Barron’s just released a cover story that suggests that President-elect Donald Trump should take steps to make U.S. trade policy freer than it is now after a backslide during the past 15 years. Barron’s goes on to assert that any aggressive push by Trump to hike tariffs will face resistance from a Republican-dominated Congress that (Read More….)
I’ve received many questions from nervous traders about what my thoughts are on piling back into gold. A rising US dollar is why you need to stay away from gold IMO.
Macroeconomics of Gold and the US Dollar
Gold is primarily priced in US dollars. When the US dollar goes down in value, it (Read More….)
Whether we are talking about individual stocks, the stock market, or the economy, when you’re wrong just admit it and then move on. The goal is to make money, not to be right 100% of the time so you can stroke your ego.
AM TV and Peter Schiff predicted that the Federal Reserve could not (Read More….)
Hillary Clinton and Democrats promised to wage war on pharmaceutical companies and do things like price controls on drugs and products of the biotechnology industry.
In California, there was a ballot measure to impose price controls on the sale of pharmaceutical drugs in the state.
Both Hillary Clinton’s probability of winning, and California’s (Read More….)
Let’s use microeconomics to examine subsidies and why I recommend everyone stay away from investing in China.
Let’s start off with a perfectly competitive market where equilibrium is set at P and Q on our supply and demand graph.
A subsidy is an amount of money given directly to firms by the government to (Read More….)
Donald Trump said he would block the AT&T and Time Warner merger if he becomes president, arguing that such media combinations leave too much power concentrated among too few companies. What Trump is describing is monopolistic behavior. As Bloomberg writes…
Trump also suggested he would favor a breakup of NBC and Comcast Corp., a merger (Read More….)
Protectionist policies in the form of tariffs and quotas are coming from a Trump Administration. It seems appropriate then that we examine tariffs and quotas from a macroeconomics perspective.
The two most common ways of restricting trade are with tariffs and quotas. From a political point of view and to prevent a trade war, a (Read More….)
We pulled off an incredible victory of getting Donald Trump elected. Congrats guys, we did it. Now the first point of focus is the backward bending Laffer Curve. Thanks to the reckless policies of Democrats and Obama, the national debt is up to almost $20 trillion dollars. The horrible national debt leaves Trump with little (Read More….)
Increases in government regulation, taxes, environmental regulations, and ObamaCare on businesses, shifted the aggregate supply (AS) curve inward and thus reduced aggregate demand (AD).
With the explosion higher in the cost of doing business, businesses hired fewer workers. In fact, many small businesses reduced the size of their workforce in response to ObamaCare. Less (Read More….)
For the week the S&P 500 fell -1.9%, the DJIA fell -1.5%, and the Nasdaq plunged -2.8%. Last week the VIX shot back above 20 to trade at levels not seen since the June Brexit vote. The S&P extended its longest losing streak since 1980 with its ninth consecutive decline on Friday.
Oil was (Read More….)
Pharmaceutical drug pricing is all over the mainstream financial media right now. Let’s examine the macroeconomics of what is happening.
The demand for pharmaceutical drugs is inelastic. People that need a pharmaceutical drug prescribed by their doctor will demand that drug regardless of price. As the price of the drug goes up, demand mostly stays (Read More….)
As traders, we track the monthly Employment Situation report closely. The market often does a short-term move on the first Friday of every month when the Employment Situation report for the previous month is released. Do you understand what the Employment report is showing? I bet many traders do not. As traders, we have to (Read More….)
Do you remember when the WSJ, CNN, CNBC, NBC, ABC, CBS, Bloomberg, Forbes, and Reuters ran stories at the start of the year about how no one even knows who was advising Trump on economic matters? They even went as far to say that Trump had no support of any economists.
That never sat right (Read More….)
Most government revenue comes from the taxation of transactions and labor. Taxes impact both the supply and demand curves. Taxes cause a buyer to pay more for something and suppliers to receive less. The loss of value for both buyers and sellers is called the deadweight loss of taxation. Taxation has an enormous impact on (Read More….)
ObamaCare has created massive shortages within the healthcare sector. In cities, it is common to wait many hours before being seen as hospitals have a shortage of beds. Doctors have stopped taking new patients as they are overwhelmed by the numbers of people coming to see them. Let’s examine what happened from a macroeconomics perspective.
Illegal immigration negatively impacts the hourly wage of US citizens. Illegal immigrants are pouring across the Mexico border, and we have no way of counting them but what we can do is track legal immigration from Mexico then double the number for a fuzzy-math estimate.
With legal immigration and an impenetrable border, economists working (Read More….)
Mexico is devaluing its currency to gain a huge advantage in international trade. Democrats and the Obama Administration have done nothing to stop it.
Like most economists, I am for free trade; however, free trade today is not what it was in the 90s. The concept of international trade works because of comparative advantage. (Read More….)
I’ve been asking traders what causes low-interest rates. The consensus is that the Federal Reserve is what causes low-interest rates. That is not entirely true and believing that could be harmful to your trading account.
Some 250 years ago, David Hume was the very first economist to explain what causes low-interest rates.
The three things (Read More….)
Fed’s Eric Rosengren was clear in his speech early Friday that rates need to be raised. Mr. Rosengren said that if we don’t raise rates soon, we could crash the economy. Mr. Rosengren said, “A failure to continue on the path of gradual removal of accommodation could shorten, rather than lengthen, the duration of this (Read More….)
The Q2 GDP forecast was just released a few hours ago. The forecast plunged -25% from 2.4% to 1.8%.
What caused the fall in the GDP forecast? The international trade deficit. June had a trade deficit of $63.3 billion. The consensus range was between $-60.2 billion and $-62.7 billion. Remember, a trade deficit subtracts (Read More….)
One of the reasons I began supporting Donald Trump and declared GuerillaStockTrading as an official supporter of the Trump candidacy almost a year ago has to do with economics and ultimately the stock market.
The majority of people who are against Trump are not very smart when it comes to understanding international trade and macroeconomics. (Read More….)
Across the country, the minimum wage is being raised. In 15 cities, across five different states, minimum wage increases went into effect on July 1, 2016.
Minimum wage increases are bad for the economy because they will result in fewer people having jobs.
In August of 2015, I did an economic video lesson on what (Read More….)
February 28, 2016: PrivateBancorp to be promoted to S&P400 index after the close of trading on February 29, 2016. S&P SmallCap 600 constituent PrivateBancorp Inc. (PVTB) will replace Sirona Dental Systems Inc. (SIRO) in the S&P MidCap 400 after the close of trading on Monday, February 29, 2016. (Read More….)