David Kotok's Contributions

Market History and Metaphors

FS Staff – “History doesn’t repeat itself, but it often rhymes,” Mark Twain supposedly once observed. As the Fed begins to shrink its balance sheet even as it determinedly jacks up interest rates, we would be prudent to consider where history has rhymed before...

Debt Ceiling Part II

By David Kotok – Any time US Treasury balances are below $100 billion, don't pay the federal legislature or their staff. Will this solution become law? No. They will never vote to discipline themselves.

Joseph and the US Stock Market

By David Kotok – Joseph (as in Abraham, Isaac, and Jacob) was the first (maybe) successful economist mentioned in the Bible. Why do we say that? Answer: he was data driven. Think of it this way. He interpreted Pharaoh’s dreams. He developed a model (forecast)...

Healthcare Fiasco, Tax Reform, Markets

Pundits have hypothesized that the failure of Obamacare repeal and replacement has so undermined Trump that the tax reform–infrastructure–repatriation package is likewise doomed. We disagree.


Is the Flynn–Russia–Trump leaks–Russian missile ball of wax a distraction that is causing market agents to think more about other things than economic issues? You bet. When Congressman Kevin Brady (R-Texas) takes to doing interviews...

Trump and the Four Levers of Government Policy

As Don Rissmiller of Strategas Research Partners succinctly points out, “There are four types of government policy that can be used to steer the economy: 1) monetary policy, 2) fiscal policy, 3) regulatory policy, and 4) trade policy.”

Japan: An Inflection Point

Hat Tip to Jeff Uscher of Japan Insider for the catch. Jeff notes that “As of September 2016, 27% of the Japanese population was aged 65 or older but ‘only’ 13% are aged 75 or older.” Jeff reminds us that “the standard of being considered...

Zika, Cuba, American Politics

“Why is Zika so important that you write about it often?” I have gotten that question many times. An update on the Zika situation follows. But first let me offer an explanation as to why I write about it. I believe that health issues and disease...

The Spreading Tentacles of NIRP

The spread of NIRP continues, and its downward force also intensifies. This tug of war will continue for quite some time before a victor emerges. So what is a US bond investor to do? We think it is time to evolve to a more defensive posture. Use hedging devices where...

Kotok: Near-Zero Rates May Persist Until 2018…or Longer

We are likely to have worldwide near-zero short-term interest rates for at least another two years, maybe three or four. The implications for stocks, bonds, and currency exchange rates are huge, as we will explain below.

Fed Drum Roll

Here we go again with the debate over whether or not the Federal Reserve (Fed) should, could, will, or won’t raise rates in September. This interminable drum roll of a debate must come to an end. The issue is that there is...

Barry Bannister on Greece

A sharp note this morning by Barry Bannister (STIFEL) is worth sharing. We thank Barry for giving us permission. Despite all this posturing over Greece and “Grexit” risk, I doubt Greece will be allowed to leave the eurozone.


Circularity defines the policy environment. Example: Greece gets money from the IMF and uses it to pay the IMF. Result: a circle. Another option: Greece is refused money by the IMF and therefore fails to repay the IMF.

Central Banks, Interest, Bailout Barometer

We send this note as a follow-up to ongoing comments about the size of central banks’ balance sheets, equity or lack thereof, and the guest commentary by Alex Pollock regarding the Swiss National Bank. The link that...

Stocks, Profits, GDP

So here we are. The GDP of the United States is approaching $18 trillion (17.8 is the most recent estimate, and that is before many forthcoming revisions). That estimate reflects the known effects from the strengthening dollar...

Banks – Dick Bove’s Warning

Richard Bove is the bank equity analyst at Rafferty Capital Markets. He is a longtime friend and is as distinguished and seasoned a bank analyst as anyone I know. This morning, he put out a research note that gave me pause.

U.S. Dollar Strength and U.S. Stocks

We know about currency volatility and fluctuations in the foreign exchange markets. The most recent and dramatic lesson has come with the Swiss National Bank’s abrupt policy change that removed the peg of the Swiss...

Switzerland, Contagion, and Credibility

In the wake of Switzerland’s removing the cap on the Swiss franc’s value against the euro, debt owed by non-Swiss agents has become an emerging issue. That debt, denominated in either Swiss francs or in euros, is secured by...

Deflationary Fears Are Spreading Globally

A worldwide deflation fear is expanding and may actually be rampant. BCA Daily Insights (August 25, 2014) notes that, “out of 32 OEC countries, more than two-thirds have domestic inflation rates that fall short of 1%.”

Tapering Is Now Tightening

For a long time, as we saw it, tapering and the threat of tapering (as in last year’s taper tantrum) did not constitute tightening. Today we explore why we believe the situation has now changed.

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