The Economy: Economic data is weak as we go into the Fed’s expected interest rate increase later today. Inflation remains below expectations. Retail sales x-autos is down. Auto sales have begun to disappoint. Bond yields remain stubbornly low as foreign money pours into U.S. Treasuries. Treasuries are a global safe haven with attractive yields. Regardless of what the Fed does to raise interest rates, market forces continue to suppress those levels. The Lesson: “The Market is Always Right.” Even central bankers must bow to Market Gods. They just haven’t figured this out yet … and are too arrogant to learn from history. Stocks?!? … clearly they are going to go up forever with absolutely no risk.
Food for Thought: Global central banks continue to pump $30-billion/month into the global economy; $1.5-trillion so far this year. As a result, there are reports of global recovery. A recovery based on massive debt … and we are assured that debt is irrelevant. Venezuela is bankrupt, Puerto Rico is bankrupt, Illinois is bankrupt, Stockton is bankrupt … because of debt. But central bankers continue to spout that debt is irrelevant at the global level. Good luck with that myopic nonsense. The debt of Louis XIV bankrupted France and Louis XVI got the French Revolution. The Debt of WWI bankrupted Germany and Weimar got the hyper inflation where 1 million Marks bought a loaf of bread. The Debt of WWII bankrupted Great Britain and the U.S. muscled past the Brits and into the position as the pre-eminent super power. Bread and circuses for the masses. Contact us for innovative help with your money.
Music of the Week: Heart’s “Tell it Like It Is”