Commentary

Safety Net or Stimulus

In response to the COVID-19 pandemic governments imposed shelter in place rules for their citizens and issued orders to close all but essential business in their country. The collective impact resulted in an unprecedented global plunge in economic activity that threatens the existence of many small and medium size businesses...

Commentary

Macro Factors and Their Impact on Monetary Policy, the Economy, and Financial Markets

Although there were good reasons to question whether GDP growth would accelerate in the first quarter, there were also good reasons why I expected the rate of growth to improve before mid year.

Commentary

Macro Factors and Their Impact on Monetary Policy, the Economy, and Financial Markets

In October the International Monetary Fund (IMF) lowered its 2019 GDP forecast to 3.0% from 3.2% in July. This represents a marked slowing from global growth of 3.8% in 2017. The primary driver of the slowdown has been a retrenchment in global trade and business investment in response to the ratcheting up of trade tariffs since early 2018.

Commentary

Central Bank Shenanigans

In May the Congressional Budget office (CBO) updated its 10-year fiscal estimates for federal revenue, spending, and annual deficits through 2029. The CBO is a non partisan agency tasked with analyzing data to provide Congress estimates for GDP growth and the impact on government spending and revenue from changes in tax laws.

Commentary

Macro Factors and Their Impact on Monetary Policy, the Economy, and Financial Markets

The expectation of a global rebound in the second half of 2019 was predicated on a positive resolution in the trade talks between the U.S. and China and the U.S. and the European Union. With a burst of stimulus from the Peoples Bank of China and Chinese fiscal stimulus since last summer, the global economy was beginning to show signs of improvement.

Commentary

Green Shoots for the Global Economy

What happens in China clearly does not stay in China so the outlook for China’s growth in 2019 is one of the keys to how the global economy will perform and how financial markets will respond to that level of growth.

Commentary

When Will the Federal Reserve Hit the Pause Button?

After the meeting on September 26 the FOMC published its dot plot and the expected path for the federal funds rate through the end of 2020. If all goes according to this script the federal funds rate will be raised in December, three more times in 2019...

Commentary

Synchronized Slowing Growth

Synchronized global growth was one of the main themes coming into 2018. In the second quarter GDP in the U.S. was the strongest since 2014, even as growth around the world downshifted. While global growth will be decent in the second half of this year, growth has already slowed in the U.K, Europe, China, and Japan.

Commentary

The Federal Reserve’s Axis of Symmetry

The Federal Reserve has two primary mandates: maximizing employment and stable prices. Congress also included moderating long-term interest rates as part of the Fed’s overall objective, but that should be the offshoot of stable prices. In May the unemployment rate fell to 3.8% which is the lowest since April 2000.

Commentary

Macro Factors and their impact on Monetary Policy, the Economy, and Financial Markets

It seems that after years of expecting inflation to rise to its 2.0% target the Federal Reserve and many
economists have concluded it’s just not possible. The reasons most often cited are the Amazon Affect,
Artificial Intelligence, weak wage growth, years of excess capacity, and transitory factors like the mobile phone price war in March 2017.

Commentary

Macro Factors and their impact on Monetary Policy, the Economy, and Financial Markets

GDP growth slowed in the fourth quarter to 1.9% down from 3.5% in the third quarter. Both numbers were skewed by trade data. Third quarter GDP was lifted by .7% from the export of soybeans to South America, while imports shaved -1.7% from fourth quarter GDP.

Commentary

Macro Factors and their Impact on Monetary Policy, the Economy, and Financial Markets

Throughout history banks have been at the epicenter of every financial crisis. That notoriety of failure led to the formation of Central Banks. In the wake of the 2008 financial crisis, global banks have repaired and strengthened their balance sheets, especially in the U.S.

Commentary

Macro Factors and their Impact on Monetary Policy, the Economy, and Financial Markets

During the 35 year secular bull market that began in October 1981, there were a number of sharp increases in yields in which bond prices fell. But investors who held on were bailed out by the secular bull market and eventually recovered all the losses and with gains to show for their patience.

Commentary

Does China Present Global Risk? The Coming Slowdown in China Could Affect the Reflation Trade

China’s GDP rose 6.9% in the first quarter, but is a slowdown coming? Emerging Markets have been on fire this year, will the rally continue? U.S. GDP is forecast to grow to 3.5% in the second, but could the delay in tax cuts dampen the rebound?