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Tag Archives: management

#MacroView: Japan, The Fed, & The Limits Of QE

This past week saw a couple of interesting developments. On Wednesday, the Fed released the minutes from their January meeting with comments which largely bypassed overly bullish investors. “… several participants observed that equity, corporate debt, and CRE valuations were elevated and drew attention to  high levels of corporate indebtedness and weak underwriting standards in leveraged loan markets. Some participants expressed the concern that financial imbalances-including overvaluation...

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#MacroView: Debt, Deficits & The Path To MMT.

In September 2017, when the Trump Administration began promoting the idea of tax cut legislation, I wrote a series of articles discussing the fallacy that tax cuts would lead to higher tax collections, and a reduction in the deficit. To wit: “Given today’s record-high levels of debt, the country cannot afford a deficit-financed tax cut. Tax reform that adds to the debt is likely to slow, rather than improve, long-term economic growth. The problem with the claims that tax cuts reduce the...

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7-Difficult Trading Rules To Follow In Bull Markets

As we wrap up the last two-trading days of the decade, I am wrapping up the recent series on “investing rules” (see here and here). The purpose of this series is to remind investors of the importance of having an investment discipline to protect investment capital when market volatility eventually comes. I know…I know…volatility seems to be a thing of the past, particularly given the amount of exuberance currently embedded in the markets. This was a point I made in the most recent...

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The Most Important & Overlooked Economic Number

Every month, and quarter, economists, analysts, the media, and investors pour over a variety of mainstream economic indicators from GDP, to employment, to inflation to determine what the markets are likely to do next. While economic numbers like GDP, or the monthly non-farm payroll report, typically garner the headlines, the most useful statistic, in my opinion, is the Chicago Fed National Activity Index (CFNAI). It often goes ignored by investors and the press, but the CFNAI is a composite...

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Need A Break From The Inlaws? Your “Turkey Day” Reading List

It’s “Thanksgiving Day,” and after the annual indulging into too much Turkey and dressing, cranberry sauce, and pecan pie, you might just need a break from the family to “do some research.” We are happy to oblige with a few of our most important articles over the last few months as they relate to where we are in the current economic and market cycle. Consumers Are Keeping The U.S. Out Of Recession? Don’t Count On It. “[Who is a better measure of economic strength?] Is it the consumer cranking...

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Powell’s Fantasy: The Economy Should Grow Faster Than Debt

In recent testimony to Congress’s Joint Economic Committee, Jerome Powell stated: “The debt is growing faster than the economy — that’s unsustainable. It’s not the Fed’s job to say how the government should cut the deficit, but we need to get the economy to grow faster than the debt. Otherwise, future generations will be paying more of their taxes to cover the government’s debt costs than for other things like health care, etc. I think the new normal now is low interest rates, low inflation...

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Capitalism Is The Worst, Except For All The Rest – Part 3

Part 1 – How Wall Street Destroyed Capitalism Part 2 – The Myths Of “Broken Capitalism” In Part 1, we discussed how “Capitalism” was distorted by Wall Street. In Part 2, we reviewed some of the “myths” of capitalism, which are used to garner “votes” by politicians but are not really true. Most importantly, we discussed the fallacy that “more Government” is the answer in creating equality as it impairs economic opportunity. I want to conclude this series with a discussion on the fallacy of...

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The Myths Of “Broken Capitalism” – Part 2

Read Part 1 – The Distortion Of Capitalism By Wall Street In the introduction to this series, we discussed the bit of the history leading us to the outcry against capitalism. As I concluded: “The important point is that ‘capitalism’ isn’t broken, but there is one aspect of the system which has morphed into something no one intended. As you hear candidates promising to ‘eat the rich,’ remember ‘political narratives’ designed to win votes is not always representative of what is best for you in...

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How Wall Street Destroyed Capitalism – Part 1

Over the last decade, wealth inequality in America has become a political battleground. It started with #OccupyWallStreet early in President Obama’s term and has morphed into direct calls for socialistic reforms. Is there a problem with capitalism? Does it need reform? Or, is Bernie Sanders correct when he says: Billionaires should not exist. https://t.co/hgR6CeFvLa— Bernie Sanders (@BernieSanders) September 24, 2019In this three-part series, we will explore: How Capitalism Got Distorted By...

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Debt & The Failure Of Monetary Policy To Stimulate Growth

A fascinating graphic was recently produced by Oxford Economics showing compounded economic growth rates over time. What should immediately jump out at you is that the compounded rate of growth of the U.S. economy was fairly stable between 1950 and the mid-1980s. However, since then, there has been a rather marked decline in economic growth. The question is, why? This question has been a point of a contentious debate over the last several years as debt and deficit levels in the U.S. have...

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