A Schwab market update for March 18 goes like this: (Wednesday market open) With a Federal Reserve decision directly ahead and no rate change anticipated, investors mull another hot Producer Price Index (PPI) report and cast a wary eye at crude oil and the Middle East. Headline February PPI spiked 0.7% compared with the 0.3% consensus. Stocks fell after PPI, and crude steadied amid continued Iranian attacks on Gulf states. Wall Street often treads water heading into rate announcements.

The most dire prediction of the approaching stagflationary recession, which is due entirely to the Trump administration, goes like this: Democratic Party strategist James Carville predicted that President Donald Trump’s tenure will end prematurely, stating that Trump is not long for the presidency because “everything that he tries blows up in his face.” In a Politicon video, Carville made a bold forecast about Trump’s political future. Carville stated, “I’m telling you, I think he’s just going to quit next year by this time. I think he’s just going to walk away because the Democrats control the House and the Senate.” Carville characterized Trump’s position as increasingly untenable, saying, “No one’s going to pay attention to him. The fiscal condition of the country is beyond in the ditch. The Iran thing has turned into just a catastrophe of the first order.”

We will gain insight into which problem the Fed sees as worse, because it can either raise interest rates to combat inflation or lower them to combat slowing growth and rising unemployment. Since we have a dual mandate for our Fed, it must, in the context of stagflation, do one or the other, and obviously, it cannot do both.

An often-used definition of a recession is two or more consecutive quarters of negative economic growth. Thus, we are only on the precipice of a recession and looking down, but we have not actually fallen into the gorge.

For those wanting to look at verified growth stocks, consider: IPGP, ACMR, SANM, AEIS, CGNX, FTV, EFXT, GCT, BODI, TBLA, ITEC, SCHL, ENOV, SHIP, DRD, AUGO, and SANM. For dividends and growth, consider: BHP, RNLSY, SHIP, BGS, QUAD, and UGP. For those going short, consider: ADUX, CLDX, QBTS, PONY, and LB. Over the previous three months, the top ETFs were ranked in order from highest to lowest as: PSI, SOXX, IDGT, SOXQ, and SMH. As always, good investing!

The post March 2026 Stock and Fund Picks first appeared on MarchéEconomics.

The wage growth rate is down significantly from its near-term peak more than 3 years ago (although it is still positive), according to the Atlanta Fed Wage Growth Tracker. Since peaking at 6.7% in 2022, it has steadily declined to 3.7% in early 2026. Wage growth is an important factor for a number of reasons, including as a component of economic growth and overall inflation.

Source: Federal Reserve Bank of Atlanta, Current Population Survey, Bureau of Labor Statistics and author’s calculations, as of February 15, 2026. Note: October 2025 data not collected by the Bureau of Labor Statistics.

Although Trump’s immigration policies have removed workers from the labor force and, depending on the level of unemployment within that group, may have prevented the unemployment rate from rising as fast, it appears there are also fewer jobs available. Thus, the reality is fewer jobs and lower pay. The main reason for this is Trump’s protectionist tariff policies. These same policies are behind the sudden jump in the producer price index (or PPI) to 0.5% in its latest reading. The PPI is forward-looking and represents price increases in the pipeline. By contrast, the consumer price index (CPI) is backward-looking and measures prices from a month or so earlier. The inflationary buildup and slowing growth rate (also recently reported) are consistent with a slowly developing stagflationary recession.

The current administration appears to be on a taxing (tariffs) and spending path that most Democrats would envy. Republicans supporting such policies along with the administrations political posturing reminds one of the politicians supporting France’s Vichy government during WWII that accommodated the Nazi’s. Such politicians could not be said to be on the side of Eisenhower, or in any way be considered Republicans. I guess if you were completely in the dark or totally uninformed you could be like Archie Bunker and praise Herbert Hoover (remember the All in the Family Theme Song) in a way that MAGA “Archie Bunker’s” praise Trump. I think we have to have relatively uniformed people in government to get where we are today. Luckily, the Supreme Court has finally come around and ruled that Trump’s tariffs are unconstitutional. This could be a great help.

Given that we continue to slide downhill economically. We are not yet in recession and investing is still on the table. Going long on growth stocks, one might consider: SANM, ORLA, SNEX, HRMY, EZPW, PAX, HLF, ARW, CRUS, CGEMY, DLX, and FSM. This approach should be accompanied with a build up of cash should a sudden pull-back or sell-off occur. One could also consider some stocks to short: SMR, LB, CCI, REXR, SMA, IRT, ARI, BMI, and ADUR comprise a list of candidates. For those wanting to retire in the distant future, some dividend growth stocks include: TIMB, BNPQY, BTI, CRRFY, MITT, OHI, PLTK, POR, SVNLY, USAC. The top ETFs are: XLI, XLE, XLB, XLU, and XLK. As always, Good Investing!

The post February 2026 Stock and Fund Picks first appeared on MarchéEconomics.

