• State of the Global Economy

    State of the Union This week we heard President Trump’s State of the Union address, during which he called for a bipartisan push for an infrastructure bill and lowered drug prices along with continued spending on defense. While spending $1.5 trillion on infrastructure over the next decade was part of Trump’s presidential campaign, the passing of an infrastructure bill seems unlikely without raising taxes to fund this level of spending. In terms of defense spending, the government is expected to spend around $716 billion in 2019.  Moral of the story: Depending on the ability for Congress to play nice and actually make things happen, there are winners and losers in…

  • Reassurance

    Fed speak  The Fed held its first policy meeting of the year this past week and let me tell you, the markets were ecstatic at what they heard. The FOMC voted unanimously to keep rates unchanged, which was the consensus expectation. The real game changer here was the clear messaging from Fed Chairman Jerome Powell after the policy meeting: the Fed intends to be patient and consider economic conditions as it determines future interest rate and liquidity moves. Stocks rallied in a big way on this reassurance.  Moral of the story: This is the second time the Fed has given us confidence that it won’t determine policy with a blind eye…

  • Anarchy No More

    Light at the End of the Tunnel Early Friday afternoon, we finally got news that Congress had reached a conclusion to temporarily reopen and fund the government for three weeks, and the bill was signed by President Trump late Friday night. Once the government opens, both parties are expected set up a conference committee to propose an appropriations bill for Homeland Security. Of course, the President has threatened to shut down the government again if he doesn’t get funding for his wall (or just declare a national emergency and build the wall without Congressional approval). Time will tell whether legislators can find a productive resolution, which could also include a potential…

  • Earnings & Warnings

    Trade Charade On Thursday, we got news that US officials were thinking about easing some of the tariffs against China, which sent stocks higher. Then later that day, the White House came out and said loljk that’s not actually happening now, which brought stocks down again. But then China extended an olive branch on Friday by offering to increase its purchases of US goods by more than $1 trillion over six years with the goal of reducing the annual US trade deficit to zero, which sent stocks soaring again on Friday. This might go down as the most “on again, off again” relationship story of 2019, brb let me grab my bowl of popcorn…

  • All about the Consumer

    Retail Me Not Macy’s was definitely not giving thanks for their parade to the bottom of the board this week, falling 17.7% on Thursday after they reduced their guidance for sales and earnings after upgrading it only two months ago. The catalyst? Consumers had put up the best holiday sales numbers in six years at the beginning of the holiday season (Black Friday), but then basically just stopped shopping until Christmas so retail sales were really weak in December. Numbers from Target and Costco were a little more promising but the headline news about Macy’s brought down stocks across the entire retail sector – Kohl’s, L Brands, and Nordstrom were among…

  • New Year, Same Drama

    Shutdown showdown The government shutdown has been going on for two weeks and counting. The crux of the issue? $5B to build a border wall. The irony? The economic costs of this shutdown have probably already exceeded $5B because of Wages being paid to federal workers who aren’t working (I’ve heard this is every millennial’s dream – get paid to do nothing, is that true??) Lost revenue the government can’t collect from foregone services like permits and fees The costs to the broader economy from this disruption The government shutdown in 2013, which lasted 16 days, lowered quarterly GDP by 0.2%-0.6% ($2B-$6B). GDP is impacted by both consumer spending and…