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Debt Ceiling–april Tax Collections Fall Short—debt Ceiling X-date Moves Closer—slim Republican Majority—swing District Republicans Likely To Vote For A Higher Debt Ceiling–debate May Increase Equity Market Volatility—seek Out Investment Opportunities That May Result

Date Posted: May 1, 2023
Debt Ceiling Uncertainties—extraordinary Measures Will End Soon Uncertainty Continues To Grow Concerning The Outcome Of The Debt Ceiling Debate. Treasury Reached The $31.4 Trillion Debt Ceiling Borrowing Limit January 19th Without Congress Passing An Increase. Since Then, Treasury Employs “extraordinary Measures” To Pay Its Bills And Delay Bump…

Fed “may’ In May—powell No Rate Cuts This Year– Markets Look For Cuts At Every Fed Meeting— Systematic Cause For Bank Deposit Runs, The Fed Itself– Reduced Mid-sized Bank Deposits Restrain Credit And Economic Growth–a Shortage Of Growth Favors Growth Equities—focus On Upcoming Banks Quarterly April Earnings Releases—commercial Real Estate Loans Dominate Mid-sized Banks—most Mid- Sized Banks Meet Federal Risk Tests——fed Needs To Catch Up To Systematic Communications Revolution

Date Posted: April 3, 2023
Fed “may” In May, Rates Peak, Powell No Rate Cuts This Year, Financial Futures Markets Look For Rate Cuts At Every Fed Meeting Post May The Fed indicated at its March meeting that, “if appropriate,” it will raise the funds rate at its next meeting in May another 25 bps to 5.0-5.25%. The Fed’s policy statement in March also shifted from anticipa…

Fed Fights Itself—restrictive Rates Vs Qe–banks Awash In Deposits—baby Boomers Retiring—removes Key Job Skills And Knowledge—impacts Productivity— Automation Technologies A Substitute— Rapidly Growing Boomer Social Security And Medicare Costs— Funded By Higher Taxes After The Presidential Election

Date Posted: March 2, 2023
The Fed Fights The Fed—restrictive Fed Proxy Funds Rate  While Financial Markets Fight The Fed, At The Same Time, The Fed Fights Itself With Both Restrictive Fed Proxy Rates And Excess Bank Deposits Resulting From Its Quantitative Easing During The Pandemic (Qe.) Currently, Financial Markets Look For The Fed To Raise Fed Funds Rate To Close To 5…

Geopolitical Restructuring December Commentary

Date Posted: December 19, 2022
The Year Ahead– Looking Beyond 2023 At this time of the year, traditional year-ahead forecasts emanate from “Wall Street. Our Commentary, in two parts, will first look into next year. Then, more critically, beyond 2023 to take advantage of long-term investment opportunities created by ongoing economic uncertainties and financial market volatil…

Inflation Moderation Lags Economic Slowing—Increases Uncertainties for Fed Decisions—M2 Money Stock Growth Rate Declining Rapidly—If Sustained–Economy May Slow Sooner Than Forecasts—Fed Pivoting Sooner?—Treasury Market Depth Below Historic Norms–Third Year of a Presidential Term—a Very Good Year for Stock Market Performance–Presidential Campaign Begins November 9th—Could Bring Pressure on Chair Powell to Pivot

Date Posted: November 10, 2022
Fed Recognizes Risks to the Economy from its Rapid Rate Increases—Result-Lower Rate Increases at a Measured Pace As broadly noted, monetary policy impacts demand and inflation with long and variable lags. As important, if not more so, monetary changes take much longer to impact prices than to effect economic output. If this delay proves prescie…

Broad Lowering of Earnings Estimates Likely During Quarterly Reporting Period — Monetary Policy Changes Impact Economic Output Before Prices — Increases Chances for Fed Errors – Post-Covid Era Regionalization Benefits North America – End of Zero Rate Environment – Cash as an Asset — Recognizing Risks, Long-Term Equity Values Likely Created

Date Posted: September 28, 2022
Chair Powell Continued to Caution Against Prematurely Loosening Policy — Investors Finally Listened Investors, prior to the recent August CPI report, continued to invest, in our view, “hoping” that inflation peaked and would likely decline at a rapid rate. With that “hope,” financial markets seemed to expect the Fed would then begin cutting rat…

Chair Powell — Read My Lips — “Restrictive Policy for Some Time” — Treasury Actions May Reduce Near-Term QT Concerns — Service Sector Inflation May Prove Sticky Due to Wage Cost Pressures — Shelter Inflation Increases into First Half of 2023 — QT May Reduce Multiple Inflation – Corporate Fundamentals Regain Focus as a Result

Date Posted: August 31, 2022
Chair Powell—Sensitive to Fed’s Errors in the 70’s – Avoid Prematurely Loosening Fed Policies Our past Commentaries referred to the Fed’s failed stop-and-go interest rate policies during the inflationary seventies (See Figure 1). That past troubled experience showed how hard it proved to be to finally pull down sticky inflation. That prior trac…

Goods Inflation Likely Moderating — Inflation Focus Shifts to Services and Wage Costs — Economy Slowing-Mild or Deep? — Fed Must Avoid 70’s Stop-and-Go Rate Policy Errors — Equity Market Hopes – Is That a Strategy?

Date Posted: August 2, 2022
GDP Second Quarter Decline — First Real Signs of Economic Slowing — -First Quarter Quirky Decline Masked Internal Growth The government’s “advance” estimate for second-quarter GDP showed a 0.9% decline. In comparison, GDP for the first quarter of 2022 declined 1.6 percent. This would suggest first quarter GDP showed weaker results than in this …

Russo-Sino Alliance-Post-Post-Cold War — Erodes Globalization-Russian Control of Gas Supplies May Force Germany to Ration — German Economy Suffers Next Winter

Date Posted: June 29, 2022
Russo/Sino Alliance — Post-Post-Cold War — Erodes Globalization — Russia’s Control of Gas Supplies to Europe — Germany May Ration — German Industrial Production Suffers—Increase Depth of European Recession—European Central Bank Will Face a Dilemma The global economy faces inflationary pressures from the Euro-Asian alliance formed by China and R…

Sharp Market Declines — Negative Wealth Effect — Underwrites Fed Policies – Strong Employment Gives Fed the Umbrella for Aggressive Policies — QT Pressures Multiples — Refocus on Earnings Leads to Stock Selectivity – Less Focus on Broad Indices — Negative U.S. and China Workforce Demographics Changes Globalization

Date Posted: May 20, 2022
Current High Levels of Inflation — Broadening Impact With its May meeting, the Fed announced more aggressive tactics in its war to diffuse inflation. Figure 1 provides an updated map of that battlefield. That map shows Median CPI which, in the Cleveland Fed’s view, provides a better sense of underlying inflation than does either headline or cor…