Tag Archive: tax reform
China Surprises While the Dollar Begins Week Softer
Overview: The new week, which features the BRICS
meeting and the Jackson Hold symposium is off to a quiet start. The failure of
Chinese banks to pass through last week's 15 bp cut fully into the lending
prime rates was a major disappointment and it is not yet clear the logic. While
the yuan and yen are softer, as are more local Asian currencies, while most of
the G10 currencies are posting small gains against the greenback. Gold is
trading little...
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Poor US Data Cast Doubts on New Found Hopes of a Soft-Landing
Overview: Yesterday's string of dismal US economic
data delivered a material blow to those still thinking that a soft-landing was
possible. Retail sales by the most in the a year. Manufacturing output fell by nearly 2.5% in the last two months of 2022. Bad
economic news weighed on US stocks. The honeymoon of New Year may have ended
yesterday. The US 10-year yield fell below 3.40% for the first time since the
middle of last September. The Atlanta...
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The End Game Approaches
The pendulum of market sentiment swings dramatically. It has swung from nearly everyone and their sister complaining that the Federal Reserve was lagging behind the surge in prices to fear
of a recession.
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The Euro and Sterling Remain within Tuesday’s Ranges
Overview: A new record high in the S&P 500 yesterday and news that Evergrande had made an interest rate payment failed to lift most Asia Pacific bourses, though Japan and Hong Kong, among the large markets, posted modest gains. The Dow Jones Stoxx 600 is pushing higher in the European morning to put its finishing touches on its third consecutive weekly gain. US tech is trading off, and this is weighing on the NASDAQ futures while the S&P...
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FX Daily, July 13: Headline US CPI may Decline for the First Time in a Year
New record highs in the US S&P 500 and NASDAQ coupled with China allowing Tencent to acquire a search engine helped lift Asia Pacific equities. It is the first back-to-back by MSCI's regional index for more than two weeks. Australia's market was a notable exception.
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FX Daily, July 12: Markets Adrift ahead of Key Events
The new week has begun quietly. The dollar is drifting a little higher against most major currencies, with the Scandis and dollar-bloc currencies the heaviest. The yen and Swiss franc's resilience seen last week is carrying over.
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FX Daily, July 07: Dollar Stabilizes at Elevated Levels After Surging Yesterday
The dollar has steadied after surging yesterday and has so far retained the lion's share of its gains, though it remains lower against most major currencies today. The dollar-bloc and Norwegian krone are the best performers while the yen is underperforming.
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Buybacks Get All The Macro Hate, But What About Dividends?
When it comes to the stock market and the corporate cash flow condition, our attention is usually drawn to stock repurchases. With good reason. These controversial uses of scarce internal funds are traditionally argued along the lines of management teams identifying and correcting undervalued shares. History shows, conclusively, that hasn’t really been true.
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Bi-Weekly Economic Review: A Weak Dollar Stirs A Toxic Stew
We received several employment related reports in the first two weeks of the year. The rate of growth in employment has been slowing for some time – slowly – and these reports continue that trend. The JOLTS report showed a drop in job openings, hires and quits.
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Global Asset Allocation Update
There is no change to the risk budget this month. For the moderate risk investor the allocation to bonds is 50%, risk assets 45% and cash 5%. The extreme overbought condition of the US stock market persists so I will continue to hold a modest amount of cash. There are some minor changes within the portfolios but the overall allocation is unchanged.
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Bi-Weekly Economic Review: Animal Spirits Haunt The Market
The economic data over the last two weeks continued the better than expected trend. Some of the data was quite good and makes one wonder if maybe, just maybe, we are finally ready to break out of the economic doldrums. Is it possible that all that new normal, secular stagnation stuff was just a lack of animal spirits?
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Bi-Weekly Economic Review: Who You Gonna Believe?
We’ve had a pretty good run of data recently and with the tax bill passing the Senate one would expect to see markets react positively, to reflect renewed optimism about economic growth. We have improving economic data on pretty much a global basis. It isn’t a boom by any stretch of the imagination but there is no doubt that the rate of change has recently been more positive.
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Global Asset Allocation Update
There is no change to the risk budget this month. For the moderate risk investor the allocation to bonds is 50%, risk assets 45% and cash 5%. The extreme overbought condition of the US stock market did not correct since the last update and so I will continue to hold a modest amount of cash.
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The Fetid Swamp of Tax Reform
The likelihood that either party will ever drain the fetid swamp of corruption that is our tax code is zero, because it's far too profitable for politicos to operate their auction for tax favors. To understand the U.S. tax code and the endless charade of tax reform, we have to start with four distasteful realities: 1. Ours is not a representational democracy, it's a political auction in which wealth casts the votes that count.
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Bi-Weekly Economic Review: Gridlock & The Status Quo
The good news is that the economy just printed its second consecutive quarter of 3% growth, a feat not accomplished since Q2 and Q3 2014. The bad news is that the growth spurt in 2014 was better, quantitatively and qualitatively. Those two quarters produced gains of 4.6% and 5.2% (annualized) in GDP, much better than the most recent 3.1% and 3% prints of Q2 and Q3 2017.
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Global Asset Allocation Update
The risk budget this month shifts slightly as we add cash to the portfolio. For the moderate risk investor the allocation to bonds is unchanged at 50%, risk assets are reduced to 45% and cash is raised to 5%. The changes this month are modest and may prove temporary but I felt a move to reduce risk was prudent given signs of exuberance – rational, irrational or otherwise.
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Bi-Weekly Economic Review: Yawn
When I wrote the update two weeks ago I said that we might be nearing the point of maximum optimism. Apparently, there is another gear for optimism in this market as stocks have just continued to slowly but surely reach for the sky.
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FX Weekly Preview: Three on a Match: US Tax Reform, ECB and Bank of Canada Meetings
Busy week of economic data and central bank meetings, and reaction to Spanish developments and Japan and Czech elections. Focus below is on the Bank of Canada and ECB meetings and tax reform in the US. The biggest challenge to tax reform is unlikely on the committee level but on the floor votes, especially in the Senate, in a similar way the stymied health care reform. US and German 2-year rates are diverging the most since the late 1990s and...
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Bi-Weekly Economic Review: As Good As It Gets
The incoming economic data hasn’t changed its tone all that much in the last several years. The US economy is growing but more slowly than it once did and we hope it does again. It is frustrating for economic bulls and bears, never fully satisfying either. Probably more important is the frustration of the average American, a dissatisfaction with the status quo that permeates the national debate. The housing bubble papered over the annoying lack of...
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