MMA Weekly Column: October 21, 2019

REVIEW AND PREVIEW

Larry Kudlow, the chief economic adviser to President Trump, accused staff members of the Federal Reserve’s Board of being part of the “deep state.” – Megan Henney, “Larry Kudlow Accuses Feb Board of Being ‘Deep State,’” https://foxbusiness.com, October 17, 2019.

Republican Senate Majority Leader Mitch McConnell on Friday blasted President Donald Trump’s decision to withdraw U.S. troops from northern Syria, calling the move “a grave strategic mistake” in an op-ed for Washington Post. “The recently announced pullout risks repeating the Obama administration’s reckless withdrawal from Iraq, which facilitated the rise of the Islamic State in the first place,” McConnell wrote in the op-ed. While his piece does not explicitly lay blame at Trump’s feet — or even mention his name — it warns that the Trump administration’s sudden foreign policy shift “will leave the American people and homeland less safe, embolden our enemies, and weaken important alliances.”– Kevin Breuninger, “Mitch McConnell Blasts Trump’s Syria Withdrawal as a ‘Strategic Nightmare.’” https://www.cnbc.com, October 18, 2019.

Continue reading…

MMA Weekly Column: October 14, 2019

REVIEW AND PREVIEW

Stocks slid off their best levels of the session on Friday after the U.S. and China agreed to a “phase one deal” in the trade war, but still managed to post strong gains. The deal, which will take three to five weeks to write, includes China agreeing to raise its agricultural purchases to between $40 billion and $50 billion from $8 billion to $16 billion, in addition to making reforms on intellectual property and financial services. The U.S. will not be raising tariffs from 25 percent to 30 percent on Oct. 15. A decision has not yet been made on the tariff increase scheduled for Dec. 15. China’s trade team is calling the agreement a “pause” in the trade war, and not a deal. The Dow Jones Industrial Average was up as much as 517 points in the moments following the announcement before finishing higher by 319 points, or 1.2 percent.– Jonathan Garber, “US and China Agree to ‘Phase One Deal’ in Trade War, Stocks Rally,” https://www.foxbusiness.com, October 11, 2019.

Continue reading…

MMA Weekly Column: October 7, 2019

REVIEW AND PREVIEW

The U.S. economy added 136,000 jobs in September, the Bureau of Labor Statistics said Friday. Economists polled by Dow Jones expected an increase of 145,000 jobs. The unemployment rate fell to 3.5%, a 50-year low, but wages grew at a slower-than-expected pace last month. “This sounds like a Goldilocks number to me,” Steve Grasso, director of institutional sales at Stuart Frankel, told CNBC. “It still gives the Fed some room for cover to cut rates. This is as close to a not-too-hot, not-too-cold greeting for the market.” – Fred Imbert, “Dow Jumps More Than 200 Points After Steady Jobs Report,” October 4, 2019, https://www.cnbc.com.

And on that news, plus supportive statements by Fed Chair Jerome Powell that the economy was still on sound footing, the U.S. stock market blasted off to the upside.

Continue reading…

MMA Weekly Column: September 30, 2019

REVIEW AND PREVIEW

A week that started out as Democrats’ big push to destroy Mr. Trump, could instead easily come to be known as the week that ended Mr. Biden’s run. – Kimberly Strassel, “Taking Out Joe Biden,” Wall Street Journal, September 27, 2019.

What we know of the call (for impeachment) underscores Mr. Trump’s greatest flaw as President, which is his political narcissism. Every decision boils down to how it affects him or his re-election prospects. Other Presidents have made similar calculations, but Mr. Trump lacks the basic filter to know when he is crossing a line that creates trouble for himself or the country. – Review and Outlook, “Trump’s Ukraine Call,” Wall Street Journal, September 23, 2019.

Impeachment.

Continue reading…

MMA Weekly Column: September 23, 2019

REVIEW AND PREVIEW

As mid-level discussions take place this week between China and the U.S. amid an ongoing trade war, new reports indicate that President Trump might be prepared to escalate the situation should an agreement not be reached in the near future. – Brittany de Lea, “Is Trump Preparing to Ramp Up U.S., China Trade War?” September 19, 2019, https://www.foxbusiness.com.

Chinese trade negotiators had a sudden change of plans Friday, canceling a visit to meet U.S. farmers after they wrapped up trade talks in Washington this week. The cancellation put a damper on hopes that China would restart purchasing U.S. agricultural goods, which it had halted in April in retaliation against President Donald Trump’s tariffs. – Yun Li, “Chinese Trade Negotiators Cancel U.S. Farm Visit,” https://www.cnbc.com, September 20, 2019.

Continue reading…

MMA Weekly Column: September 16, 2019

REVIEW AND PREVIEW

The U.S. budget deficit has topped $1 trillion for the first time in seven years, the Treasury Department said Thursday. The federal government’s budget deficit rose by $200 billion in August to $1.067 trillion. It’s up 19 percent, or $169 billion, from the October to August period of last year. The national debt now stands at $22.5 trillion, up 13 percent since Trump took office in January 2017.– Jonathan Garber, “U.S. Budget Deficit Tops $1 Trillion,” https://www..foxbusiness.com, September 12, 2019.

