Fed Hawkishness Reverberates

Yesterday’s Fed rate hike and hawkish guidance has had big impacts on global markets. It has accelerated the sovereign bond selloff. I have made the claims that central banks have been keeping interest rates low to fund the debts governments have run up. You can argue that the Fed now has no choice when it…

Fed Statement Analyzed

There was a panelist on CNBC during its coverage of the Fed decision who put out the idea that the Fed would raise rates 6 times next year. If Trump’s polices do create growth and the Fed reacts to this by raising rates 6 times, Trump will attack the Fed, calling it a political entity…

Fed Raises Rates

Today the Fed raised rates by a quarter point. It provided guidance for three rate hikes in 2017. This is an increase of one rate hike in 2017 from the September dot plot. 2018 and 2019 have that quarter point rate hike pulled through, but have no additional rate hikes from what was expected. The…

What Can Go Wrong?

The market is hyperbolic in its bullishness which has no basis in anything tangible other than optimism that Trump’s presidency will bring GDP growth and reignite corporate profit growth. It’s natural to want to be optimistic, but this rally is too powerful. At some point, early in Trump’s term, speculators will recognize the obvious: Trump…

Inflation Could End the EU

In a recent article, I had the wrong tone about future European monetary policy. I reflected what Draghi would like to do, not what is likely to happen. Draghi is in favor of extending the bond buying program, but the Germans are against it. This disagreement will cause fireworks which threatens the survival of the…

The Budget Deficit Is Dire

The budget deficit for the first two months has been released. It is the dire situation the country finds itself in. It represents the lack of wiggle room Trump will have to get his agenda passed. There have been questions about the possibility of the government trying to spend money to boost growth to help…

Cost Cutter In Chief

President Trump has shown the type of leader he will be over the next 4 years in his recent actions as President elect. He has been shown to be what I am coining ‘the cost-cutter in chief.’ I have been skeptical of Trump’s campaign line that he would get rid of “waste, fraud, and abuse”…

Skepticism About The Rally

The market is in the irrational exuberance stage at the moment as even the Italian bank stocks have been rallying this week. As I mentioned in my last post, the indicators in the economy have improved. However, the market was already priced as if they were improving, so it shouldn’t be rallying as much as…

Up, Up & Away

The optimism is quite high in the market and in business as the anticipation of Trump bringing changes in government which are pro-business is causing a ‘risk on’ trade to be put in place. I heard Trump say in an interview on NBC that he would cut 80% to 90% of regulations. This would be…

Fake News Shouldn’t Worry Facebook

Businesses have a life cycle. They have their inventive period, their growth period, their maturity period and their decline period. When a business is in the growth and mature period, investors believe the company can keep going forever, but that usually doesn’t happen. Sometimes businesses get a second life like Apple got with the iPhone,…