"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
Icarus flew too close to the sun and the United States' fascination with debt may prove to be equally destructive. Yesterday the CBO published its long-term Debt-to-GDP estimates. Those figures show U.S. debt steadily increasing as a percentage of GDP ramping-up to 195% of GDP by 2050. If debt-funded stimulus, zero interest rates and expansionary … Continue reading U.S. Debt to Reach 195% of GDP by 2050
It is going to take several years for the U.S. economy to recover back to 2019 levels. 2019 is a low bar in our view as that economy - much like the present one - was debt-fueled, deficit-ridden and plagued by artificially low interest rates. These factors in the aggregate have stymied sustainable, real economic … Continue reading Markets Are Poised To Grind Lower
Despite a record increase in the Money Supply (M2) the U.S. economy likely will not experience near-term consumer price inflation given less than robust Personal Consumption. Further expansionary monetary policy will increase price inflation risk, particularly if Personal Consumption continues to rebound. This story is most efficiently told with pictures and captions. Click on any … Continue reading Near-Term Consumer Price Inflation Risk Is Likely Low
Q3'20, Q4'20 and calendar 2021 consensus estimates need to come down. Why? 21% unemployment (U6 measure), permanent economic damage that businesses suffered (and will continue to suffer), as a result of the shutdown, the COVID "back-to-work tax", the threat of a second COVID wave, geopolitical risk, record debt levels and social unrest have created more … Continue reading Expect A Bumpy Ride For The Economy and The Capital Markets Over The Next Several Years.
The Fed's behavior in recent months has been something out of a horror movie. The low interest rate, expansionary monetary policies introduced by former Fed Chair Bernanke and continued by former Fed Chair Yellen have dramatically accelerated under current Fed Chair Powell. Bernanke dealt in $Billions, Chairman Powell prefers $Trillions. Click any of the charts … Continue reading The Forever Bubble-Blowing Fed
Check out our podcast on the topic at the SoundCloud link below. Look for the TEK2day Podcast on Apple, Spotify, Stitcher and Google Podcasts. https://soundcloud.com/ceorater/ep-371-moral-hazard-is-infecting-the-capital-markets
A COVID-19 vaccine is required to restore public confidence. Public confidence is required to kick start the global economy on its path to normal productivity levels. Similarly, the equity and credit markets will require public confidence and a healthy economy to return to sustainable growth. The COVID vaccine must be in production and readily available … Continue reading A COVID-19 Vaccine Is Required To Restore Full Public Confidence
We discovered a weak-to-moderate correlation between the year-over-year percentage change in GDP and the year-over-year percentage change in CEO Turnover at Fortune 1000 companies. We examined GDP and CEO Turnover at quarterly increments from Q1 2009 through Q4 2019. We treated CEO Turnover as the dependent variable and GDP as the independent variable. CLICK HERE … Continue reading Are GDP & CEO Turnover Related?