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November 2016

Mark Zandi and Ryan Sweet discuss the outcome of the U.S. presidential election, what must be done early in the new president’s term to help the economy, and the implication of the election outcome on the fiscal outlook and growth.

Access this webinar recording, in which they discuss:

Did the election outcome change the baseline forecast?
Will there be continued policy stalemate?
Can tax reform become a reality?
How about more infrastructure spending and increase in the federal minimum wage?
What is the nation's fiscal outlook?
Related Insights
Article

Weekly Market Outlook: Unprecedented Amount of Baa-Grade Bonds Menaces the Credit Outlook

Greater uncertainty surrounding the sustainability of corporate earnings growth has adversely affected the performance of medium- and lower-grade corporate bonds. If fears over the adequacy of future corporate earnings persist, the upside for benchmark U.S. interest rates is probably well under consensus expectations.

November 2018 Pdf John Lonski, Yukyung Choi, Katrina Ell, Veasna Kong, Barbara Teixeira Araujo, Ryan Sweet, Michael Ferlez
Article

Weekly Market Outlook: Gridlock Stills Fiscal Policy and Elevates Fed Policy

Gridlock is here. Because of the constraints placed on fiscal policy by a Democratic House and a Republican Senate, the Federal Reserve's role at assuring an adequate rate of economic growth has been magnified. Though currently not a pressing issue, a widely anticipated deceleration of corporate revenues and profits may eventually influence Fed policy. Such slowdowns increase the risk of widespread cutbacks in business outlays on capital goods and staff. A severe enough retrenchment in business spending would quickly end the current episode of monetary firming. Both equities and corporate bonds can transcend the slower growth of corporate earnings. However, if an unbending climb by benchmark interest rates amid continually slower profits growth triggers expectations of a prolonged shrinkage of earnings, share prices will sink and corporate credit spreads will swell.

November 2018 Pdf John Lonski, Yukyung Choi, Katrina Ell, Barbara Teixeira Araujo, Ryan Sweet, Michael Ferlez
Article

Weekly Market Outlook: Net Stock Buybacks and Net Borrowing Have Yet to Alarm

Recent outsized advances by equity prices probably owe something to either actual or anticipated buybacks of common stock. Both the relative steadiness of corporate credit quality and ample amounts of corporate cash now improve the outlook for equity buybacks. In the Financial Accounts of the United States, the Federal Reserve supplies an estimate of net equity buybacks, where the estimate applies to net buybacks of both common and preferred equity. Because of an often heavy use of preferred stock by financial companies, net buybacks of nonfinancial-corporate equity are the preferred measure when analyzing the behavior of net equity buybacks over time. For example, the $55 billion of total net equity buybacks for the year-ended June 2018 consisted of $485 billion of net stock buybacks by U.S. nonfinancial companies and $281 billion of net equity issuance by U.S. financial institutions.

November 2018 Pdf John Lonski, Yukyung Choi, Katrina Ell, Veasna Kong, Barbara Teixeira Araujo, Ryan Sweet, Michael Ferlez
Article

Weekly Market Outlook: Financial Liquidity Withstands Equity Volatility for Now

Higher interest rates and trade related frictions, including the effective tax hikes brought on by the imposition of tariffs, have lowered the market value of U.S. common stock by 8.1% from its current zenith of September 20, 2018. Thus far, systemic financial liquidity has yet to suffer materially from the latest bout of equity market volatility. However, liquidity will be adversely affected if a further weakening of the equity market substantially increases the cost of both equity and debt capital. A persistently volatile equity market risks swelling the uncertainty surrounding the valuation of business assets. In turn, capital spending and business outlays on staff may be less than otherwise.

October 2018 Pdf John Lonski, Yukyung Choi, Katrina Ell, Veasna Kong, Barbara Teixeira Araujo, Ryan Sweet, Michael Ferlez
Article

Pride and Protectionism: U.S. Trade Policy and Its Impact on Asia

Crafting economically sound trade policy is easier said than done.

October 2018 Pdf Mark Zandi, Steven CochraneRyan Sweet
Article

Weekly Market Outlook: Stepped Up Use of Loan Debt May Yet Swell Defaults

Credit quality benefits to the degree a borrower has locked in continued access to debt capital and has capped the interest expense of outstanding debt. Basically, long-term debt having a fixed interest rate is preferred to short-term debt having a variable interest rate. Through the first nine months of 2018, U.S. corporate bond issuance incurred year-over-year setbacks of 21% for investment-grade (to $698.9 billion) and 25% for high-yield (to $151.5 billion).

October 2018 Pdf John Lonski, Yukyung Choi, Franklin Kim, Katrina Ell, Veasna Kong, Barbara Teixeira Araujo, Ryan Sweet, Michael Ferlez

Moody's Analytics Webinar: No Brexit to No Deal

The Brexit saga is quickly coming to a head, but it is increasingly unclear which direction it is headed. Join Mark Zandi and the Moody’s Analytics team as they assess the global macroeconomic implications of the range of possible scenarios from No Brexit to No Deal.

October 12, 2018 WebPage Mark Zandi, Barbara Teixeira Araujo
Webinar-on-Demand

Moody's Analytics Webinar: No Brexit to No Deal

The Brexit saga is quickly coming to a head, but it is increasingly unclear which direction it is headed.

October 2018 WebPage Barbara Teixeira Araujo, Mark Zandi
Article

Weekly Market Outlook: Financial Market Volatility May Soon Influence Fed Policy

Free-falling share prices might soon drive the 10-year Treasury yield under 3%. The market value of U.S. common equity was recently 7.4% under its record high of August 29, 2018. In the event the equity market sinks 10% under its current zenith, the containment of inflation expectations supplies the Fed with more than enough leeway to temporarily halt its ongoing normalization of monetary policy. When monetary policy lacks precedent, flexibility is necessary. Never before has the Fed simultaneously firmed policy by both hiking fed funds and reducing its holdings of Treasury bonds and agency mortgage backed securities.

October 2018 Pdf John Lonski, Yukyung Choi, Franklin Kim, Katrina Ell, Barbara Teixeira Araujo, Ryan Sweet, Michael Ferlez
Article

Weekly Market Outlook: Equities Suggest Latest Climb by Treasury Yields Is Excessive

Share prices recently dropped in response to an unanticipated and possibly fundamentally overdone jump by Treasury bond yields. Nevertheless, the market value of U.S. common equity may need to drop by at least 5% from its current record high if a flight from risk is to prompt a flight to quality that is capable of lowering Treasury yields in a lasting manner. A convincing fundamental justification for the latest ascent by Treasury yields is elusive. U.S. consumer price inflation remains well contained. August 2018's PCE price index rose by merely 0.1% from July as its year-to-year increase dipped from July's 2.3 to 2.2%. More importantly, the core PCE price index, which excludes often volatile food and energy prices, was unchanged from the prior month, which left its yearly increase at 2.0% for fourth consecutive month.

October 2018 Pdf John Lonski, Yukyung Choi, Franklin Kim, Katrina Ell, Barbara Teixeira Araujo, Reka Sulyok, Ryan Sweet, Michael Ferlez
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