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2000, version 2.0?

9 Oct

The technical indicators of the stock market are reaching crazy levels. In nearly three years, six tech stocks – Facebook, Amazon, Google, Netflix, Apple and Microsoft – have seen their weighted average price-to-earnings ratios increase 50 percent. Between January 2015 and August 2017, these six stocks’ collective market capitalization accounted for 40 percent of the [...]

A Disastrous GDP Boost

2 Oct

The effect of all the recent natural disasters has been huge, and I’m not talking solely about the hundreds of thousands of Americans who lost everything. The effect I’m talking about is economic. Many cities will need to rebuild. And while this isn’t the best way to achieve economic growth, the rebuilding efforts are expected [...]

Heated Fed Debate Continues as Stakes Rise

25 Sep

The Federal Reserve is in a pickle. On one hand, it wants to raise rates at least once more in 2017. On the other, it wants to reduce its $4.5 trillion balance sheet. Such behavior often leads to a recession. Is this too much shock to our less-than-stable economy? Well, interest rates need to normalize. [...]

The Stock Market is Shrinking

18 Sep

It’s getting more and more difficult to choose investments these days. The possibilities seem endless and it’s not getting any easier as time goes on. Now, you’d think I was talking about individual stocks. But no, I’m talking about stock indexes. They’re often traded as exchange-traded funds (ETFs), which are singular ticker symbols comprised of [...]

Financially Healthy States Lean Right, Have Low Taxes

28 Aug

The Mercatus Center at George Mason University aims to “bridge the gap between academic ideas and real-world problems.” Last month, the organization released its report ranking all 50 states on their fiscal health. It examined which ideas are working, which ones aren’t, and the resulting financial conditions left in the wake. The comprehensive study weighs [...]

Spending + Debt = Crisis

21 Aug

You have to hand it to our federal legislators. They really know how to spend. For the first time ever, federal government spending topped $4 trillion. It’s up from $3.85 trillion the year prior. That equals $33,805 for each of the 118,562,000 households in the U.S. Before we go blaming President Trump, it’s important to [...]

Strong Potential for a Global Swan Attack

14 Aug

Last week we talked about the “Orange Swan” effect of President Trump. Well, there are a few more “swans” in the world that could really screw things up. First is the possibility of Janet Yellen getting monetary policy wrong within the context of other domestic reforms. We were promised health care reform, tax cuts and [...]

The Orange Swan

7 Aug

During our last fiscal meltdown, the Federal Reserve took drastic measures. It lowered interest rates to basically zero, took on an enormous Quantitative Easing (QE) program, and increased its balance sheet from $900 billion to $4.5 trillion. The Fed thought the wealth effect of these measures would lift the economy. For some it did. But [...]

The Fed “Unwind” May be a Tailspin

31 Jul

Leading up to 2007 – before the Federal Reserve’s Quantitative Easing program and Zero Interest Rate Policy, the Fed held about $800 billion in its portfolio, or “balance sheet.” Today, the Fed has about $4.5 trillion on the balance sheet, much of which is government debt and mortgage-backed securities purchased years ago to save us [...]

When Low Unemployment Can Be Bad News

24 Jul

We’re at or near full employment – or so the statistics say. Full employment generally means almost everyone who wants a job can get one, and the primary constraint on growth is the amount of labor available. Plentiful, abundant jobs with growing companies? I don’t think that is most folks’ reality. More likely, if they’re [...]