The Economy: Comrades Unite! Commissar Chairman Powell has arrived … and in the famous last words of Alexander Haig, “is in control.” The Star Chamber Bucking Bronco that we know as the Federal Reserve showed its new face to The Swamp today. In a welcome break with hoary tradition, Powell has real world experience as a businessman. Imagine the folly of having a businessman run the central bank of the greatest capitalist country in the history of the planet. But alas our joy, like a second marriage, may be the triumph of hope over experience. In his appearance on The Hill, Powell stated that 1) Further QE remains as viable monetary policy (All Hail Mammon); 2) The Fed saved the Post-Crisis World (All Hail Self-Praise); 3) Banking regulations are pillars of strength (All Hail TBTF). Long story short; The Beat Goes On. … the economy continues to expand; some indicators positive; some negative … .
Food for Thought: It’s human nature to assume that the future is going to look like the immediate past. So stocks and real estate will go up forever. Interest rates will remain low forever. Central Bankers will be able to manipulate the global economy forever. The political pendulum will swing left forever. China is a benevolent capitalist player forever. The dollar will remain the world’s reserve currency forever. Renewable energy subsidies will remain forever. The Manchurian Candidate has landed and Vlad Rules forever. The crypto-currencies world should be ignored forever. … If you see chinks in any of this armor, that is where “the next big thing” is shining like a diamond in the rough.
Music of The Week: Paul Carrack’s “Live at the London Palladium”
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The Economy: “Synchronized Global Expansion” is the latest buzzword describing our global and national economy. While the Fed begins reducing their balance sheet this month, the rest of global central banks continue to print money with abandon; piling on more debt for future generations. How this house of cards ends is anyone’s guess. While we shake our heads in wonder, the flip side of the coin is that the Good Ole USA might actually pull it off. Natural and man-made disasters aside, Armageddon may not occur. Not to sound like a shill, but as a nation we have a history of coming back from the brink. While Americans appear to be more divided than ever before, the numbers show an optimism that can’t be denied. Consumer confidence is at all-time highs. Manufacturing indices are surging. Inflation remains historically low. Last but not least, the stock market continues to set new records. You can argue that the economic expansion is in the 7 or 8th inning. You can debate equity valuations or comparisons. You can read the tea leaves till you’re blue in the face. But one thing is clear; stocks are saying that the good times will continue.
Food for Thought: “Bless her heart” is Southern Belle code. Spoken in sympathetic tones, it translates into “That gal is out of control!” Such is the case of Senator Elizabeth Warren’s quixotic effort to put Wells Fargo out of business because of its ongoing regulatory problems. Bless her heart! Liz confuses herself with Moses and the Golden Calf. Bless her heart. First, there’s the matter of elevation: There is no Mount Sinai; she’s in The Swamp. Second, the Golden Calf is the Federal Reserve which is the Titanium Transformer; stronger than dirt and able to leap tall buildings in a single bound. Bless her heart. Third, hurling tablets don’t work no mo. The good Senator from Massachusetts would be more effective chasing Salem witches than tackling a TBTF bank.
Music of The Week: Tom Petty’s “Southern Accents.” Tom Petty passed away this week at 66.
The Economy: Call it Deer-In-The-Headlights week. First up was The Donald and The Hillary. Each took a turn to be stumped on the stump. But this week’s prize goes to Wells Fargo CEO Stumpf who was grilled, roasted and vilified by lawmakers who wanted Stumpf’s neck on a stump … headlights or no. The fallout from the Wells Fargo morality play is expected to advance the agenda to break up the TBTF banks. The state of California has suspended all official dealings with Wells Fargo following the bank’s scheme that created phony bank and credit-card accounts to collect fees. Oversight committees of other organizations are questioning their relationships with the bank. For the duration, Stumpf has collected more than $250 million in compensation. Senator Elizabeth Warren condemned Stumpf for his “gutless leadership.” Watch the video of the hearings to see the fury of lawmakers. No admission of guilt yet.
Food for Thought: When you change jobs, analyze whether you should take your 401k with you. This is a detail that sometimes falls through the cracks or is postponed. The assets in your 401k belong to you. Your best course of action may be to roll those assets into an IRA. By doing so you exercise more control over your retirement planning. We can help with your analysis. Transferring your 401k is a simple process. Contact us if you have questions.
Music of the Week: JJ Cale’s “Closer to You”