Tag Archives: Economic Uncertainty

The Fed’s Beige Book and The BBC’s New Pidgin English Website

The Economy: The Fed’s Beige Book, a measure of the national economy, was released last week. It showed a soft economy. The preamble was optimistic but the details were less so. Combined with the economic hit form Harvey and Irma, the Fed is likely on hold through year end. This continues the “lower for longer” interest rate scenario we had for the past several years. The hurricanes have dominated the headlines for the past week. NAFTA, the White House half-life of Gary Cohn and North Korean threats have faded to black … at least for the moment. Since the world didn’t end with either NOKO’s nuclear war threats or the hurricanes, stocks are again on a rocket-ride to infinity and beyond. This despite comments by the following scaredy cats: 2017_09_06: Deutsche Bank Chief Executive Officer John Cryan “We’re now seeing bubbles everywhere”; 2017_09_06 Lloyd Blankfein, CEO, Goldman Sachs: … (world financial markets) “have been going up for too long”; 2017_09_11 Seth Klarman of Baupost Group: “… plans to return capital to investors by year-end due to a lack of opportunities”; 2017_09_12 John Hussman of The Hussman Funds: “I view the market as having no investment merit at all here.” Like I said, scaredy cats! They should be tarred, feathered and run out of town on a rail for thinking that stocks could possibly do anything other than go up forever.

Food for Thought: Taki Magazine reports that in a tip of the hat to globalism, multiculturalism and identity politics, “… the British Broadcasting Company (BBC) has launched a website in Pidgin English. The BBC points out that Pidgin English is ‘an informal lingua franca. It is a language that really unites people and cuts across all sorts of barriers—ethnic, regional and socio-economic.” The new site’s headlines feature Pidgin droppings such as “Indian woman divorce husband because dem get no toilet,” “Why dem dey call Hurricane human being name,” “How Tanzania dey kill mosquito,” and our personal favorite, “Why China dey chop African Donkey.” Nothing new here. Anyone who’s had children in school recognizes this patois as proficient english for graduating seniors. Next up, Gullah.

Music of the Week: Bruno Mars’ “It Will Rain”

 

Increased Economic Uncertainty

The Economy: Uncertainty has increased recently. Hurricanes Harvey and Irma will lower economic numbers going forward. The hydrogen bombs and loose-cannon missiles of the North Korean Crisis create their own questions. The issue of raising the debt ceiling has been kicked out to December. Inflation remains stubbornly below its 2% target. As a result, the Fed is probably on hold for any action for the remainder of the year. Both further interest rate increases and any balance sheet reduction would serve as a brake on an economy that is now more opaque than usual. Lower for longer; so mortgages and loans should remain near their historic lows. Our informal polls continue to confirm that a majority of respondents expect some type of an economic slowdown and a market pull-back. But stock markets continue to toy with their highs and bonds reflect the on/off of the flight-to-quality, safe haven depending on the geopolitical story of the day. September is historically the worst month for stocks. But with the current environment, all bets are off.

Food for Thought: Families with a net worth of $10 million or more have special needs. Taxes of all kinds, especially estate taxes are a major concern. Intergenerational wealth transfer is another issue. Many families are asset rich and cash poor. Wills, trusts, insurance and family businesses further cloud prudent action. Fees for these services frequently run to 6-figures. But the return is often several times that amount. Think about it.

Music of the Week: Peter White’s “Smile”