There are many definitions of interest rates. One is that interest rates are the price or cost of liquidity. As liquidity increases, the cost goes down. (The supply of liquidity is greater than the demand for it.) As liquidity decreases, the cost goes up. (The demand for liquidity is greater than the supply of it.) One of the factors pushing our interest rates up is…
Fighting is easy. Walking away from a fight is difficult. The Federal Reserve is a creature of Congress and can be terminated whenever Congress chooses. Fortunately, Congress recognizes that independent economic guidance cannot come from either the Executive or Legislative branches of government. After all, somebody has to guide the economy who cares more about the economy than the latest polls. In September, I wrote…
I am confident that, if my family depended on it, I would find a way over or under or around or thru any fence. (Of course, I still remember how to use C-4 plastic explosives, as well as “bangalore torpedos.”) Assuming that is mere bravado or over-confidence on my part, then a wall on the Mexican border might make sense. However, if I was Nancy…
I am confident that, if my family depended on it, I would find a way over or under or around or thru any fence. (Of course, I still remember how to use C-4 plastic explosive, as well as “bangalore torpedos.”) Assuming that is mere bravado or over-confidence on my part, then a wall on Mexican border might make sense. However, if I was Nancy Pelosi,…
During the global financial crisis of 2007/8, the assessed value of my home starting dropping. Two years later, it had dropped 29%. Did I cry? Did I sell my home? Did I curse my realtor? Of course not! I just waited for it to recover. The S&P 500 has now dropped 11% and is still dropping. This year will probably be the first losing year…
Let’s say you’re a large pension fund that wants to buy 100,000 shares of Apple. If you enter such a large BUY order into the market, it would drive the price up. Of course, you don’t want to pay any more than necessary. So, what do you do? You enter a “dark pool.” Large financial institutions maintain these dark pools. If you want 100,000 shares…
I parted company from my Republican friends, when they impeached Clinton for lying about sex with a woman. I will part company from my Democratic friends, if they impeach Trump for lying about sex with two women. Sure, there are nuances of differences, but they are only nuances. HOWEVER, if Trump — or any other person — colluded with the Russians, then I hope they…
Like most people, economists like to argue. However, one idea that almost all economists agree with is: “If you want less of something, tax it. If you want more of something, subsidize it.” Otto von Bismarck said: “Politics is the art of the possible, the attainable — the art of the next best” The president of France, Emmanuel Macron, understood the French people would use less…
Like most people, economists like to argue. However, one idea that almost all economists agree with is: “If you want less of something, tax it. If you want more of something, subsidize it.” Otto von Bismarck said: “Politics is the art of the possible, the attainable — the art of the next best” The president of France, Emmanuel Macron, understood the French people would use less…
When I go to sleep at night, I reluctantly relinquish control of the TV remote. By then, that poor piece of plastic is exhausted, breathing heavy, and sweating profusely. That’s because it has been worked so hard — after all, every commercial break requires a channel change. In the never ending search for a balanced view, I rotate between Fox News, CNN, MSNBC, and Newsy. …
Many years ago, the mentor of Warren Buffet was Benjamin Graham. He taught: “In the short run, the market is a voting machine but in the long run, it is a weighing machine.” Colleges teach us that the stock market reflects both current economic conditions and future expectations. It weighs economic data. Today, the economic data is strong and healthy. So, when is the market not…
Inside our country, the stock market has been fretting over the possibility of slowing growth in corporate earnings and GDP, as well as rising interest rates, an ominous yield curve, the trade war, and the perpetual political circus. As if all that was not enough burden on U.S. investors, we just imported two more – overnight. First, the once fearsome OPEC looks like it may…
Inside our country, the stock market has been fretting over the possibility of slowing growth in corporate earnings and GDP, as well as rising interest rates, an ominous yield curve, the trade war, and the perpetual political circus. As if all that was not enough burden on U.S. investors, we just imported two more – overnight. First, the once fearsome OPEC looks like it may…
Think of buying a bond like loaning money to a friend. If he must repay the money tomorrow, there is not much that can go wrong before then. However, if he must repay you in twenty years, there are many things that could go wrong, and you might not get repaid. An example would be a surge in inflation, reducing the value of the repaid…
Democrats did a bad thing! Back in the 1930’s, they introduced the concept of gerrymandering in Virginia. Instead of voters picking their legislators, the legislators picked their voters. Hiding behind the valid concept of redistricting, which is required every ten years following the census, the Democrats packed Republican voters into as few districts as possible. This made Republican districts more Republican and Democratic districts more…
There are good Republicans and there are bad Republicans. George H. W. Bush was a great Republican. More importantly, he was a good and decent American, who will be missed. Rest in a well-deserved peace . . .
