The Time Value Of Opportunity

The time value of money is a finance concept that recognizes that a dollar held today is worth more than a dollar in the future. This is due to the fact that the dollar held today can begin earning interest as soon as it is received. Or viewed differently, a dollar in terms of purchasing power is worth more today than it will be in the future due to the eroding forces of inflation. Ironically, those that directly manage the money supply in the United States are currently facing a similar time value dilemma, except their challenge deals not with money but instead with opportunity. And when confronted with their latest decision in this regard on Wednesday, they came up troublingly short.

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The Earth, Wind & Fire Prophesy

Did the legendary R&B band Earth, Wind & Fire in 1978 unwittingly predict an important monetary inflection point for the global economy and its capital markets nearly four decades later? Two major global central banks in the U.S. Federal Reserve and the Bank of Japan will respectively emerge from their highly anticipated and watched policy meetings next Wednesday, September 21. Capital market pretenders, and there are many following seven years of relentless policy stimulus, have certainly seen their minds shifted in recent days by the notion that the Fed might actually raise rates at the same time that the Bank of Japan may finally be out of bullets for additional stimulus. Will these central bankers be able to successfully chase the investment market clouds away come the 21st night of September?

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What The Lael Is Going On Here?

I’m all for transparency. The more information that investors and the general public has at its disposal, the better. But important criteria for transparency to be meaningfully useful is that the information provided must be at least somewhat organized and coherent. Otherwise, it can cause more harm and confusion than good. And when it comes to the Fed and their ongoing efforts at monetary policy transparency, it is an utter mess that is further damaging the confidence of already wildly distorted financial markets.

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The Fed Gets The Green Light

The August employment report was revealed on Friday morning to much fanfare. As anticipated, the latest monthly jobs reading came in short of expectations. But the number was still solid enough to support a quarter point interest rate increase by the U.S. Federal Reserve at their upcoming policy meeting on September 20-21.

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Surprise, Surprise, Surprise!

Friday is set to deliver what is arguably the most important employment report for investors in years. Our data dependent U.S. Federal Reserve has apparently become data point dependent, declaring that their decision as to whether to raise interest rates at their upcoming FOMC meeting on September 20-21 will be heavily influenced by the outcome of the latest monthly employment report for August.

Please click on the link to read more of my article on Seeking Alpha.