The Economy: We're beginning to see consistent evidence that the global economy is slowing. China, Japan, Australia and the EU are embarking on further stimulus efforts. Here at home, recent Fed comments and actions seem to indicate that the tightening cycle is over; a sign of a US slowdown. When it comes to viewing and understanding Fed-Speak, Plato's Cave is the best point of reference. The only thing that matters is what is done, not what is said… or more appropriately … what the shadows have said. In that context, little has changed in Fed action. Like most of everything today, the US economy has been politicized/weaponized. Rational evaluation of Fed direction is difficult when the noise from competing agendas drowns out everything except the circus. Reliable financial/economic reporting has been drowned out by the roar of the crowd. Every point has multiple, mindless counterpoints all crammed down the collective throat of investors and policy makers. Cogent analysis has given way to mob-rule style-points … and if you can cloak your economic agenda in politically expedient overtones, then all the better. At Higgins Capital, we see cyclicality in life, nature and economies. Progress is never linear. Neither is economic expansion. The business cycle has not been repealed. The current expansion is mature. We continue to urge caution while taking advantage of special opportunities.
Food for Thought: The US economy continues to expand on the back of stimulative monetary policy. 10-years after the financial crisis, the US economy is still not strong enough to be self-sustaining without Fed intervention, tax cuts, deficit spending and ballooning debt. The economic chasm that separates the Chicken Littles from The Cockeyed Optimists is every bit as wide and deep as the chasm that separates the political left from the right. Pessimists see global financial Armageddon with a global debt reset that will end civilization as we know it. Optimists see the triumph of Central Bank Planners who have proven the end of capitalism and the triumph of Marxist socialism. We're more prosaic. We see a rock and a hard place. Unprecedented debt levels and record numbers of share buybacks are creating favorable metrics for financial markets. If the real economy is doing as well as stocks say it is, then it would seem logical that interest rates would be allowed to find their own level. It would seem that real estate would be booming along and reaching new highs. It would seem that Central Bank manipulation of financial markets would be over. But none of this is happening. Instead, we seem to be seeing more Band-Aids applied to a debt laden, over-managed global economy … with all players shaking their heads in wonder and saying, "This can't possibly go on forever." There is always opportunity in chaos. What's your next move? Let us hear from you.