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Triumph of the Euro?
by Brian S. Wesbury and Robert Stein of First Trust Advisors, 5/3/10
Because Greece uses the euro, devaluation is not an option to solve the country's budget problems. As a result, Greece?s pain will be concentrated in the sector that is causing most of the problem: government. The conditions of the bailout, decided by the EU and IMF, require Greece to freeze government salaries, eliminate bonuses, and lift the retirement age to 60 for government workers, as well as raise value-added and excises taxes. While the tax hikes are disappointing, the focus on restraining government spending, rather than using devaluation, represents a triumph of the euro.

Fed Twiddles its Thumbs
by Brian S. Wesbury and Robert Stein of First Trust Advisors, 4/29/10
The Federal Reserve made no direct changes to monetary policy yesterday, leaving the target range for the federal funds rate at 0 percent to 0.25 percent. Minor changes to the Federal Reserve's statement on Monday, however, show that the central bank is continuing to gain confidence in the economy. These include comments that the labor market is 'beginning to improve,' rather than 'stabilizing;' household spending is 'picking up' rather than 'growing at a moderate rate;' and housing starts have 'edged up' rather than staying 'flat.'

Steep Auto Sector Recovery to Continue
by Brian S. Wesbury and Robert Stein of First Trust Advisors, 4/27/10
Both auto sales and auto production have rebounded substantially in the past year. We expect these trends to continue as a major feature of the V-shaped economic recovery. In the first half of 2009, cars and light trucks were sold at a 9.5 million annual rate, the slowest pace for any six-month period since 1974-75, when the US population was about one-third smaller. Then, along came cash for clunkers in July/August 2009 and sales temporarily surged to a 12.6 million annual rate.

The Danger of Zero Percent Interest Rates
by Brian S. Wesbury and Robert Stein of First Trust Advisors, 4/26/10
The Fed has become overly involved in financial markets and it is losing sight of its number one job - maintaining price stability. Zero percent interest rates are becoming more dangerous every day. The economy is outperforming the Fed?s forecast, creating a dilemma. Before massive snowstorms, the Fed projected that real GDP would grow 3.1 percent in 2010. First Trust's forecast for Q1 real GDP is 3.4 percent, despite record-breaking storms. And we expect Q2 real GDP growth to approach 6 percent.

Higher Inflation, Not Hyperinflation
by Brian S. Wesbury and Robert Stein of First Trust Advisors, 4/19/10
Some analysts have proposed inflating/devaluing our way out of this debt crisis. The theory is that with deficits already so large and no immediate prospects for spending control, the US government may have to resort to an Argentina-style monetary policy to pay for its largesse. Hyperinflation with a side order of devaluation, however, is not a free lunch. That was a lesson learned all too well in the 1970s. And now, with future entitlement spending making the current securitized debt small by comparison, it makes even less sense for the government to pursue.

All Aboard the V-Train
by Brian S. Wesbury and Robert Stein of First Trust Advisors, 4/12/10
As the economic data clearly traces out a V-shaped recovery, some previously skeptical pundits are standing on the V-train platform shouting 'all aboard' as often as they can. Others are slowly raising their forecasts of growth, even job growth. Unfortunately, there is a group of people who still haven't arrived at the station. But they will be wrong. Government spending has hindered, but not killed, the recovery. Recoveries happen. This one would indeed be stronger if the government had not wasted so many resources. Nonetheless, the V-train is on the tracks.

No Double-Dip For Housing
by Brian S. Wesbury and Robert Stein of First Trust Advisors, 4/5/10
While the end of the Federal Reserve's massive mortgage purchasing program will certainly not help the housing market, it probably will not result in a double dip for housing of the economy. Instead, home building, home sales and home prices should all be up nationwide a year from now versus today. Perhaps the most important reason for this is that the labor market, the last of the lagging economic indicators, has finally turned positive.

Gary Becker's Optimism
by Brian S. Wesbury and Robert Stein of First Trust Advisors, 3/30/10
The commentary responds to a recent Wall Street Journal interview with Nobel prize-winning economist Gary Becker. Becker is the founder, with Milton Friedman, of the Chicago school of economics. Becker said the financial crisis did not undermine his belief in free markets, and that he remained hopeful that competing interest groups would protect the country in the long run from a systematic bias toward bad policy. While Becker primarily blames new financial instruments for the economic crisis, however, Wesbury and Stein blame mark-to-market accounting rules.

Health Care Fallout
by Brian S. Wesbury and Robert Stein of First Trust Advisors, 3/22/10
The health care bill is no reason to run for the hills. In the short term, there are no policy changes that will derail or noticeably slow the V-shaped economic recovery slowly underway. There are harmful policy shifts, including extra fees on health insurers and the makers of medical devices, but these are sector and not macroeconomic issues, at least in the short term. The biggest macroeconomic effects will stem from tax hikes scheduled to go into effect in 2013. In the meantime, however, Wesbury and Stein retain their bullish stance.

