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More Money fuels the markets


As expected, the European Central Bank announced additional monetary stimulus in its effort to jump-start the EU economies. Global markets liked what they heard and bought stocks to celebrate. read more…

Europe Follows the U.S. lead


The European Central Bank has lagged behind both the U.S. and Japanese counterparts in their efforts to stimulate the economies of the European Union. Today, they attempted to address that fault before Europe sinks into a recession. read more…

What’s up with bonds?

At the beginning of the year Wall Street was certain that interest rates were on their way up. Investors dumped all kinds of bonds anticipating that prices would plummet.  Bond prices did the upset. Go figure. read more…

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January Could be Important


Now that the Fiscal Cliff is behind us and the spending battle is dead ahead, investors are wondering what lies ahead.  Historically, the market’s performance in January has been important. Since it is a good signpost for the future over the last 60 years, let’s examine some of the indicators that many professional traders use. read more…

Round Two



The ink is still drying on the Fiscal Cliff compromise and already the focus has shifted from preventing tax hikes to what promises to be a battle royal over spending cuts. At stake could be the future health of the economy. read more…

The Business of Guns

The firearm industry has a lot going for it. It is responsible for a piece of this country’s economic recovery including job growth as well as providing a hefty contribution to the tax base. It also sold the weapons that recently cut down 26 people, including 20 children, in a Connecticut elementary school.  read more…

Republican Grinch Sinks Markets


Evidently disappointed that the world didn’t end on Friday, the Republican-controlled House took matters into their own hands. Rejecting any compromise at all, the Tea Party members of the GOP rejected out of hand their own Speaker’s “Plan B” and then took off until after Christmas. read more…

The Business of Guns


The firearm industry has a lot going for it. It is responsible for a piece of this country’s economic recovery including job growth as well as providing a hefty contribution to the tax base. It also sold the weapons that recently cut down 26 people, including 20 children, in a Connecticut elementary school. read more…

Pushing on a String


There was a time when an announcement of further easing from the Federal Reserve would have sent the markets soaring. This week the Fed promised more monetary stimulation and the markets finished flat to down.

Even more puzzling was gold’s reaction to the announcement. The Fed is planning to purchase $85 billion/month in mortgage-backed securities, effectively pumping even more money into the economy. That money, unlike its previous bond-buying program, which bought long Treasury bonds and sold short ones, will involve printing new money. That is normally considered inflationary and yet gold prices barely budged. The next morning gold promptly fell $20/ounce.

In a historic move, the Fed also tied interest rates to the jobless rate, promising that until unemployment came down to a 6.5% rate, it would keep interest rates at a near-zero level. The market’s response was a big “so what.” Investors do not believe that these latest Fed actions will do anything to reduce the number of Americans out of work or increase the growth rate of the economy.

The economy has been functioning under a historically low interest rate environment for some time. These low rates have been effective in avoiding another recession and keeping unemployment from rising further. But maintaining the status quo is not enough. In order to add jobs, the economy has to grow faster and that’s not happening.

Ben Bernanke, the chairman of the Federal Reserve, has often said the central bank can do only so much. In order to accomplish a high growth, low unemployment economy, he maintains fiscal stimulus is absolutely necessary in tandem with lower rates.  I agree.

But the Fiscal Cliff is not about cutting taxes and higher spending. It’s about avoiding tax increases and cutting spending. Those actions seem to be at odds with what the central bankers are saying. The Republicans continue to insist that spending is the problem and that President Obama and the Democrats want tax cuts but little in spending cuts.

Republican Congressman John Boehner, Speaker of the House, on Thursday, continued to insist “that the right direction is cutting spending and reducing debt.”

How dense can one be? Has Boehner and the Tea Party bothered to look at how well that recipe hast worked in Europe over the last two years? It has been a disaster. It was also a disaster in Latin America throughout the 1980s. It flies in the face of what our central bankers are saying as well.

Boehner argued that if you include President Obama’s new proposals to increase spending in areas that could stimulate the economy, then there would be practically no spending cuts at all in his Fiscal Cliff deal. Well, hurrah for the President.

I had hoped that if President Obama was re-elected, we could avoid the worst. The Bush tax cuts would be extended and the GOP’s insistence during the election campaign (and up to and including yesterday) that we needed deep spending cuts would be moderated. So far the jury is out on my bet.

You may disagree, but I firmly believe that more, not less fiscal spending is absolutely imperative to jump starting the economy in tandem with the central bank’s monetary policies at the present time. I will worry about the deficit after the economy is growing at a healthy rate and unemployment drops. At that point, I believe the explosion in tax revenues from a growing, full employment economy will take care of the deficit, the debt and the Republican’s propensity to angst. Until then, don’t sweat the deficit, stay long and bet on avoiding the Fiscal Cliff.


Cheap doesn’t cut it anymore

In this brave new world of ours, it is no longer enough to simply offer the lowest cost product. Product innovation is now critical to a company’s success. U.S. companies are discovering it is becoming harder to innovate when their manufacturing plants are half a world away. read more…

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About Bill

Bill Schmick was born in a blue-collar neighborhood of Philadelphia, just a few blocks north of “Rocky Balboa” territory where most of his Catholic schoolmates grew up to be either cops or criminals. He narrowly escaped both professions by volunteering to fight in Vietnam as a U.S. Marine... Read More



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