Current Commentary

Growth Continued in the 4th Quarter of 2020. The double-dip recession so many feared didn’t arrive in the fourth quarter of 2020, and it certainly doesn’t look like it will happen in early 2021, either.

The seemingly endless election of 2020 is finally over, with Democrats winning both Senate seats in Georgia. As a result, President Biden will have slender majorities in the House and Senate. These slender majorities limit many dramatic policies, which require 60 votes, but tax policy is likely to change in some significant ways.

When it comes to attracting people, jobs, and businesses, some states are just better than others.

We hear every day about the breakdown of America...with both sides telling us "this is the end." As students of history, we don't buy it. The US has been in pickles before, but we always "work the problem."

If you must find "evil" in either of these narratives, remember that evil is ultimately perpetrated by individuals, not the institutions in which they operate. And this is why it's important to favor economic and political systems that limit the use and abuse of power over others. In the story of baby Jesus, a government law that requires innkeepers to always have extra rooms, or to take in anyone who asks, would "fix" the problem.

The details are still up in the air, but we're confident anything that gets passed will include (among various other provisions) enlarged and extended unemployment benefits, more help for small businesses, some sort of liability shield to protect businesses from being held liable for COVID-19 infections, as well as some aid for state and local governments.

The COVID-19 Recession is the weirdest we've ever had. There is no way anyone could have forecast it. It did not happen because the Fed was too tight. It did not happen because of a trade war. It was self-inflicted, caused by COVID shutdowns... The pace of recovery will depend heavily on renewed shutdowns and the speed of a vaccine rollout.

S&P 4,200 - Dow 35,000...we anticipate the vaccines will work roughly as advertised, and businesses will continue to improve in handling the obstacles posed by the illness and government shutdowns alike. Meanwhile, the Senate should remain a check on aggressive tax hikes, and the federal courts may curb excesses in regulation. New entitlements? Highly unlikely. In addition, it looks like trade conflicts with other countries will ease.

Let’s rethink the issues around instant gratification. It’s OK to get your online order through Amazon Prime within hours or a day, but it’s not the same with getting a pre-tax 401(k) contribution today only to have to pay more in taxes later on.

For now, pulling these funds from the Fed will not harm market liquidity, as markets are behaving quite well. In addition, taking these funds back will hopefully muzzle some at the Fed who have become more vocal in their recommendations about fiscal policy, supporting a very large expansion in the size of government, a policy at odds with the preferences of the current Administration. In other words, Treasury is telling the Fed to stay in its monetary-policy lane.