The Economy, The Market, And A Stock Idea

The Economy

  • The new administration’s pro-growth, you’re-gonna-get-tired-of-winning attitude, has had a great psychological effect on the mid-west, the south, and middle America… drawing those once-idled now-excited workers into the labor force
  • Meanwhile, the new FOMC policy is pro-hike-up-interest-rates, in order to curb the past 8 years of pro-growth policy. The FOMC attitude is justified by one simple factor → on paper, the US economy is looking strong, specifically unemployment is low and inflation is finally approaching 2% again.
  • So, as you can see, the FOMC’s efforts to keep inflation under control (by raising interest rates) clashes with the goals of the new administration, which promised to boost economic growth above any levels seen in recent history
  • But the FOMC’s actions are quite normal and to be expected. Every 8 to 10 years the FOMC needs to shift policy because healthy economies work in cycles. It’s a balance — a give and take… 24/7 growth is dangerous. In the same way that being awake 24/7 will kill you.
  • Growth is good for an economy, but extreme rapid growth leads to extreme rapid inflation, which leads to unaffordable pricing…
  • A country at full employment leads to too much employee supply and not enough employer demand, which could lead to stagnant salary growth…
  • These two outcomes together won’t mesh well for we the people.
  • The FOMC knows this and therefore, is going into a new, more aggressive phase of draining the easy money from the financial system as the economy continues to strengthen under the new administration.
  • Chairwoman of the FOMC, Janet Yellen: “We certainly welcome stronger economic growth in the context of price stability”
  • The 2008 financial crisis marked the start of a decade of highly expansionary monetary policy (Quantitative Easing), something many people thought wouldn’t work in rehabilitating the economy. However, it accomplished what it set out to do, and the US never ran into the feared ‘negative interest rate’ problem.
  • Now economic normalization is under way.
  • As a country, we should celebrate that economic achievement. We got out of the 2008 crisis, and are headed into a brighter economic future.
  • Trump should take the raising of interest rates as a compliment… clearly the FED wouldn’t raise interest rates if they thought the economy would break under both Trump policy and tighter credit policy.
  • The FOMC’s actions indicate they feel the new administration’s policies will keep us economically resilient, and our growth won’t be hindered by the tightening of credit — I don’t understand why Trump would accuse the FED of sabotaging him. They’re paying him a compliment.
  • Investors clearly agree, and are giving our economic climate a nod of approval. The rate hike sent stocks AND bond prices higher. The Dow climbed ~100 points, almost breaking 21,000.
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Disclaimer: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of ...

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