Tag Archives: Fed Minutes

Evaluating Data and US Military Intervention

The Economy: The numbers released this week underscore the difficulty in evaluating the economy. Consumer confidence is at all-time highs; as is bullish sentiment. Auto Sales disappointed. ADP Jobs report on Wednesday were blow-out; far above expectations. Yet the very similar NonFarm Payrolls were far below expectations on Friday. Oil has rallied, dipped and rallied back on each OPEC announcement. Fed Minutes were released and showed a more hawkish stance towards raising interest rates. They also contained a comment that stocks may be overvalued. The nuclear option on Gorsuch was exercised without causing a ripple. This is the conundrum of soft versus hard data. Soft data is about how you feel or what you think. Hard data is information that has some basis in statistics. With the manipulation of statistics you now have to frame hard data in terms of what might be fake news. For example, are any numbers provided by the Chinese Communist Party real? For better or worse, they certainly drive the markets. For the U.S. the consensus is that the Trump rally is intact regardless of the healthcare fail, the headwinds of tax reform, a looming trade war with China and as of today, a possible hot war with Syria/Russia. We continue to hear that regardless of the macro picture, bank lending standards remain tight.

Food for Thought: The relentless upward bias of the stock market stumbled Wednesday when the Fed Minutes were released. Two comments were taken as bearish for stocks. First, further interest rate hikes are coming in 2017. Second, the statement that stocks may be overvalued was viewed as a warning. Together, these comments stopped the rally and caused the largest reversal in 15-months. Markets closed down dramatically. But like so many other issues that should have paused this bull market, the reversal was forgotten overnight. Stocks had a positive day as the prospect of a Syrian war and the adage, “buy on the sound of cannons, sell on the sound of trumpets” was heard. Last week Tillerson indicated that Syria was best left to the Syrians. Today, Trump bombed ‘em. U.S. military intervention in Syria. Perhaps it’s the Art of The Deal, but it seems that there’s a lot of U.S. saber rattling going on. We have U.S. troops in Poland, on the Russian border, for the first time in history. We’ve turned-up the anti-Russian volume on Ukraine. We’re threatening North Korea with unilateral action. We’re flashing the sabers at China over the South China Sea. Perhaps the Central Banker stock market, which has morphed into the Trump Bump market will evolve into the global war market. To Infinity and Beyond.

Music of the Week: Billy Idol’s “Charmed Life”

Central Bankers Take a Back Seat to Politics

The Economy: The global economy appears to be on the mend. While we’re optimistic, we’re cautious because there’s been so much financial engineering and Central Bank intervention since the financial crisis. Every developed economy has engaged in currency manipulation and all government statistics are suspect. Nevertheless, this is the playing field. The Fed minutes were released this week; a non-event. The usual, “perhaps, maybe, somehow, if only, somewhere” had the Talking Heads all aflutter. The rest of the planet yawned and went about its business. After a decade of having the headlines to themselves, Central Bankers have taken a back seat to politics. … and what a show it is. Brexit is proceeding; France is Frexit; Italy is rudderless; Greece is broke; Russia is conniving; China is posturing, North Korea is flexing. Through it all, Trump is pumping, humping and dumping.

Food for Thought: Global financial markets are enthralled with all this uncertainty and excitement. In an alternate universe there might be concern. Not now, not nowhere. This time is different!

Music of the Week: Kim Waters “Midnight Love”

Federal Reserve Uncertainty

The Economy: 3rd quarter earnings season began this week but it’s too early to tell whether this will be a good or bad metric. Of more immediate focus were the Fed minutes that were released today. As expected the minutes showed the Fed slowly moving towards an interest rate hike at some point in the future. Hawks have jumped on a December hike. Doves push it out into the indeterminate future. Low interest rates and slow growth have become embedded in the global economy. Something extraordinary will have to happen to change that dynamic. Governments and central banks have proven adept at containing immediate damage and pushing the day of reckoning into the future; if in fact there is one. While the list of the Gloom and Doom Crowd grows longer, they’ve been wrong for so long that their voices have faded to insignificance.

Food for Thought: 4th quarter is here with its annual tax planning and year end strategy sessions. This is a good time to review all aspects of your financial picture. Are you on target? … do you have a target? Has your tolerance for risk changed? Is your financial documentation up to date and in a location that is known to someone other than yourself? Are wills, trusts and health care directives current? Contact us if we can help you.

Music of the Week: Vanessa Williams’ “The Real Thing”