely to stay that way for the near-term. October earnings calls may provide a bump in the road. Looming corporate tax increases will likely put an end to the bubble. The combination of Trump tax cuts and the recent fiscal … Continue reading The Tech Stock Speculation Era
Tag: fiscal policy
Fiscal and Monetary policy enjoys a symbiotic relationship. Both the fiscal side of the house as well as the monetary side believe (in true Keynesian fashion) that spending is the answer to nursing the U.S. Economy back to health. This shared philosophy ensures that fiscal and monetary policies - State-Led Capitalism - will be coordinated … Continue reading Fiscal & Monetary Policies Are Joined at the Hip
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
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
Endless, Nameless. The title of an old Nirvana song which also describes the Fed's position on monetary expansion ("endless") and the Fed's overall monetary strategy ("nameless"). The biggest bubble the world has ever witnessed. Fundamentals are out the window. Former politicians and baseball GM's are leading SPACs. Stock splits lead to material increases in market … Continue reading Endless, Nameless – The Reckless Fed
Fed Chair Powell's comments on Thursday were in-line with our perspective published on Wednesday. The Fed will continue to work to "stimulate" the economy (it can't of course, it can only inflate asset prices). However, every time Chairman Powell mentioned "full employment" in his speech I couldn't help but think of the job dislocation that's … Continue reading Dovish Fed Policy Speaks to A Weak Economy and Permanent Job Dislocation. We Propose A Solution.
We expect Federal Reserve Chairman Powell to reiterate: 1.) the Fed's near zero interest rate policy for the foreseeable future, 2.) the Fed's willingness for market intervention. Further, we expect the Fed to provide guidance concerning its CPI increase tolerance level. Historically that tolerance level has been 2%. We will clearly overshoot a 2% CPI … Continue reading Tomorrow’s Fed Meeting Will Be More of The Same
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.
This next round of debt-funded stimulus will ensure that the U.S. economy look much like Japan's at least for the next decade if not the next 20-30 years. The fiscal side of the ledger is a deficit-promoting mess and the monetary side is complicit by way of subsidizing the debt. Fed official Neel Kashkari believes … Continue reading More Debt-Funded “Stimulus” Ensures Near Zero Real GDP Growth
A well-reasoned, fundamental-based investment process incorporates company-specific analysis combined with industry trends and macro-economic drivers. This approach helps identify valuation "dislocations" which may be leveraged to the upside or downside. However, fundamentals have never mattered less. Investors' collective attention is glued to Washington with one eye squarely focused on the Fed and the other on … Continue reading Will The Fed Purchase Equity ETFs Next?