Every security is priced off of Fed-set interest rates.  The ultimate question is, are rates going higher or lower?  The answer to that trickles through every other asset class, affects borrowing rates, corporate liquidity, profit margins and credit risks, stock valuations etc.

Bank rates have come down but, according to Martin Armstrong, the spread that banks are charging vs what they pay in deposits and what they charge in loans is near a record high.  Individuals and corporations have been largely deleveraging.  Less spending = slow economy.  The same thing happens when you take more money in the form of higher taxes.   Expected higher tax and higher regulation changes ones view on future expected return and shapes decisions on business expansion and risk taking.

The current Keynesian central planning approach is not the answer. The answer is in letting millions of individuals seek solutions, create new things, seeing opportunities, taking chances, filling needs, driven by their own self interest and the interest of their individual teams that when aggregated up creates a larger and healthier collective whole.

Armstrong says he has the largest economic database in the world. He believes that it has helped him better identify major trends and turning points.  That has come in handy in combination with his Adam Smith approach of staying unbiased and letting the data speak instead of the Marx-Keynesian approach of trying to force the free markets to do as a few central planners think best.

Read More >