Mixed signals from the Fed is causing bond and stock markets to interpret our economic prospects in a wildly different way.
The Fed is responsible for setting short term interest rates. Normally, that’s the main tool the Fed uses for having the economy speed up or slow down. But what do you do if short term interest [...]

The top story this week is the July employment report from the Bureau of Labor Statistics -the BLS.  Wall St expected 100,000 new private payroll jobs created but this would be offset by losses in jobs from census workers, and from state, local, and federal workers of around 165,000. So on the whole, the market [...]

What do you think it means when a Federal Reserve Governor (the St Louis Fed Governor – this week) publishes a statement indicating the Fed should begin buying US Treasuries to help stop deflation?   It’s a sign that the Fed sees a weakening economy, that deflation is here, and that they’re out of bullets. In 2009, when the Fed [...]

I have been working from the premise that once the federal government stimulus is removed, and once 2011 tax increases kick in, that our economy will enter the second leg of a recession -the double dip. In a broad sense, I arrive at this conclusion because I maintain that the pain of unwinding a quarter [...]

I won’t get into the gory details of economics, lest you skip reading these newsletters altogether. But consider please, the possibility that Keynes was wrong.
There are several widely followed schools of thought / philosophies in the field of economics (called the dismal science was good reason).  John Maynard Keynes is arguably the best known economist and [...]

Here are some updated stats on our economic recovery:

The US trade deficit is falling to the 3% of GDP range (from over 6%). This is good news. It means our cheaper dollar is helping exports and making imports more expensive. This in turn reduces our need to borrow from foreigners (other things being equal).
20% of [...]

The Fed is due to end purchases of mortgage backed securities by the end of March. That will leave it with $1.25T worth of mortgage backed bonds. This extraordinary measure was taken to ensure mortgage rates remain low in order to make home purchasing easier (so we could reduce a mountain of housing inventory). We’ll [...]

In order to ensure that large banks did not fail earlier this year, banks were told to repair their balance sheets. They were:
-          Force fed money from the feds to ensure their balance sheets showed a solvent bank.
-          Told to raise equity (issue more shares)
-          Told to raise money from bond issuances.
In so doing, we [...]

While at a conference for CPAs, I had the opportunity to listen to someone from the Federal Reserve Bank System speak. He indicated that the Fed sees unemployment peaking in 1Q 2010. Unfortunately he showed a graph that was put together 2 months ago that showed projected unemployment rates for September and October that were [...]

The Japanese economy went through 15 years of stagnation and 4 years of near zero growth since its peak in 1990. Since the reasons for their economic melt-down and ours are very similar, we can learn from their efforts to right their economy.
What Happened in Japan:
• The world’s 2nd largest economy was expanding at an [...]