RINF

The Congressional Budget Office is making some projections that are breath-taking when it comes to the growth of the federal debt, but also how slow the economy is to grow.The CBO projects economic growth will average only 1.6 percent over the next thirty years and the federal debt in 2050 will be almost double the size of annual GDP.Furthermore, debt loads all over the economy are at or near historic highs and businesses and consumers will be hard-pressed to generate sufficient cash flow to carry the debt.

The 4-8 year period beginning in February of this year potentially will contain three or more official recessions and come to be referred to as the Depression of the 2020s.The money-supply situation today could not be more different from the money-supply situation during the early 1930s*.Because of the way the Fed measures "inflation", for the Fed to achieve its 2% "inflation" target, the average American's cost of living probably has to increase by at least 5% per year.

Coming into COVID-19, a chunk of client bond money was in higher yielding money markets since credit spreads (in my opinion) offered little value prior to March 2020.After the 35% correction in the S&P 500, and upon the announcement of the Fed liquidity programs, all that money was moved into corporate credit risk (a tactical bet) given the spread widening that happened.Can't recall the source, but Value is on track to outperform Growth for the month, for the first time in years. The question is, "is this sustainable or is it the proverbial dead-cat bounce?"

Three new forces are set to lift inflation beyond what markets are currently expecting in the years ahead, reversing a decade of subdued price rises.Market volatility has returned after months of steady advances in risk assets, and could stay elevated as the U.S. election draws near.Markets will focus on a slew of purchasing managers’ index data this week to gauge the latest business sentiment.

On Friday, due to the "quad-witching options expiration" (when all options contracts for the current strike month expire and rollover), the market gave up support at the 50-dma.The markets are very oversold short term, so a tradeable "bounce" remains very likely in the next few days.While you may feel strongly about one party or the other when it comes to politics, it doesn't matter much when it comes to your money.Holding a little extra cash, increasing positioning in Treasury bonds, and adding some "value" to your portfolio will help reduce the risk of a sharp decline in the months ahead.

Powell is struggling to reinforce flagging Federal Reserve credibility.In the 1960s, Alan Greenspan was said to have commented the Great Depression was a consequence of the Fed having repeatedly placed "Coins in the Fuse Box".Is all the hullabaloo really about consumer inflation fractionally below target? And will this be viewed as reasonable by the average American?

Aggressive central bank purchases of government bonds in the US, Europe, Japan and the UK allow governments to issue more debt and suppress the cost of that debt, which has a very powerful effect.Perhaps the new adage should be, "Don't fight the Fed and the Treasury."China is shifting towards a slower but more sustainable growth model, which should reduce global demand for commodities.

Judging by the new economic projections released by the Fed, rates will remain on hold for several years.There are no easy explanations for disinflation's persistence and it's hard to solve a problem that you don't fully understand.Perhaps the dramatically higher level of government spending to address the pandemic will be the inflation-lifting catalyst that's so far eluded monetary policy efforts.