Economic Outlook

on Sunday, 22 November 2020 16:53

The World Economic Forum in Davos, Switzerland is “where billionaires go to lecture millionaires how ordinary people live.”
James Delingpole, British writer, journalist

on Sunday, 22 November 2020 16:49

“It’s like people, including in the media (see New York Times) who call The Great Reset a conspiracy can’t read.”

 

Klaus Schwab is the founder of the World Economic Forum ~Ed

Is All The COVID Vaccine “Good News” Priced In?

Posted by ZeroHedge

on Wednesday, 18 November 2020 7:04

In discussing yesterday’s market action, overnight Rabobank’s Head of Macro Strategy Elwin de Groot, writes that following the vaccine-inspired rally, “the market seems to have reached a delicate balance now where on the one hand, many investors are willing to long beyond the temporary resurgence of the virus as there is ‘light at the end of the tunnel’, whilst others remain concerned that the upcoming months could still prove rather challenging. This balance was well-illustrated by the performance in the S&P 500 yesterday, where the market opened lower, then regained almost fully the opening losses but then slipped again towards the end of the trading session. Yes, with the S&P only a whisker from its all-time high it is obviously ‘risk-on’, but somehow if feels different.”

This point was on full display this morning when in the third consecutive good vaccine news released since Pfizer’s covid news last Monday, in which the company followed up with an increased effectiveness estimate (from 90% to 95%) which should make the company’s application for emergency US authorization be accepted smoothly, the stock response was lukewarm at best, with futures now having faded the entire post-update spike higher…CLICK for complete article

New Study Finds The Fed Put Is Very Real And Dates Back To The Mid-90s

Posted by ZeroHedge

on Tuesday, 17 November 2020 10:53

For some of us, the idea of a Fed put hasn’t even been up for debate over the last several decades. We know it exists and, in fact, most of us believe it is the Fed’s main (and perhaps only) actual mandate: making sure markets only go up.

But that doesn’t mean the rest of the “straights” aren’t catching on a little late. And to them, we say better late than never.

And so now, a new study called “The Economics of the Fed Put” featured in Barron’s appears to show conclusively that the Fed put actually exists. The study’s authors, Anna Cleslak, a finance professor at Duke University’s Fuqua School of Business, and Annette Vissing-Jorgensen, a finance professor at the University of California, Berkeley’s Haas School of Business, found “compelling evidence” of the Fed put dating all the way back to the mid 1990’s.

For their research, the authors looked at “decades’ worth of minutes and transcripts of meetings of the Federal Open Market Committee, the stock market’s performance between those meetings, and the federal-funds rate.” CLICK for complete article

Debt Continues To Spiral Out of Control

Posted by Virginia Fidler

on Wednesday, 11 November 2020 9:48

The COVID pandemic has hit the global economies like a tsunami, leaving unprecedented financial disaster in its wake. The modern world (with the possible exception of the Wehrmacht Republic) has not seen anything like it.

The U.S. government has tripled its budget deficit to $3.1 trillion in an attempt to soften the economic blow for its citizens. This is a considerable increase from the fiscal year 2019 deficit of $984 billion. The deficit is expected to make up 16 percent of the GDP by the end of the fiscal year 2020.

At the same time, the federal debt will comprise 98 percent of GDP. The situation is made worse because millions of citizens are out of work. 

Thousands of businesses have closed, either temporarily or permanently, thus cutting off sources of tax revenues for the federal and state governments. At the same time, the government has had to meet the needs of so-called entitlement programs such as Medicare and Social Security. We see a gigantic chasm between U.S. government spending ($6.55 trillion) and U.S. government revenue (3.42 trillion). Four trillion dollars have gone toward relief measures for unemployed citizens and struggling businesses. There will likely be more relief spending in the near future. The U.S. annual deficit is expected to outpace the U.S. at 102 percent of GPD. 

According to Maya MacGuineas, president of the Committee for a Responsible Federal Budget, “We should be borrowing now, but once the economy recovers, our debt cannot continue to grow faster than the economy forever.” CLICK for complete article