Living close to the water in a coastal community, sea level rise is not an academic issue to me – it is personal. I know we cannot just build a wall to hold back the sea, nor can we elevate entire cities, but I have been impressed with how effective “improved drainage” can be, including large storm water retention ponds. It is not a simple…
While I would not do any business with Wall Street giant Goldman Sachs, I do have great respect for their research and just read their 2019 outlook. In a word, they are quite bullish on December of this year but less bullish on 2019, predicting only a 5% rise in the S&P, mostly in the first half of the year, before economic growth slows to…
While I would not do any business with Wall Street giant Goldman Sachs, I do have great respect for their research and just read their 2019 outlook. In a word, they are quite bullish on December of this year but not very bullish on 2019, predicting a 5% rise in the S&P, mostly in the first half of the year, before economic growth slows to…
A veteran of the Pacific Theater during World War II, Bert Aaron is a patriot, living in Williamsburg. I am thankful that he has been a friend, a client, and an inspiration for so many years! The local paper, Virginia Gazette, just published his latest column. With his permission, I quote it below: ********************************************************************************************************************************************************************** Stop. Hold on, take a breath. The locomotive is running away…
It is not news that bad news is piling up. The good news of improving corporate earnings is burdened by the growing geopolitical problems worldwide. For the U.S., we have clearly entered a “recession” but NOT the type we fear. It is a “growth recession,” the rate of growth is receding, not the size of the economy. Earnings growth this year has been about 15%…
The Fed has been under increasingly heavy criticism. No president has ever been happy when the Fed is raising interest rates, but the current one is especially loud. Now, Wall Street is beginning to complain more loudly as well. There is a belief that rising interest rates mean falling stock prices, and it’s only logical . . . in the long run. History tells us…
Some years ago, a client asked me what was “this Google thing?” After explaining what a search engine does, I added that Google was the greatest shredder of privacy in the history of the planet. Then, Facebook came along. If you have not yet read Wednesday’s article in The New York Times, it is well worth the read. Here it is: https://www.nytimes.com/2018/11/14/technology/facebook-data-russia-election-racism.html?action=click&module=inline&pgtype=Homepage You will learn that…
The market was already nervous before the 9:30 AM open on Monday. Higher and higher interest rates were bad enough, but the market was also frightened by a senior trade negotiator who predicted a long, slow fight with China, with no end to the trade war in sight. Then, the world’s largest company, Apple, was downgraded when several of its suppliers downgraded 2019 earnings. Later…
My investment outlook is evolving. Two months ago, the economic data was unrelentingly bullish. Now, cracks have appeared (see both ISM reports). This does NOT suggest the recession that investors fear. Not all recessions are created equal. The stock market has been propelled over the past year or so by rapidly rising corporate earnings (EPS). The second and third quarters were up 20% on a…
You should always shower and brush your teeth. You should always respect your elders and do your homework. And, you should always get a professional financial plan designed exclusively for you and then follow every detail. While I am a Certified Financial Planner professional, I haven’t prepared a written “financial plan” in years. My initial concern was that a written financial plan tends to be…
My parents were part of the “Greatest Generation” and had a rather low opinion of my generation of “baby boomers.” We were a bunch of dirty, long-haired, pot-smoking, commie-hippies who were too self-involved to love our country. Of course, that was before we got jobs, babies, and mortgages. Now, we-boomers look down our boomer-noses at the “millennials” or Generation X as being useless techno-addicts, too…
The Bureau of Labor Statistics issues their monthly “Jobs Report” on the first Friday of each month. It is arguably the most watched report on Wall Street. Today, before it was released, Dow futures indicated it would open up 250 points. As soon as the report was issued, it dropped to 180 points. It was a good jobs report, with 250 thousand new jobs created…
It takes hip boots to wade through the governmental reports issued each day. In one obscure report by the Treasury Department on Monday, they estimated that they will have to issue bonds (or take on debt) at a faster pace. The debt to be issued in FY 2019 is 17% more than FY 2018 but 160% more than FY 2017. My Democratic friends will ask…
History teaches us that the current period of incivility we are experiencing is not unique. In the 19th century, some Congressmen had fistfights on the floor of Congress and at least one pulled a gun on another. Eventually, the cycle of civility returned to normal. Regrettably, we have entered another cycle. I think President Trump gets too much blame for the toxic culture we are…
Robert Doll is the Chief Equity Officer of Nuveen and a CNBC favorite. His latest Commentary is instructive. He reminds us of ten things: 1. U.S. economic growth remains solid. 2. Manufacturing levels may come under pressure. 3. The outlook for global growth may have weakened recently, but we see no near-term signs of significant financial pressures. 4. Global fiscal policy is likely to be…
Somebody, please explain paranoia to me! Every religion feels they are being persecuted for their faith. The lunatic who slaughtered the innocent Jews in Pittsburgh did it because Jews were slaughtering Christians . . . What? Like I said, lunatic! If any faith has a documented claim on being persecuted, it is the Jewish faith. Yet, in Christian churches, both Protestant and Catholic, there is…
Most investors were sorry to see the Dow drop almost 300 points last Friday. However, I was sorry it didn’t drop 1,000 points. Stock market corrections don’t hit bottom until there is some degree of panic, which flushes stock out of “weak hands.” I know this slump is not a financial crisis, as I watch that data closely. I doubt it is not the beginning…