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Entries from March 2017

The Euro Can’t Break Up

March 31st, 2017 · Comments Off on The Euro Can’t Break Up

The euro is highly dysfunctional, it confers few economic benefits, has been an economic disaster and is a source of political problems within the EU. It was never easy to leave the euro, but on balance, for countries like Greece, Portugal, and Italy, it seemed a good idea. But new collective action clauses in bonds […]

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Tags: Eurocrisis

Melt Up… What Is Really Driving The Epic Stock Rally?

March 31st, 2017 · Comments Off on Melt Up… What Is Really Driving The Epic Stock Rally?

The dominant opinion about what has caused the stock market rally is that it is expectations of a Trump reflationary package. But such package is likely to be a year away, and could very well disappoint. But as it turns out, there are other good reasons for the stock rally. Can the rally continue? On […]

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Tags: The Markets

Demand Trumps Supply

March 31st, 2017 · Comments Off on Demand Trumps Supply

Can Trump significantly lift the growth of the US economy? Trump’s reflationary efforts are likely to run into supply constraints, given by a tight labor market, low productivity growth and a low growth of the labor force. His supply policies aren’t likely to relieve these constraints anytime soon. Nevertheless, by running demand consistently higher than […]

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Tags: The Markets

The Coming Italian Bond Explosion

March 30th, 2017 · Comments Off on The Coming Italian Bond Explosion

We think there are many reasons why Italian bond yields are likely to go higher, like eurozone tensions, a rising yield global environment, ECB tapering, political uncertainty, etc. Unfortunately, for US-based investors, the pickings are basically very slim. One has to have access to European markets, where there is only one ETF listed. There are […]

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Tags: Bonds · Italy

Shopify Going From Strength To Strength

March 30th, 2017 · Comments Off on Shopify Going From Strength To Strength

Shopify has grown at near triple-digit rate the past years. This year, growth will slow down, but not by much. The company’s focus is on the long-term build-out of its platform; solving problems for its merchants gives it an edge. However, shares are steeply valued already. Shopify Going From Strength To Strength

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Tags: SHOP

Blowing Up The Deficit

March 30th, 2017 · Comments Off on Blowing Up The Deficit

There are good reasons to assume that Trump’s tax cuts aren’t likely to increase economic growth by all that much. But they are likely to blow up the budget deficit and run into a more active Fed. The combination of loose fiscal policy and tightening monetary policy will lead to higher rates and capital inflows, […]

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Tags: Public sector deficits and debts

The Hurdles To Higher Economic Growth

March 15th, 2017 · Comments Off on The Hurdles To Higher Economic Growth

Stocks are pricing in a considerable amount of higher economic growth. However, there are a number of barriers that make it difficult to meaningfully achieve higher economic growth in the US. We go through some of these, most notably the labor market and the risks of higher inflation. The Hurdles To Higher Economic Growth | […]

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Tags: Economy

Turning The U.S. Into Germany

March 15th, 2017 · Comments Off on Turning The U.S. Into Germany

The US experienced something of a populist revolution, people are unhappy with the economy, among other things. While Bernie Sanders wanted to change the US into Denmark, it’s less clear what economic model Trump admires. From his trade adviser Peter Navarro we gather that it could be Germany. Can the US be turned into Germany? […]

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Tags: Economy

Intel’s Adventures In The Internet Of Things

March 15th, 2017 · Comments Off on Intel’s Adventures In The Internet Of Things

Shares of Intel are plagued by worries about growth. To some extent, these worries are overblown. Intel even managed growth in a declining PC market. And they have plenty of growth sectors to invest in, like the Internet of Things, which also drives growth for many of their core products. The downside is that this […]

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Tags: INTC

Shares Expect Too Much From A Trump Reflation Already

March 11th, 2017 · Comments Off on Shares Expect Too Much From A Trump Reflation Already

The Trump reflation package is liable to disappoint in terms of reviving business investment and growth. It is also liable to create a hole in public finances, and likely remedies like a border tax could hobble growth more. Equity markets seem oblivious to this, which might continue for a while but reality has a habit […]

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Tags: The Markets · Trump