'Forever Fed,' But Why?

Everyone has heard of the Federal Reserve Bank or “The Fed” and that it has something to do with the value of our money — and so it must be very important. But few even claim to really understand what the Fed does and how it does it.

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Adam Puff
New Highs, Still a Buy

The Dow Jones Industrials Average and S&P 500 are breathing down the neck of record highs set last Fall. Some take that as a sign to sell, time to shift out of equities and realize gains. We think that would be a mistake.

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Adam Puff
The Wizard of Oz

It feels like we are living in the Land of Oz and the Fed is the "all-powerful" wizard in control.


From just about every significant group of thought leaders – the press, politicians, economists, analysts, and government officials – the narrative of the past twelve years has been all about government and nothing about the entrepreneur. They say the crisis ended because of government bailouts and easy money. It's an artificial sugar high, covering up fundamental problems that still exist and could come back without the Fed's support.

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Adam Puff
Ten Years Ago...

It's March 8, 2009. The market's down 56% from its all-time high, unemployment is over 8% and hurtling toward 10%, it's just been reported that real GDP dropped at a 6.2% annual rate in Q4 of 2008, and it feels like the world is coming to an end. You're tired, exhausted from living though this, and you fall into a deep sleep. So deep, in fact, that you don't wake up until today, 10 years later.

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Adam Puff
The Great Boogie Man, DEBT!

Twenty-two trillion! It's a number we have been hearing a lot lately. Five years ago, it was seventeen trillion. Sometimes as a statement, sometimes a question. Debt – consumer, business, but most notably government – has a permanent spot on many investors' minds. But knowing the level of debt hasn't helped investors. It needs to be taken in context.

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Adam Puff
The Return of Tax Bullies

In civilized societies, children are taught not to bully. The “#MeToo” movement has declared war on adult sexual bullies. But there is one area where the bullies have not been called out and, in fact, are often applauded, even though they have hurt thousands of times as many people as Harvey Weinstein.

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Adam Puff
No Sign of Recession

Talk about destroying a narrative. On Friday, the Labor Department reported 312,000 new jobs in December, with an additional 58,000 from upward revisions to prior months. Recession talk got crushed.

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Adam Puff
Consumers Stay Strong

Black Friday had a 23.6% increase in online sales this year, according to Adobe Analytics, which tracks sales at 80 of the top 100 internet retailers, with one-third of the sales via mobile devices – that's up from 29.6% in 2017. Looks like more people are getting comfortable with making buying decisions on the go rather than at a desk.

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Adam Puff
Heartburn, Not a Heart Attack

The odds of a recession happening anytime soon remain remote, we it at 10%, or less. And a recession is what it would take for us to expect a full-blown bear market. In other words, the current downdraft is just heartburn, not a heart attack

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Adam Puff
The Growing Deficit

The U.S. federal government reported last week that it ran a deficit of $214 billion in August, the fifth largest deficit for any single month in US history.

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Adam Puff
Wage Growth Steps Up

Average hourly earnings grew 0.4% in August, which meant they were up 2.9% from a year ago, the largest 12-month increase since the economic recovery started in mid-2009.

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Adam Puff
US STOPS SUBSIDIZING GLOBAL GROWTH

But, more to the point, cutting the U.S. corporate tax rate to 21% and boosting tariffs on select countries and products is removing a huge subsidy to growth for the rest of the world. The U.S. is the dominant economy in the world and when it stops subsidizing foreign countries, who have not followed free market principles, economic pain spreads.

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Adam Puff
THE ECONOMIC SURGE

But after cutting tax rates and regulation, Friday's GDP report demolished their theory. Real GDP grew at a 4.1% annual rate in the second quarter, and is up 2.8% in the past year.

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Adam Puff