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Lawrence Fuller  

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  • Fed Funds Not So Easy: Major Implications For Stocks [View article]
    Greenspan held his entire portfolio in Treasuries as long as he was Chairman. I suspect the same of Yellen and Bernanke during their tenure. They make millions when they retire giving speeches and making appearances, just like every other politician that cashes in their so-called public service. They can easily afford to stay out of the market during their tenure.
    Mar 20, 2015. 08:32 PM | 5 Likes Like |Link to Comment
  • Fed Funds Not So Easy: Major Implications For Stocks [View article]
    Wow, I couldn't disagree more with that statement James, respectfully. The stock market rally is HER ONLY ACCOMPLISHMENT> I do not believe that monetary policy has any bearing on employment or inflation at this point, and it hasn't had any impact for some time. It is an extra $3 trillion in liquidity, leveraged at zero interest rates, propping up risk asset prices on a global basis, period. It probably is having an impact on a chalkboard in some classroom discussing economic theory, but not the real world. There is no connecting the dots between QE or ZIRP and the creation of a job that would not have been created without it.
    Mar 20, 2015. 08:29 PM | 11 Likes Like |Link to Comment
  • A Bear Market Is Unlikely In 2015 [View article]
    The composition of aggregate household debt data, in other words how each particular group is doing, has everything to do with the sustainability of GDP growth and corporate earnings. What we are experiencing a slow bleed or deterioration in the data because so many are not participating. This is why the GREAT GAS PRICE WINDFALL hasn't resulted in a surge in other areas of consumer spending as so many brilliant Wall Street strategists have been predicting (they live in a bubble). If this economy were a hoops team, its March after all, you'd have one guy scoring all the baskets while the other four watched from the bench.
    Mar 14, 2015. 09:39 AM | 1 Like Like |Link to Comment
  • A Bear Market Is Unlikely In 2015 [View article]
    It most certainly is - its a revolving door - GOVT to Wall Street to GOVT back to Wall Street.
    Mar 14, 2015. 09:33 AM | Likes Like |Link to Comment
  • A Bear Market Is Unlikely In 2015 [View article]
    The latest net worth report breaks it down by demographic, and it is a major issue because the wealthy invest their disposable income, while the other 90% spend most of theirs. Investing disposable income in the stock or bond market does nothing for GDP. Spending it at WalMart does a lot. Income inequality, or in this case, debt levels among demographics has everything to do with GDP for this reason. The default rates on sub-prime auto loans is nearly double what it was pre-crisis at 3.5%. The student loan issue at 1.3T is an enormous problem, default rate at double-digits.

    The deficit has bottomed. It will increase from here on out. Debt to GDP is already over 100%. I don't like to play the game of excluding what the Fed holds, as all this debt will be rolled over to the public as it matures.
    Mar 14, 2015. 09:30 AM | 8 Likes Like |Link to Comment
  • A Bear Market Is Unlikely In 2015 [View article]
    Again James,

    The "aggregate" is what you are talking about. If Jamie Dimon walks into a WalMart, and you take the aggregate net worth of everyone in the store, then divide it equally, everyone is a millionaire. But they are not! Most don't have two dimes to rub together. Many of these economic statistics are hogwash, because they don't address the wealth divide, which is sucking the life out of this economy. This is why our economic growth is so poor. There has not been a broad recovery with all participating. It has been very narrow, with some doing very, very well (thank you Fed) and many, many more doing poorly.
    Mar 13, 2015. 03:09 PM | 21 Likes Like |Link to Comment
  • A Bear Market Is Unlikely In 2015 [View article]
    I don't agree with you on the issue of household debt. If you focus on gross numbers, I think your missing the big picture. You have to look at where the debt is concentrated, in the lower and middle income households. The huge improvement in upper income households skews the numbers overall. Debt to income and net worth for lower/middle income households has steadily increased, which is largely why we are not seeing real growth in consumption in this demographic.

    I'm not sure I'd say public debt levels are not worrisome either, how is 100% + debt to GDP in the US not worrisome? And we are still running deficits that are likely at a low point and headed higher from here on out.
    Mar 13, 2015. 03:04 PM | 8 Likes Like |Link to Comment
  • Beware Chasing QE [View article]
    Papers that come out of the Fed Bank of NY? Hmmmmmm......

    I think you are applying what I am saying as an academic, much like the Fed practices monetary policy. I am talking about the real world, and how monetary policy impacts the real economy and financial markets. I could write 10 pages about this subject, but not on this thread obviously. I will respectfully agree that we simply disagree.

