Mike
Lipper’s Monday Morning Musings
American
Voters Win & Lose
Editors:
Frank Harrison 1997-2018, Hylton Phillips-Page 2018
Probable Real Winner in
November
While it is unknown which
candidate will be elected President, the probable real winner is the American
voter. Unfortunately, victory comes at the price of worse government.
In almost every poll
taken, it is clear most voters are unenthusiastic about the numerical winner. If
the number of unenthusiastic and non-voters were aggregated, they would likely
represent the majority of the country. For all intents and purposes, based on
todays’ perceptions, the occupant of the White House will be a “lame duck”. The
President will have limited influence on those occupying seats in Congress for
2026 and 2028. As most Americans prefer Congress pass very little legislation, they
are the likely winners in 2024.
However, the voters are
also losers. While members of Congress will either wear red or blue uniforms, but
in meeting rooms they will split into numerous caucuses. As the number of voting
groups goes up, compromises will produce the weakest bills. More importantly,
none of the splinter groups will have national campaign chests or the talent of
the national committees. Odds are the US structure will look similar to the less efficient European Parliaments. A
factor likely to slow international agreements.
Chairman Powell Attempts
to Teach Economics
In the press conference following
Chairman Powell’s testimony before the Houses of Congress, he indicated that
interest rates are unlikely to be the main weapon used to bring down inflation.
Furthermore, he said it is possible the “Fed” is likely to raise interest rates
under certain conditions.
This pronouncement came
as a rude shock to those viewing control of short-term interest rates as controlling
inflation and the economy. The Board of the Federal Reserve System made it unanimously
clear that the causes of inflation are multifaceted
and that control of short-term high-quality rates would not control inflation.
The rate of inflation is
an inexact measure of the rate of change in prices, as there are many influences on the aggregate
level of price changes. These influences can be ranked and put into three broad
groups, governments, private sectors, and natural forces.
Their impact on inflation
is not well-understood. Too much attention is focused on government-imposed income
taxes. Also important are business taxes, estate formation and related taxes, and
regulations of permitted actions. Additionally, State, Municipal, and foreign
taxes can also be inflationary. Changes in demographics, climate, technology,
and wars also have an impact, which is beyond the purview of the Fed and
Congress. While there are a few more narrowly focused inflation measures, they
are not generally used in making decisions. Bottomline, inflation should not be
treated as a single number of any precision.
News That May Impact Security Prices
- 16 states still have employment rates below pandemic levels, with New York and California leading the list.
- We don’t measure the flight from the US dollar correctly, as we don’t include the purchase of Bitcoin, Gold, Manhattan Real Estate, and other hard commodities requiring the exchange of dollars.
- Narrowing high yield spreads.
- EPS growth leveraging revenue growth.
- The ratio of AAII Bullish views to Bearish is near a record 2.2 times.
- Private Capital is short of opportunities and talented staff.
- Defaults are expected to grow.
- Trading liquidity to dry up with a switch to smaller caps.
Please
share your reactions so we can learn.
Did you miss
my blog last week? Click here to read.
Mike
Lipper's Blog: Fragments Prior to Fragmentation - Blog 829
Mike Lipper's Blog: Collateral
Rewards, Risks, & Opportunities - Weekly Blog # 828
Mike Lipper's Blog: Alternative Futures - Weekly Blog #
827
Did someone
forward you this blog?
To receive
Mike Lipper’s Blog each Monday morning, please subscribe by emailing me
directly at AML@Lipperadvising.com
Copyright ©
2008 – 2023
Michael
Lipper, CFA
All rights
reserved.
Contact
author for limited redistribution permission.
No comments:
Post a Comment