Fed Still Clinging to Extremely Loose Money
by Brian S. Wesbury and Robert Stein of First Trust Advisors, 3/17/10
The Federal Reserve made no direct changes to monetary policy, leaving the target federal funds rate at 0 percent to 0.25 percent. Changes to the Fed's statement with regards to the labor market, business investment and housing starts, however, suggest that the central bank is gaining confidence in financial markets and the economy. One member even strengthened his dissent toward keeping interest rates exceptionally for an 'extended period' of time. The Fed also strengthened its commitment to ending special lending facilities for the mortgage market.

More Solid Growth Ahead
by Brian S. Wesbury and Robert Stein of First Trust Advisors, 3/15/10
The consensus is forecasting a growth rate of 2.7 percent for the first half of 2010. In contrast, we are predicting 4.5 percent, with faster growth in the second quarter than the first. The tilt toward Q2 is due to unusually harsh winter weather across much of the country. The consensus is still underestimating the resilience and robustness of the US economy and remains stuck on expectations of a 'new normal.' But, productivity is strong, monetary policy is (and will continue to be) easy, inventories are razor-thin, and corporate profits are growing rapidly.

More on that Federal Pay Cut
by Brian S. Wesbury and Robert Stein of First Trust Advisors, 3/9/10
Last week, Wesbury and Stein proposed a 10 percent pay cut for all civilian federal workers in order to send a signal to creditors that policymakers were concerned about the deficit. That article generated more responses than any article the two have published. Many comments were supportive, but most were negative. Many critics of the proposed pay cut pointed to the relatively low wages of younger federal workers, while others argued that a pay cut would blunt the multiplier effect. This latter argument is fallacious, because every dollar the government spends must come from somewhere else.

Bernanke Finally Fingers Mark-To-Market
by Brian S. Wesbury and Robert Stein of First Trust Advisors, 3/4/10
Mark-to-market ideology is affecting the ability of the Federal Reserve to exit its quantitative easing. The mark-to-market rule uses bids, or exit prices, to value assets. Chairman Bernanke signaled that he recognized the problem in February when he said commercial real estate loans should be valued on income from their property, rather than their collateral value. As long as mark-to-market valuation continues to drag on securitization, the Fed will remain hesitant to withdraw its support of the system.

Getting Serious About the Deficit
by Brian S. Wesbury and Robert Stein of First Trust Advisors, 3/1/10
President Obama's proposed 2 percent federal worker pay hikes, unveiled amidst a 9.7 unemployment rate and widespread private sector pay cuts, send a clear signal: The U.S. is not yet serious about the deficit. A 10 percent across-the-board federal worker pay cut would net just $15 billion in net outlay savings, but would permanently shift future wages onto a lower path.

Don't Be An Economic Hypochondriac
by Brian S. Wesbury and Robert Stein of First Trust Advisors, 2/22/10
There are always things to worry about in the economy. With an accommodative monetary policy and the end of the panic, however, the economy is heading upward. The consensus forecast for economic growth has grown from 2 percent of real GDP to roughly 3 percent. This forecast may continue to grow to 4 percent or more.

The Fed Tests the Waters
by Brian S. Wesbury and Robert Stein of First Trust Advisors, 2/20/10
The Federal Reserve took a big first psychological step toward a tighter monetary policy yesterday when it raised the discount rate to 0.75 percent, from 0.50 percent. The Fed wants to make sure, however, that markets understand that a rising discount rate does not necessarily entail higher federal funds rate.

Greece is Not Lehman Brothers
by Brian S. Wesbury and Robert Stein of First Trust Advisors, 2/17/10
Sovereign debt defaults are the most recent fears plaguing investors. If governments refuse to cut spending and markets refuse to finance excess outlays, debt defaults could spread worldwide one-by-one. The current sovereign debt crisis in Greece is more likely to lead policymakers to reduce spending to reasonable levels, however, than to kick off a new financial panic.

The (Relatively) Bullish Case for Consumer
by Brian S. Wesbury and Robert Stein of First Trust Advisors, 2/13/10
Wesbury and Stein justify their 4-4.5% forecast for growth in real GDP in 2010 with five factors: rising consumer incomes; deleveraging; higher savings; a pickup in home building; and pent-up demand for autos.

"Extended Period" of Low Rates Starting to Lose Support
by Brian S. Wesbury and Robert Stein of First Trust Advisors, 1/28/10
The Federal Reserve made no direct changes to the stance of monetary policy today, leaving the target range for the federal funds rate at 0% to 0.25%. However, one member dissented from the Fed?s comm

Stocks are Still Cheap
by Brian S. Wesbury of First Trust Advisors, 12/28/09
Results 151–170 of 170 found.