The Economy: All systems are go on a global economy that shows signs of continuing to expand. Easy money from central banks remains the order of the day. Trump tax cuts and deregulation have bolstered business confidence. The holidays showed Americans on a spending spree. Naysayers see the band on the Titanic bravely playing as she went down. Optimists see hundreds of billions in repatriated US corporate profits, tight labor markets, inflation and Trumponomics as the next leg up in the economy and the 9-year bull market in stocks. Ray Dalio of Bridgewater has called this a new bear market in bonds as Jerome Powell was confirmed by the Senate as the new Fed Chair. Powell is seen as dovish and a continuation of the Bernanke/Yellen school of gradualism in monetary policy. But it pays to remember that markets tend to drive the Fed and not the other way around. Interest rates are rising. Gold has broken through its $1,300 resistance and oil is at multi-year highs. With global expansion, investors are complacent that central banks will keep stock markets and real estate moving up forever.
Food for Thought: Davos, billed as the Global Economic Summit is in full swing. Over time it has morphed into another rich kid’s confab with the glamorous and notorious. It is known as the Bastion of The Globalists. This year Donald Trump will upset the apple cart as he presents America First Shock and Awe with his appearance and speech on Friday. The annual ego rush of whose private jet is bigger will be sadly missing Prince Alwaleed’s private 747 with the gold throne. The Prince is apparently still confined by his King who reportedly wants billions in return for a kiss-and-make-up return to business as usual.
Music of The Week: Chaka Khan “Chaka”
We Quarterback Money®
The Economy: We end the month of May with a review, since the election, of comments on the economy and the financial markets:
2016_11_09: Jeff Gundlach of DoubleLine: “Buy This Market on Trump, Growth and Inflation.”
2016_11_09: Stanley Druckenmiller: “Buy This Market.”
2017_01_31: Kyle Bass, of Hayman Capital Management: A lower corporate tax rate … will be “extremely stimulative.”
2017_02_02: Dan Loeb Hedgie: “The … election was the most significant event of the year …”
2017_02_08: Larry Fink BlackRock CEO: “I believe we’re in the midst of a slowdown … because of all the uncertainty.”
2017_02_12: Jim Rogers: “We’re about to have the worst economic problems of a lifetime … ”
2017_03_02: Raymond James’ Jeff Saut: “I’ve never seen anything like this market, so I’m not going to play.”
2017_03_09: Bill Gross Janus Capital Group: ”…our highly levered financial system is like a truckload of nitro glycerin on a bumpy road …”
2017_04_01: Jamie Dimon CEO JP Morgan: “It is clear that something is wrong” with the nation.”
2017_05_10: Jeff Gundlach of DoubleLine: “The VIX Is Insanely Low”
2017_05_09: Lloyd Blankfein Goldman Sachs CEO: … low volatility… is not a “normal resting state” for markets.
2017_05_09: Art Cashin, of UBS: “It’s not normal … people are so blasé about what’s happening,”
2017_05_13: Ray Dalio of Bridgewater: “…the downturn … will likely produce much greater social and political conflict than currently exists.”
2017_05_30: Paul Singer of Elliott Management: When, Trump’s pro-growth agenda fails to be implemented, “all hell will break loose” …
2017_05_31: Benjamin Bowler, Bank of America Strategist: …”these markets are very weird”… US equities continue to set long-term records for instability”…
Food for Thought: My original entry for this paragraph was a commentary on Kathy Griffin. However, the Higgins Capital editors/censors, comprised of my wife and daughter, redacted so much of my reaction to Griffin’s wanton act of pure evil and hatred that the result looked like something like this from the CIA: “At__point__. Ultimately__media__internet__; __silent__”high__What’s__Award.” Long story short, my rant on decency and graciousness ended up on the cutting room floor.
Music of the Week: Cat Stevens’ “Tea for the Tillerman”