“It’s hard to make predictions, especially about the future,” Yogi Berra famously said. The S&P 500 pushed to a new high last week and the yield on the 10 year U.S. Treasury Bond dropped to the year’s low May 15—confusing signals. Ordinarily, a rising stock market anticipates higher economic growth, and higher interest rates usually
Janet Yellen takes the helm of the Federal Reserve February 1. She will be the first female head of the Central Bank. Just what kind of leader will she be? That’s the question we ask this week. She is a first rate academic uniquely qualified to address the current labor market malaise. She cares more
In a much anticipated statement, the Federal Reserve on December 18 announced a change in monetary policy—that it will begin to taper its large scale asset purchase program. The statement was coupled with additional guidance that interest rates will stay low for a considerable period. The statement’s impact is more a tweak than a decisive
The Federal Reserve met last week and it made no changes to its large scale asset purchase program. The late spring/early summer experience, where its communications about tapering the program were bungled, drove up interest rates, in expectation that stimulus would be withdrawn in the near future. As markets reacted, the Fed backtracked, and since
Inflation rates—a general increase in prices--are very low. With Fed officials talking openly about low inflation and the risk of deflation, it is appropriate to examine inflation risk and how to address it. High levels of inflation erode purchasing power and the value of stocks and bonds. This week we review aspects of inflation. The
Is the Fed’s policy of quantitative easing effective? This question is particularly relevant as the Federal Reserve meets September 17-18 to discuss tapering of its large scale asset purchase program. That conversation has caused markets to convulse this summer.
What are the prospects for investing in real estate in a potential rising interest rate environment? The first two articles this week address the return prospects for core real estate in a rising rate environment. The third article is an update on the phenomenon of private equity funds purchasing homes for long-term rental.
This week we examine the topic of financial repression, the term to describe the deliberate action of government to hold down interest rates below inflation. It represents a tax on savers and transfers benefits to government and other borrowers that would otherwise be spent elsewhere.
Since May 22, markets have been volatile. This week we explore some of the reasons, review a colorful essay on the effects of Fed policy, and what Fed policy is doing to long-term care insurance rates.
The Dow Jones Industrial Average and the S&P 500® Index recently reached all-time highs. Yet, a seeming disconnect between the economy and the stock market exists. In this blog we focus on news events that clarify the economic situation and Fed policy and the apparent disconnect with the level of the major stock indexes. We also mention an item in the President’s budget proposal that is central to this region’s economy.