    Lastly, I'll address your comment -
    The bottom line is that as bad as the Quantitative Easing Policy is, no one has an alternative policy that will stimulate more economic growth or control deflation better.

    Continuing with a bad policy because there are no alternatives makes no sense, that isn't a reason to maintain a bad policy.

    There are alternative approaches, as I've mentioned, on the fiscal side, but they haven't taken place. So maintaining a bad policy is not a solution to that.

    Given the numbers we have seen today, its hard to say that the Fed's policy is controlling deflation. And it certainly isn't stimulating economic growth that wouldn't have happened on its own.
    Mar 13, 2015. 12:54 PM | 1 Like Like |Link to Comment
  • Beware Chasing QE [View article]
    Raising short-term interest rates from zero bound today would not stifle economic growth, it would stifle speculation in financial markets, and it may actually stimulate economic growth. QE is a different story all together. The point of QE is to address liquidity in the financial system, and there has been ample liquidity for some time/ excess reserves. What has been holding back credit creation is qualified borrowers and demand for credit from those that can borrow. You can't solve that with extra liquidity or lower interest rates. You solve that through investment in real assets (not financial), that leads to higher skilled/higher pay job creation, in my opinion. Perhaps the ECB learned something from our experience by including $120 billion infrastructure project as a part of their $1 trillion experiment.
    Mar 13, 2015. 06:33 AM | 1 Like Like |Link to Comment
  • Beware Chasing QE [View article]
    It will produce more savings for consumers. It may also lead to more demand for credit, as opposed to less, with concerns that interest rates will rise in the future. I think leaving interest rates at zero is deflationary in the current environment. It certainly isn't stimulating demand, except for financial speculation.
    Mar 12, 2015. 09:04 PM | 1 Like Like |Link to Comment
  • This Is Why The Stock Market Is Tumbling [View article]
    What interval do you speak of Salmo? Seasonal?
    Mar 12, 2015. 08:44 PM | Likes Like |Link to Comment
  • Beware Chasing QE [View article]
    Ah, the $64,000 question! How does the Fed reverse the damage it has done? I think its too late. It has AGAIN allowed, if not encouraged, so much leverage to build up, but this time in financial markets, and it must be unwound, which is not pleasant. I think it understands this, but has no idea to what degree. The best that it can hope for is a very slow unwind, good luck. The experiment begins in June I imagine with the first rate increase, followed by a second and a third incremental 25 basis points. It must also allow its portfolio to run off, and hope the market will absorb the new debt we are issuing each along with the near $3 trillion that has to be rolled over in the Fed's portfolio of holdings.
    Mar 12, 2015. 07:46 PM | 1 Like Like |Link to Comment
  • Beware Chasing QE [View article]
    The Federal Gov't doesn't fund itself at the overnight rate. It issues treasury debt all along the yield curve. The Fed's OMO lowered those rates across the board. I also think another objective of the Fed was to rebuild the balance sheets/ and bottom lines of the banks/investment banks largely responsible for the financial crisis.

    Listen, we just have a ideological disagreement as far as the Fed is concerned, and that's ok. I respect your opinion, but I simply think this institution does far more harm than it does good.
    Mar 12, 2015. 06:20 PM | Likes Like |Link to Comment
  • Beware Chasing QE [View article]
    I beg to differ on that front. I think one of the objectives of QE was to finance the deficits we ran from 2008 to the present, and keep the borrowing costs of the federal gov't manageable. As for Fed policies, it is limited in what it can do, and I think it has stepped beyond the bounds of what it should be allowed to do. The problems in the US are ones that the Fed can not, and should not, be addressing - they are structural and need to be addressed with fiscal policy.
    Mar 12, 2015. 05:28 PM | Likes Like |Link to Comment
  • Beware Chasing QE [View article]
    I think that ZIRP and QE were brilliant at the beginning. Yet they were largely due to the Fed's inability or refusal to regulate. ZIRP and QE should have bought Congress time to address our issues with fiscal policy. Instead, they did what they always do - nothing. What they did do was nothing more that silly consumption-based stimulus that simply stole forward demand. If the Fed had normalized policy long ago and ended QE soon after the expansion had started, we wouldn't be in the mess we are today.

    We would have had to address our mammoth debt and deficit issues, because the Fed wouldn't have circularly financed the gov't and made the deficit look better than it really is.
    Mar 12, 2015. 04:57 PM | Likes Like |Link to Comment