Tag: fiscal policy

List of 160+ CEOs Who Favor Additional Debt-Funded Transfer Payments To “Stimulate” The U.S. Economy

List of 160+ CEOs Who Favor Additional Debt-Funded Transfer Payments To “Stimulate” The U.S. Economy

The fiscal deficit will be stimulated to new heights once the $1.9 trillion debt package is passed by Congress. Speculative securities, SPAC deal flow, general fraud and moral hazard will also be stimulated along with housing and automobile prices. This debt package will do nothing to create sustainable employment nor sustainable GDP growth. Rather, the … Continue reading List of 160+ CEOs Who Favor Additional Debt-Funded Transfer Payments To “Stimulate” The U.S. Economy

Long Rates Continue To Climb As Inflation Persists. Nothing To See Here.

Long Rates Continue To Climb As Inflation Persists. Nothing To See Here.

The Fed would have us believe "There's nothing to see here," (to quote Frank Drebin), as it relates to inflation. Consumer spending funded by government debt is of inferior quality as compared to spending funded by increased production. In January Americans spent their debt-funded government checks that were mailed out at the end of December. … Continue reading Long Rates Continue To Climb As Inflation Persists. Nothing To See Here.

The Fed’s Evolution From Independent Agency to Treasury Subsidiary

The Fed’s Evolution From Independent Agency to Treasury Subsidiary

We recently wrote that weening the equity market and Americans off of easy money will be difficult. We expect The Federal Reserve to march in lockstep with Congress and Treasury rather than act as the independent check on Government the Fed was meant to be. Thus, we expect monetary policy to remain loose for the … Continue reading The Fed’s Evolution From Independent Agency to Treasury Subsidiary

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

When You Are Your Biggest Customer

When You Are Your Biggest Customer

The U.S. is similar to a legacy Technology company whose best days are in the rear view mirror. A telltale sign of this reality is that fact that the Federal Reserve is the largest buyer of U.S. Treasuries. There was a time when Japan and China were the largest holders of U.S. Treasury securities. Today, … Continue reading When You Are Your Biggest Customer

Multiple Fiscal Stimulus Rounds Are Coming. Good News for Equities. Bad News for The Real Economy.

Multiple Fiscal Stimulus Rounds Are Coming. Good News for Equities. Bad News for The Real Economy.

We believe there will be multiple fiscal stimulus rounds. When one considers the stalled economy, negligible Real GDP growth and high unemployment, it would seem that this $2 Trillion stimulus round under discussion won't be sufficient to satisfy the narrative that Government needs to do more. When one factors in runaway entitlements (table below), it … Continue reading Multiple Fiscal Stimulus Rounds Are Coming. Good News for Equities. Bad News for The Real Economy.

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