The ECB announced a new quantitative easing program Thursday which will see 20 billion euros ($21.9 billion) per month of net asset purchases for as long as the central bank deems necessary. It also cut the rate on its main deposit facility by 10 basis points to -0.5%, a new record low, and introduced tiering measures to mitigate damage to banks’ balance sheets. – Elliot Smith, “European Stocks Close Higher After Aggressive ECB Stimulus,” https://www.cnbc.com, September 12, 2019.

Continue reading…

MMA Weekly Column: September 9, 2019

REVIEW AND PREVIEW:

Job growth continued at a tepid pace in August, with nonfarm payrolls increasing by just 130,000, thanks in large part to the temporary hiring of Census workers, the Labor Department reported Friday. Wage growth remained solid, with average hourly earnings increasing by 0.4% for the month and 3.2% over the year; both numbers were one-tenth of a percentage point better than expected. – Jeff Cox, “Job Growth Falls Short of Expectations as August Payrolls Rise June 130,000,” https://www.cnbc.com, September 6, 2019.

Temporary tariffs fired as first shots are now looking permanent and at higher rates than initially advertised. Opposing countries have shifted buying plans, with long-term implications. Company supply chains have been dislocated, and they will never go back to their pre-trade war conditions, as post-trade war long-term risks will remain in the psychology of business executives and have to be managed through supply-chain diversification. Tariffs are a tax on trade, and regardless of who pays the tax; trade is hurt. Thus, global trade is slowing, and as global trade slows, so does global economic growth – Bluford Putnam, “Trade War: Everything Has Changed,” September 4, 2019, https://www.cmegroup.com.

Continue reading…

MMA Weekly Column: September 2, 2019

U.S. markets will be closed on Monday in observance of the Labor Day holiday.

REVIEW AND PREVIEW:

Republican Sen. Thom Tillis is pushing for an investigation into the Federal Reserve’s independence, after a former agency president suggested policymakers should punish President Trump for the U.S.-China trade war by allowing the economy to tank, hurting his 2020 re-election chances. A member of the Senate Banking Committee, Tillis said he planned to ask the chairman, Sen. Mike Crapo, R-Idaho, to hold a hearing regarding Fed independence… Trump’s frequent criticisms have raised concerns about the independence of the Fed — prompting four former chairs to stress, in a Wall Street Journal op-ed, the need for the central bank to remain free of short-term political pressures. “It is critical to preserve the Federal Reserve’s ability to make decisions based on the best interests of the nation, not the interests of a small group of politicians,” wrote Paul Volcker, Alan Greenspan, Ben Bernanke and Janet Yellen, who have all, at one point, headed the Fed, appointed and reappointed by six different presidents, both Republican and Democratic. – Megan Henney, “GOP Senator Calls for Probe into Fed’s Independence,” https://www.foxbusiness.com, August 30, 2019.

Continue reading…

MMA Weekly Column: August 26, 2019

REVIEW AND PREVIEW:

Stocks fell on Friday after President Donald Trump ordered in a series tweets that U.S. companies find alternatives to their operations in China. “Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing… your companies HOME and making your products in the USA,” Trump tweeted. “The threats always been out there but there’s been no need to provoke that,” said Art Hogan, chief market strategist at National Securities. “It’s almost like the administration was expecting the Fed to announce a rate cut at the Jackson hole meeting. And since Powell did not deliver, he went to defcon 5.” – Fed Imbert, “Trump Orders U.S. Companies to Look for Alternative to China,” https://www.cnbc.com, August 23, 2019.

Central banks are just getting started with monetary easing, hedge fund manager Kyle Bass said, predicting U.S. interest rates will keep falling and follow global interest rates all the way down to zero. “We’re the only country that has an integer in front of our bond yields. We have 90% of the world’s investment-grade debt. We actually have rule of law and we have a decent economy. All the money is going to come here,” Bass, founder and chief investment officer of Hayman Capital Management, told CNBC on Tuesday.– Fred Imbert, “Kyle Bass Says U.S. Interest Rates Will Follow the Rest of the World to Zero – “This is Insane,” https://www.cnbc.com, August 20, 2019.

Continue reading…

MMA Weekly Column: August 19, 2019

REVIEW AND PREVIEW

The yield curve is blaring a recession warning. The spread between the U.S. 2-year and 10-year yields on Wednesday turned negative for the first time since 2007. Such a development has occurred ahead of each and every U.S. recession of the last 50 years, sometimes leading by as much as 24 months. “Historically, the 2-10 has had better predictive ability of recession than equities,” Sri Kumar, president of the Santa Monica, California-based Sri-Kumar Global Strategies, told Fox Business. Jonathan Garber, “Recession Indicator, with Perfect Record Flashing Red,” https://www.foxbusiness.com.

The contrast is absolutely exquisite.

As I sit here in the Castello di Montegufoni, a 12th century castle nestled in the rolling hills of Tuscany, Italy, listening to the sound of a gentle wind rustling the leaves of stately trees outside my window on a lazy Wednesday afternoon, while the sublime peach-colored light of the comforting Sun passes in and out of shadowy patterns forming across the splendid renaissance paintings on my ceilings and walls, I realize what a transcendent moment this is in my life. You see, I just got married to the most beautiful woman I have ever met, in the most perfect wedding ceremony, on a Rhine River cruise ship hired for this special event, consisting of 140 of the most beautiful people in the world – family and friends – that I know.

Continue reading…