With the Senate having passed a budget plan yesterday with only Democratic votes as well as a tie broken by Vice President Harris, it is only a matter of time before President Biden signs the first significant tax hike since the “Fiscal Cliff” tax hike in early 2013.
The Federal Reserve raised short-term interest rates by three-quarters of a percentage point (75 basis points) on Wednesday.
To many investors, this week’s GDP report is more important than usual.
If you follow the financial press, the conventional wisdom has come to the simple conclusion that the way to fight inflation is raising interest rates. Unfortunately, this is just not true.
How many times have you heard that the US dollar will collapse because of Fed and fiscal policy?
Some investors think the US is already in a recession. As we wrote two weeks ago and as recent data have confirmed, we don’t think that’s the case.
As we celebrate 246 years of national independence, our country is now more than two years into an economic recovery from the two-month COVID Lockdown Depression.
We've told people to watch the M2 measure of money in order to understand whether inflation will cool down or heat up.
Real GDP declined at a 1.5% annual rate in the first quarter and, as of Friday, the Atlanta Fed's "GDP Now" model projects zero growth in Q2.
We became bullish about stocks once mark-to market accounting was fixed in March 2009.
The Federal Reserve raised rates by three-quarters of a percentage point (75 basis points) today, the most at any meeting since 1994 and exactly the move Chairman Jerome Powell was dismissive about in early May after the last meeting.
Investors are worried.
All eyes will be on the results of the Federal Reserve meeting on Wednesday when it announces how much it's going to raise short-term rates, its new projections for the economy and short-term rates for the next few years, as well as Chairman Powell's press conference.
JP Morgan CEO Jamie Dimon caused a stir lately when he talked about a "hurricane" hitting the US economy.
We are now about five months away from the mid-term elections that will decide who controls the Senate and House of Representatives for the next two years.
At least a couple of major retailer stocks got clobbered last week as investors sold on reports that they missed earnings estimates.
The consensus among economists puts the odds of a recession starting sometime in the next year at 30%, according to Bloomberg's most recent survey.
At the end of 2021, we set out our projections for the stock market in 2022: 5,250 for the S&P 500 and 40,000 for the Dow Jones Industrial Average.
"Transitory" is out, "expeditious" is in.
Ultimately, inflation is always and everywhere a monetary phenomenon, as the late great economist Milton Friedman used to say.
No one can say that the Federal Reserve can't do the impossible.
Real GDP, in the US, grew 5.5% in 2021, the fastest growth for any calendar year since the Reagan Boom in the mid-1980s.
When interest rates go up, many analysts start to worry about recessions.
Intellectuals and politicians often try to verbally summarize or justify conventional thinking in pithy ways.
Inflation is a political lightning rod.
Normally when we write about public policy – monetary policy, taxes, spending, trade, and regulations – we mainly focus on what we think policymakers will do and the likely effects on the economy or the financial markets.
As expected, the Federal Reserve raised short-term rates by one quarter of a percentage point (25 basis points) earlier today, the first rate hike since the end of 2018.
With every passing month, politicians and economists try to blame inflation on anything but excess money growth.
Russia's invasion of Ukraine led western nations to impose the most draconian economic sanctions in the modern era.
They say the truth is the first casualty of war...so, here we are about one week into the Russian invasion of Ukraine and the fog of war is still very thick.
Late last year we unveiled our stock market forecast for 2022, projecting the S&P 500 would rise to 5,250 and the Dow Jones Industrials average would climb to 40,000.
The financial markets have been on tenterhooks lately for two main reasons: Russia and rate hikes.
Nothing is normal about the current business cycle; it really is unique.
The Federal Reserve’s policy statement from last week plus Jerome Powell’s post-meeting press conference made it abundantly clear it is ready to start raising short-term interest rates in March.
The Fed stayed the course today, with no change in the Fed Funds rate, no adjustment to the pace of tapering, no shift in the timeline for raising rates, and no indication that they intend to lift rates in larger steps.
When fourth quarter GDP data is released later this week, it will show that 2021 finished on a high note.
Consumer prices rose 7.0% in 2021, the largest increase for any calendar year since 1981.
Many analysts were disappointed by last Friday’s job report for December, but we think the headline masks an overall report that shows continued improvement in the labor market and a possible surge in small-business start-ups and entrepreneurship.
Welcome to 2022! We can't imagine a more transformative year for America. After two years of unprecedented government actions, the winds of change are blowing hard.
The Bible story of the virgin birth is at the center of much of the holiday cheer this time of year. The book of Luke tells us that Mary and Joseph traveled to Bethlehem because Caesar Augustus decreed a census should be taken. Mary gave birth after arriving in Bethlehem and placed baby Jesus in a manger because there was "no room for them in the inn."
From 30,000 feet, the COVID lockdown and re-opening played out pretty much like we thought.
A renominated Powell is a different Powell. The Federal Reserve didn't raise interest rates today, a policy move we think is overdue, but it made major changes that set the stage for multiple rate hikes in 2022 and beyond.
We were bullish in 2021 and bullishness obviously paid off. As of the Friday close, the S&P 500 is up more than 25% so far this year.
In recent weeks, the stock market has decided the economic pain associated with an eventual tightening of fiscal and monetary policy is more likely to come sooner rather than later.
On Friday, news of a COVID-19 variant identified in South Africa, and the announcement of new travel restrictions, sent markets reeling. This is obviously not the only variant, and it won't be the last, either.
As Americans gather among family and friends to celebrate Thanksgiving, we all have much to be thankful for.
Inflation is back and worse than it's been in decades. Consumer prices rose 0.9% in October and are up 6.2% in the last twelve months. Two more months of moderate increases, and the CPI will be 6.5% in 2021, the highest inflation since 1982.
In spite of what listening to the mainstream media might make you think, the voting public doesn't change much from year to year or election to election. As a result, when leaders try to take policy too far in one direction, without enough public support, they often get punished at the polls.
The Federal Reserve today announced the (much-overdue) start to tapering, which means it will continue to increase the size of its balance sheet, but not quite as fast. Starting later in November, the Fed will reduce its monthly pace of asset purchases to $105 billion per month from the current rate of $120 per month.
Investors will be focused on the Federal Reserve this week and our expectation is that it will finally announce an overdue tapering of quantitative easing. In addition, we expect Chairman Jerome Powell to make it clear in the press conference that he expects tapering to be completed by mid-2022.