2018

Fear political populism and the loss of democracy but embrace economic populism as necessary.

Sometimes governments choose to mimic the private sector and amplify the trend in the economy. This is called pro-cyclicality - and in worst case scenarios, it can be quite destabilizing.

This month, we have seen an unprecedented increase in volatility. When the fundamentals take a knock, that’s when we should worry though. Let’s wait for the CPI next week and revisit this conversation.

With the Fed already on notice about inflation because of “low, low unemployment”, massive amounts of new deficit spending will only move up their timetable. And bond rates will rise as a result.

A big upward revision in the data would be what the President would call an unwelcome ‘good news’ surprise.

The short vol trade may now be over. Bond yields will again reach levels that causes angst for equity markets. And equities will tumble. Rinse and repeat.

Yesterday’s market meltdown - and today's reaction - reduces the risk that the Fed will over-tighten, taking froth out of an over-extended market.

Hallmarks of recession are all around about the time they happen if one looks close enough — certainly in 2008. I don’t think we are in a recession by any stretch, right now — not even close.

The short-term solution reached last month to extend the US federal government's funding expires on Thursday.

Reuters has done a state-by-state analysis of wage data in the US, showing average pay rising over 3% in more than half of US states. This puts more pressure on the Federal Reserve to raise interest rates.