Tag: monetary policy

U.S. Debt to Reach 195% of GDP by 2050

U.S. Debt to Reach 195% of GDP by 2050

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

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

The Tech Stock Speculation Era

The Tech Stock Speculation Era

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

Powell Is A Paper Fed Chair. That’s Good News for Stocks.

Powell Is A Paper Fed Chair. That’s Good News for Stocks.

Powell is a paper-loving, paper-printing Fed Chair. Powell has never hesitated to print his way out of a tough spot. We predict that should the equity markets roll over another 10-15 percentage points Powell and his band of merry Federal Reserve Board members will seek to support the equity markets with Equity ETF purchases. Tickers … Continue reading Powell Is A Paper Fed Chair. That’s Good News for Stocks.

Equities Continue to Experience Fund Outflows as Technology Stocks Slide

Equities Continue to Experience Fund Outflows as Technology Stocks Slide

Equity funds continue to experience fund outflows as taxable bond funds enjoy fund inflows. (see table & chart below). A modicum of sanity has crept into the equity markets insofar as Technology names are concerned. High multiple growth names that were driven primarily by speculation and momentum have finally started to pull back over the … Continue reading Equities Continue to Experience Fund Outflows as Technology Stocks Slide

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

Endless, Nameless – The Reckless Fed

Endless, Nameless – The Reckless Fed

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

Dovish Fed Policy Speaks to A Weak Economy and Permanent Job Dislocation. We Propose A Solution.

Dovish Fed Policy Speaks to A Weak Economy and Permanent Job Dislocation. We Propose A Solution.

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.

Tomorrow’s Fed Meeting Will Be More of The Same

Tomorrow’s Fed Meeting Will Be More of The Same

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

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.