....Per Moody’s, there were no rated muni defaults in 2018.
...Trump should stop bashing Powell and start directing his administration to issue 100 year TIPS. The world would buy a lot of them and the United States could achieve remarkable low cost permanent financing for its many needs and wants. ...
1.... At 30% on all China sourced imports, the federal revenue would grow to about $200 billion annually. The tariffs amount to a sales tax imposed on American consumers and businesses. For a metaphor, This amount would be roughly equal to a national increase in the gasoline tax of about $2 per gallon. That is the trajectory of the present thresholds of Trump-Navarro trade war policy
2. Will Trump use the Exchange Stabilization Fund (ESF) as a supplemental weapon in the trade war? In our opinion this move would significantly undermine the long-term stature of the US and of the US dollar as a world reserve currency. The mere fact that Trump has alluded to using the ESF (and to wanting a weaker dollar) makes it now an unpredictable issue and raises risk premia.
... Any creditworthy borrower can obtain financing easily, and any refinancing is happening or has happened. There is not a lot left to “milk” out of the system.
4. Lastly, there is a developing body of research that estimates how much damage negative rates and even very low rates are doing. Torsten Slok has published a partial list of those papers. Essentially, negative-rate policies and very-low-rate policies eventually become counterproductive and act as contractionary forces. See Brunnermeier and Koby, “The reversal interest rate,” January 30, 2019 (https://www.google.com/url?
AOvVaw2dJTpeNxHCREsdw_ovQtwD).
Quantitative accounts have been defensive for months; they are now redeploying as indicators confirm opportunity and market based prices indicate entry. When the inflation adjusted interest rate is zero or lower, money’s usage is free. This is bullish for many asset prices.
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