Fed acts, Investors yawn

David MoonBlog

There was a time that investors were so focused on possible Federal Reserve Board interest rate increases that the media used paparazzi tactics to capture a glimpse of the briefcase of then-Chairman Alan Greenspan, convinced that a thicker attaché telegraphed a likely rate hike. Times have certainly changed. In the late 1990s Alan Greenspan was a rock star. Who can even name today’s Fed Chair? When the Federal Reserve Board increased the federal funds rate two weeks ago, stock investors seemed disinterested. Bond investors seemed outright contrary, as the rate on the 10-year Treasury note actually declined. The Fed does … Read More

So is this the “Art of the Deal”?

Harold Black, PhDBlog

There are many inscriptions over the doors of the congressional buildings. However, the most important one is missing. It is “Abandon hope all ye who enters here.” The reason being that no congress – and no president – is serious about limiting the rate of growth in federal spending. The latest episode was when the president signed the budget bill and then admonished the congress for being so profligate. The president sought to hold back a meager $15 billion – which is not even a rounding error – and the republican controlled senate refused to endorse it. It is as … Read More

LESSONS FROM MY KIDS

David MoonBlog

My twins turned 18 this past week and will be headed to college in a little more than a month. There are so many things I’ve tried to teach them, going so far as to write a book of advice for them. (Shameless promotion: visit www.davidmoon.com.) As my family celebrated both Father’s Day and their birthday in the same week, I realized that I’ve learned so much more from them than they likely have from me. Most of these lessons have both a business and a broader life application. I’ve learned the importance of believing something. That is, having some … Read More

Economics: a befuddling breakfast

David MoonBlog

After reading a recent article about the strength of the U.S. economy, my inquisitive 17-year-old son contacted the author. “Dad,” he asked over breakfast, “what makes the economy strong?” After explaining Gross Domestic Product to him, he rephrased his question. “Okay, but what makes the economy strong?” His most basic question revealed the inherent weakness of economics: it is an activity in which broad, general guesses are calculated to two decimal places. He continued. “What makes consumers buy more or less stuff? How do we know what consumer confidence is?” Each of his questions had a very straightforward answer, and … Read More

Fed raises rates; markets yawn.

David MoonBlog

The Fed’s quarter-point increase in the Fed Funds rate yesterday was generally ignored by investors, except for the discussion fodder it provided. There are a couple of reasons for that. The market experiences wild swings in reaction to surprises. The Federal Reserve has regularly announced its intent to raise rates.  There was no surprise.  Yesterday’s press release included the announcement that the Fed intends to raise rates two more times this year, bringing the 2018 rate hikes to four. If done as orderly and expectedly as yesterday’s hike, these two additional 2018 rate hikes will almost certainly be met with … Read More

DIVERGENCE OF ECONOMY, STOCKS

David MoonBlog

The U.S. unemployment rate has fallen to 3.8%, a level seen only once since 1969, when it briefly bottomed in 2000. The Atlanta Fed increased its second quarter GDP forecast to 4.8%, a figure that, if it proves accurate, will be the second highest quarterly increase in the past ten years. Corporate earnings increased nearly 23% in the first quarter. Hourly wages increased 2.7% over the past year and minutes from May 2 Federal Reserve Board meeting indicate that the governors continue to see the economy as strong. Yet with all of this good news, the stock market is essentially … Read More

Everything looks good in hindsight

David MoonBlog

I have developed a 100% foolproof method for reaching your ideal body weight. No one has ever failed using my system; every person using Moon’s Miracle Body-mass Management Method has succeeded in reaching and, more importantly, maintaining his ideal body weight. Here is the secret: over five years I studied people who exercised vigorously daily, ate healthful foods, consumed only enough calories to support their ideal body weight and got plenty of rest. At the end of the five years, every individual in the study was the perfect weight. One caveat: every three months we dropped from the study anyone … Read More

MCM’s Garrett Arms Forbes interview

Marsha GourleyBlog

MCM’s Garrett Arms recently sat down with Forbes contributor Luke Schiefelbein to discuss Pershing Square, one of the world’s largest publicly-traded hedge funds. Forbes: Why Bill Ackman Will Salvage Pershing Square  

U.S. less divided, not more

David MoonBlog

Your Facebook feed notwithstanding, we live in the most socially and culturally unified period in our country’s history. With brief exceptions following national tragedies, America has never been more unified, peaceful and genteel as it is now. The U.S. is certainly less divided today than it was in my childhood. In just my lifetime I have seen a Ku Klux Klan rally and attended a school with white and colored water fountains. I also witnessed the election of the first black U.S. President. In the first 20 years of my life, a president and U.S. senator were assassinated, a presidential … Read More

Annuity warnings

David MoonBlog

Based solely on information from radio ads and free dinner sales presentations, one could assume that annuities are very simple safe and predictable investments. Of course, that is the goal of the ads. In reality, annuities are very complex investment vehicles that few investors understand before purchasing – sometimes effectively permanently committing their capital into an illiquid vehicle that increases your total tax bill, when they believe they are doing exactly the opposite. Before purchasing any type of an annuity, read every document you are asked to sign. Do not rely on summaries or sales brochures. You can avoid most … Read More