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In a recent column Daily Wire editor Ben Shapiro lamented a central conflict that he contends defines democratic politics: the conflict between truth and desire. Shapiros view is that conservatives arent wrong when they say they cant compete with Santa Claus its far harder to draw voters to your side by telling them they wont get something than by telling them theyll get real estate on the moon.
Though he may have mis-written, Shapiros analysis explains why conservatives havent consistently controlled the House, Senate, White House, and everything…

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Risk happens fast and the Trump trade may be over The administration’s first initiatives have been ineffective A potential stock market top may now be in place
A Less Effective White House: After Friday’s failed health care bill, President Trump’s future tax, regulatory and fiscal initiatives will be more difficult to accomplish. I have expected this outcome for several months; others may soon come to the same conclusion.
We soon may learn that:
The president has and will continue to be educated that there is a fundamental difference between the art of the…

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There was bound to be a political commotion when the Trump administration released its 2018 budget. After all, it isn’t every day that the White House proposes deep cuts in agency spending: for 2018, the Environmental Protection Agency would be down 31%; the State Department, 29%; the Department of Education, 14%; and the Department of Transportation, 13%.
Outrageous, screamed critics. Good programs are being gutted. Surely true. But some ineffective or unimportant programs would also be gutted. The reflexive horror from Congress and (yes) the media to spending cuts reveals a central cause of…

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Sage words indeed, and likely true.
After all, Herbert Hoover had the biggest honeymoon of all and look what happened down the pike.
The markets tripled under two socialist presidents (Bill Clinton and Barack Obama) and slid 35% under the pro-business George W. Bush administration.
Even Ronald Reagans first two years in office were rocked by a 25% plunge in the stock market after a brief, though powerful, bounce following the November 1980 election.
What you see isnt always what you get, and it is likely a mistake to extrapolate todays market performance into the…

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During the middle 2000’s when Alan Greenspan’s Fed endeavored to change the outward monetary policy stance to “tightening”, it was not unusual for some divergences to have emerged. One of those was between the federal funds rates, either target or effective, and Treasury bill equivalent yields. Under a hierarchical system, this was not unexpected or alarming except as when the distance between them became unusually large (2006). Federal funds are unsecured interbank transactions whereas Treasury bills are near equivalent to them except secured by lending cash to the federal…

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“What Washington needs is adult supervision.” –Barack Obama Yesterday’s opening missive, ” Wall Street Blues,” depicted an overvalued market, moderating U.S. economic prospects, elevated investor optimism and a new Administration that, arguably, appears to be doing nearly everything it can do to jeopardize its legislative agenda (which, despite protestations in some parts, has been crucial to the S&P index’s impressive run since the November election). The latter is an important point, though Jim “El Capitan” Cramer, and some others, have disputed President Trump’s prospective market…

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The American Health Care Act (AHCA) has been proposed by House Republican leaders as a way to repeal and replace the Affordable Care Act (Obamacare). The plan was met with derision on the left and from much of the right. Liberals simply want to preserve Obamacare or expand it, so a plan to repeal and replace it with anything short of universal, single-payer nationalized healthcare will fail to gain support from Democrats. Conservative Republicans dislike the plan because it replaces Obamacare subsidies with refundable tax credits and leaves too many federal regulations in place. They believe…

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While helping my daughter run her first lemonade stand, a nice neighbor approached and asked what charity we were raising money for. But, we werent raising money for anything. My daughter had just started her first business, and I was proud of her for that. So, I looked at the neighbor and said that we were working for profit, not charity. Given the recent controversies surrounding Unilevers CEO, Paul Polman, maybe they should consider consulting my daughter about the value of profit seeking as the company conducts its comprehensive review.
The value of profit is often overlooked by the…

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There is no market sector that has been as embraced as heartily as financials
But, the domestic economy is slowing, the Trump regulatory and fiscal policy put may be waning, the yield curve is flattening, interest rates are contained, protectionism is rising around the world and bank valuations are back to pre-crisis levels. Sell financial stocks.
“Skepticism is the chastity of the intellect; do not surrender it lightly.”
–Richard Fisher’s mother (Richard is the former president of the Federal Reserve Bank of Dallas)
Group stink has never been more conspicuous…

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Todays regulators must react to fast-paced technological change like ridesharing services offered by Uber and Lyft. These regulators are making decisions that will likely have a big impact on the pace and direction of innovation. If they are not careful, their policy interventions could hurt both the economy and consumers.
For example, earlier this month, Uber lost a court battle in the UK that would require London cabbies to pass an English test. Lawyers for Uber argued the language requirement would cause 33,000 existing drivers to lose their livelihoods, and that the rule is excessive….

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With Janet Yellen expected to depart after her first term, interviewers frequently ask me whom I would choose as her replacement as Chairman of the Federal Reserve. My answer is always the same: David Malpass.
While the Federal Reserve presently serves no useful purpose such that its shuttering would affect a tiny percentage of the U.S. whole, the reality is that it still exists. And its going to exist for a long time.
The Fed will always be with us simply because politicians will never abolish what is a convenient whipping boy every time the U.S. economy slows. Even though the…

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The Office of the Comptroller of the Currency is refashioning itself to be innovation friendly. It started appropriately by admitting that it had a problem: “a low risk tolerance for innovative products and services.” It then set out to remedy the problem by, among other things, setting up an innovation office and proposing a special purpose national bank charter for fintech firms. That’s all well and good, but the proof of the pudding is in the eating. Based on the terms that the OCC laid out in its recent draft document on “evaluating charter applications from financial technology…

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President Trump’s “skinny” budget was released last week and you’d think the world has already ended because it includes cuts to a number of agencies. Typically, a president proposes a comprehensive, detailed budget thousands of pages long. But that’s a monumental task just weeks after assuming office, so new presidents present a smaller budget followed by the more detailed one later. Trump’s “skinny” budget, though, is briefer than usual because it only deals with the small part of spending the Washington crowd refers to as “discretionary” spending. Before thinking that…

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“On the road from the City of Skepticism, I had to pass through the Valley of Ambiguity.”
–Adam Smith
Before starting this missive, I want to touch on the importance of skepticism in a marketplace that is more susceptible than ever to exaggerated moves both on the upside and the downside.
Skepticism is an important historical tool. My commentary and my ongoing market narrative is laced with skepticism.
Large skepticism leads to large understanding. Small skepticism leads to small understanding. And no skepticism leads to no understanding.
With that, why did the markets rally after an…

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The idea of a Great Moderation had been around in various pieces for some time before the 21st century. The US and even the global economy had experienced a sharp and sustained reduction in volatility across all sorts of metrics. From inflation and employment to general output (GDP), from the mid-1980s forward it seemed as if a new golden economic age had somehow been achieved. Since it had happened and because it was by contemporary accounts an unqualified positive, a great amount of scholarly effort was put forth to identify who might claim authorship of the accomplishment.
The…

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