Getting back to it in 2015

I have been remiss in not keeping this blog going.

I am going to attempt to update this blog as much as possible from this time forward, for no other reason than the economy is going to be as newsworthy in 2015 as it was back in late 2008.

A few key points that I feel will dominate 2015:

  • The Federal Reserve will not be able to “normalize” rates. Janet Yellen will battle disinflation for much of the year. I am on the fence whether QE will return, I would put that at 60% likelihood. If the Fed and the bond market did not view QE as a defeat of monetary policy, I would put the odds as high as 90% for another round of easing.
  • Beggar Thy Neighbor I: will be a huge driver of currencies. Dollar strength which was once called “flight to quality” but now takes the phrase “cleanest dirty shirt in the pile” will drive US equity prices lower. The Swiss National Bank’s move this week to decouple the franc from the euro is the opening gambit. Euro parity with the dollar is tantamount to splitting the ECB as southern tier countries suffer as the German economy soars.
  • Beggar Thy Neighbor II: The Swiss bank’s move is a precursor to the ECB beginning its own version of QE. The Swiss did not want to hold the billions of euros it needed to buy to keep the cap on the franc.
  • While crude oil prices are the main driver of US disinflation, first quarter GDP will come in sub 2 percent — a far cry from 2014 Q4 5% reading.  Retail sales (ex-gas) will be well below expectations. You see retailers like Macy’s and Target announcing  store closures before final holiday sales numbers are out tell me the numbers are bad and the margins will be worse.
  • Six years into the “recovery” and Main St. is still struggling demonstrates how lopsided QE really is. The transfer of wealth from middle class to top 5 percentile is so blatant given the data, it has to be equated to Russia and the  oligarchs in the 1990s. Not sure if or when a backlash will occur.
  • Gold will probably see a price rebound equal to 2009 highs, as investors look for a store of value in 2015. The $80 move in the last week or so will continue as currencies move lower. Gold in euros has had a bigger move and will continue as it moves to parity with greenback.

These are but a few of the economic milestones and/or predictions I will hit upon this year.

I hope you are a jazzed as me for what is coming ahead in 2015.


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