Private markets are no longer primarily determined by the actions of private buyers and sellers. The State now controls private markets as the primary mover. Guessing the timing, scale and duration of massive fiscal and monetary programs has superseded if not largely replaced fundamental analysis. That's not to say that fundamentals do not matter, but … Continue reading State-Led Capitalism
Tag: The Fed
Dovish Fed Chair Jerome Powell held day 2 of his semi-annual monetary report to Congress today. To summarize, the Fed's got your back if you are a company of most any size, if you participate in the capital markets, if you are a politician looking for a free lunch, if you desire low interest rates … Continue reading This Dove’s Not Crying
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
The Federal Reserve is crowding out private capital. It has engaged in what feels like perpetual quantitative easing ("QE") since 2008. The Fed buying corporate credit is the latest perversion from this increasingly political institution. Federal Reserve assets continue to grow pushing against the $7 Trillion mark. Fed assets could potentially cross the $10 Trillion … Continue reading The Fed Is Crowding Out Private CapitalPremium
The economy will not enjoy a "V" recovery. A combination of defaults, bankruptcies, market disruption and high unemployment will make for a gradual recovery. PPP and Fed liquidity will eventually expire. Admittedly the Fed will likely inject more capital into the economy growing its already bloated $6.6 Trillion balance sheet. At some point this all … Continue reading A “V” Recovery Is Not In the Cards