The Economy: The State of The Union clearly showed the sharp divide in the U.S. electorate. Pick your flavor. Markets have cheered Trump since the election. Given the ongoing economic expansion, expect the Fed to continue to tap-the-brakes with further interest rate hikes. Jay Powell replaces Yellen as Fed Chair at cob today. Yellen was the most dovish Fed Chair in history. Powell, by contrast is on record as saying, “… it is not the Fed’s job to stop people from losing money.” This in itself will be a sea-change, if there is follow through, since the Fed has been stock market driven since the Financial Crisis. Markets, the media and investors in particular have been enamored with synchronized global growth, tax cuts, profit repatriation, one-time bonuses and historically low unemployment. The Fed interest rate moves have created every expansion and every recession; every bull and every bear market. Party on Garth!
Food for Thought: What is your long-game? Gonzo Hunter Thompson spoke for some when he said, “Life should not be a journey to the grave with the intention of arriving safely in a pretty and well preserved body, but rather to skid in broadside in a cloud of smoke, thoroughly used up, totally worn out, and loudly proclaiming “Wow! What a Ride!” For most however, there are more prosaic goals such as planning for retirement, creating an estate or other bequeaths to family, friends and charitable organizations. Annuities may be the appropriate way to achieve funding needs. Contact us if you have questions about Annuities.
Music of The Week: Chaka Khan “Chaka”
We Quarterback Money®
The Economy: Steady as she goes with our heads firmly planted in the sand … or elsewhere that the sun doesn’t shine. Global economies continue to report they are expanding … with the ongoing Central Banks stimuli of hundreds of billions. So the logical question is, “How healthy is the patient in an induced coma with 9-IVs and a ventilator?” The answer is that it depends on who you’re talking with. A sunny, weekend walk around La Jolla shows streets paved with gold, crowded with exotic cars, full of laughing shoppers swilling $4,500 Haut Brion while lighting their smokes with $100 bills. The local lululemon says that business has never been better. But the company founder says the stock has crashed and wiped $10 billion in equity off the books. Chicanery or the drunken revelry of those untouched by hardship, convinced of their moral superiority? If a tree falls in the forest and no one hears it, did it make noise? The smart money didn’t pay attention to Vulcan at his anvil inside Vesuvius either.
Food for Thought: You can run but you can’t hide. The consensus is that financial markets are insane but still the only game in town. … game being the operative. Central Banks have manipulated markets beyond any point of recognition. So what happens next? Good question. Everyone agrees that when things end it will be the Mother of All Ugly (MOAU?!?). Everybody except you is going to be wiped out. You’re going to be in cash when the end comes and then jump into the greatest buying opportunity in history. Of course, everyone is planning to do this. So beware Bob Farrell’s Rule #9 “When all the experts and forecasts agree — something else is going to happen.”
Music of the Week: Steven Kummer’s “Nice ‘N Easy”