Skip to main content

QE Forever!

Volatility came back last week as the world began to contemplate a less intrusive Fed. Also, it seemed that people finally began to notice that the world might not be as stable as the financial markets had been implying.  Ukraine is erupting in social unrest as a large swath of its population has taken to the street to protest government corruption, China's economy is sputtering, and Iran's nuclear ambitions remain.

Adding to and perhaps at the heart of the rocky week past, the world seems to also have taken notice that the Fed just might be serious about pulling away the punch bowl of easy and abundant money. This led our stock market to a terrible week, which was benign compared to the responses in Argentina and elsewhere, as currencies began to break down in the emerging market. The chair of the IMF, Ms. Lagarde, voiced concern that this financial market collapse could very well continue and might even throw Europe into deflation if the Fed doesn't do something.

So, it seems that investors in US stocks and Argentinian Pesos have the same trade on!  Who knew?

Will the Fed acquiesce to what are sure to become more fervent calls to save the world and reaffirm its full commitment to QE?  Or will we witness financial discipline and a newfound respect for allowing the players in the markets to work things out on their own, letting water find its level?  This week should provide us with some great clues. Pay careful attention.

I'm betting on a repeat of the past, when even hinting at reducing QE led to a rapid market decline that pressured the Fed to reaffirm its commitment to continuing to save the world. Call me extreme, but I just cannot see how QE ever ends. How can a Fed Chairman explain to all who are getting crushed financially that it's better than continued intervention?  Can you imagine Janet Yellen explaining that in her first month in office?  Seems impossible to me.

Popular posts from this blog

"No, Not You. You Are Fake News."

"No, not you. You are fake news."  These were the words chosen by our president-elect to shut down a CNN reporter seeking to question him at his recent press conference. Many hearing those words surely recoiled, interpreting them as an affront to freedom and a form of censuring. I reacted quite differently, instead celebrating the moment that a strong leader decided to hold people accountable in a public manner for their actions.

Taxes and Hyperbole

There is a new tax code in the U.S., and this is indeed a “Yuuuge” deal. As far as I can tell, it is as close to an unmitigated home run for America as can be. Is it perfect? Of course, it’s not. The code retains its unwieldy size and complexity, largely as a result of compromises made in order to bribe congressmen and senators for their votes. Until we get term limits, it seems we’re stuck with a tax code that is big and complex. However, it does hit the mark on a few key issues: most every taxpayer will now pay less to the federal government (except those in states with ridiculously mismanaged economies who now will be forced to hold their state politicians more accountable); and our businesses, large and small alike, will remit less of their profits to the federal government and will be liberated to invest that savings into growth – which will surely create job and wage growth in the productive private sector.

James Harden - A Classic Case of Misunderstood Value

The last time I wrote on hoops was December 2013 when I presciently trashed Carmelo Anthony. The time has come to take out my poison pen once again to decry James Harden as a fraud. I know that Harden has amazing stats - third in scoring, first in assists, and that his team the Rockets have far exceeded expectations as they are currently the 3rd seed out west. But, I still maintain that he is an awful player.