Last Friday, the 10-year Treasury Note closed at a yield of 2.85%. That's up from 2.41% at the end of 2017, but down from the peak of 3.24% on November 8th, and well below where fundamentals suggest yields should be. In the last two years, nominal GDP growth – real GDP growth plus inflation – [...]
The Federal Reserve meets on Wednesday and there's one thing we know for sure: it's going to raise rates by another 25 basis points, lifting the federal funds rate to a range from 2.00 to 2.25%. Why are we so confident? Two reasons. First, the market in federal funds futures is putting the odds of [...]
The U.S. federal government reported last week that it ran a deficit of $214 billion in August, the fifth largest deficit for any single month in US history. The Congressional Budget Office thinks these numbers are consistent with a budget deficit of about $800 billion for Fiscal Year 2018, which ends September 30. If so, [...]
Friday's jobs report finally included what appears to be evidence of the long-awaited acceleration in wage growth. Average hourly earnings grew 0.4% in August, which meant they were up 2.9% from a year ago, the largest 12-month increase since the economic recovery started in mid-2009. By contrast, these wages were up 2.6% in the 12-months [...]
For decades the United States has, directly and indirectly, subsidized global growth. For example, after World War II, the U.S. provided direct economic aid to Western Europe with the Marshall Plan, while also helping to rebuild Japan. And since then, we have provided never-ending direct aid to foreign countries, which has been a constant political [...]
In my last blog I mentioned I would follow up with example of not only why the financial press is virtually always wrong, but why they have to be wrong. Again, in this vitriolic time I feel compelled to remind you that this is not a political commentary of any kind. Any comments made here [...]
"Wealth creation" versus "the redistribution of wealth" is an age-old political/economic battle. And once again, Senator Elizabeth Warren - among others - has capitalism in the crosshairs. Adam Smith defended capitalism in 1776. Karl Marx attacked it in the 1800s. William Jennings Bryant attacked it; Grover Cleveland defended it. FDR attacked it; Ronald Reagan defended [...]
Since March of 2009, the predictions of economic, and stock market collapse have been non-stop. Doom-and-gloomers have been unrelenting. And it's doubly frustrating since you can't disprove a negative until it doesn't happen. We have written hundreds of pieces since the recovery - and bull market – began, arguing that the pessimism was unjustified. We've [...]
The Federal Reserve made no changes to monetary policy today and it barely changed the language of its statement. That makes sense to us because we haven't changed our outlook for monetary policy or the economy, either. The investor consensus, the Fed, and our view are all agreed that the Fed will raise twice more [...]