Because I have a Ph.D. in economics and a much vaster knowledge base in the areas of this subject, I can make predictions that will happen in the future with a high degree of accuracy. Also, since cause and effect happen with considerable lags most of my predictions refer to around six to twelve months in the future. So, if you want to know the current state of the economy, just read what I said six to twelve months in the past. Tariffs (taxes) have led, as predicted, to increasing inflation and decreasing growth, or “stagflation.” That is why the Fed remains so cautious and states that focusing on either inflation or the wobbly labor market has risks going forward. The Fed can only fight a demand side recession that, because of a reduction in consumer spending, is both deflationary and has a declining GDP. Simply increasing the money supply, signaled by decreasing the discount rate, remedies the situation . . . but with a lag, of course. Trump’s tariffs cause a supply-side or supply-chain disruption that leads to both stagnation or slowing growth and rising unemployment and inflation. If the Fed targets unemployment buy lowering rates it makes inflation worse. If the Fed targets inflation by raising rates it make unemployment worse. If Trump succeeds in pressuring the Fed for lower rates, we will most certainly face much higher inflation. This will lead to higher, not lower, long term interest rates and less domestic investment as a result. There is no simple serendipitous scenario credited to the simpletons who think that if Trump just gets his way we will be better off.

On a different topic. Trump’s narcissistic personality disorder is characterized by, among other things, a strong proclivity to respond positively to praise and react very negatively to criticism. His personality disorder makes him subject to manipulation by Putin who praises him and to an inability to handle any kind of criticism or negative news. Thus, his decisions seem irrational when, instead, the are the result of a disorder. Investors will have to take Trump’s personality disorder into consideration as it could lead to much greater uncertainty going forward. Investors in gold have already done this. You should to. For example, I would strongly consider a fund like IAUI as a way to generate income and take advantage of Trump’s personality disorder through rising gold prices. As always, good investing!

The post September Update first appeared on MarchéEconomics.

Election cycle theory suggests that the negative effects of Trump’s tariff policy will not fully set in until the beginning of next year. Thus, we can expect that the stock market will remain on relatively steady footing until then. On the other hand, Trump’s fight with Fed chair Powell has some very negative ramifications. First, Fed policy independence is being threatened by Trump. Firing Powell would send the stock market into turmoil and could cause a complete collapse in the short-run. The longer run is a bit more complicated but rests on the fact that the ECB just decided to keep interest rates the same due to tariff uncertainty.

In the U.S., Fed chair Powell has also kept interest rate reductions on hold due to tariff uncertainty and the increase in the inflation rate that is already underway due to tariffs. Trump still thinks he wants lower rates, however. Here is what happens if Trump gets his way. The Fed only controls short-term rates via the discount rate that it sets directly and the targeted federal funds rate. The discount rate is the interest rate the Fed charges member banks that need to borrow cash reserves to meet their legal reserve requirements on checking deposits. The slightly lower federal funds rate is the overnight rate charged by banks that want to lend their excess reserves to other banks to meet their reserve requirements. Lowering the discount rate causes the Fed to increase excess reserves or monetary liquidity into the banking system so as to reduce the targeted federal funds rate. More liquidity, in turn, pushes up prices and the inflation rate.

In the bond market, the real return on a bond is the nominal interest rate received by the bond holder minus the expected inflation rate. When the expected inflation rate increases due to lower short-term interest rates and increased monetary liquidity, bond holders must demand higher nominal rates so as to maintain the same real return on bonds. Consequently, existing bond holders will tend to sell their existing bonds and drive up the nominal interest rate. This happens because bond values and their corresponding nominal interest rates are inversely related. Thus, short-term rate reductions will increase interest rate expectations and longer term market interest rates in the bond market.

Some consequences of higher longer term interest rates are less private investment by home purchasers and corporations. This will increase unemployment along with the higher inflation rates. I think this is just the opposite of what Trump wants, but it just means that Trump does not understand basic economics.

Given that the economy is threatened by both tariff and monetary policy risks but effected positively by election cycle theory, one can make the argument for investing cautiously until 2026. Some growth stocks to consider are: APEI, PAAS, AU, HMY, KROS, KGC, STKL, B, and FUTU. Dividend growth stocks include: ACRE, APAM, BSET, CRGY, KGS, PAGP, TROW, VOD, and ARLP. For the previous three months, the five fastest growing ETFs were: SMHX, SHOC, SMH, TRFK, and FTEC. As always, good investing!

The post July 2025 Stock and Fund Picks first appeared on MarchéEconomics.

Thus, the Republican lies about a short-term disruption analogous to a kitchen remodel are very far from the the truth. Instead, it will be more like demolishing your house and replacing it with one that resembles the house in Christmas Story. You will need the smaller closets because clothing imports are also being taxed. It will replace your cars with just one very expensive 3000 SUX made by the UAW that earns a black spot in Consumer Reports for crash worthiness and reliability. Unfortunately, the tariffs won’t cause assault weapons to be replaced by Red Rider BB guns, otherwise I’d be somewhat more enthusiastic. In the meantime, I wouldn’t invest in the stock market. A global recession is not the appropriate circumstance for that.

April 7: Park cash funds: BOXX, USFR, ICSH, JPST, and SGOV. An investment grade CLO that will lose little and has low credit risk is JAAA. It also pays decently. A stable value money market fund is SWVXX which is always worth $1.00, pays over 4%, and is completely tradable. CEF hedges for inflation include: CEF, GLD, and RLY. Good NOT investing!

April 21: If Trump succeeds in replacing the Fed Chair Powel with a crony who will lower the discount rate and increase the money supply, tariff induced inflation will become extremely bad. This will cause real assets that hold their value relative to devalued dollars to skyrocket in value. Holding funds such as CEFS, GLD and RLY or buying real estate would be the best ways to play that scenario.

April 28: By Hari Kishan

BENGALURU (Reuters) -Risks are high that the global economy will slip into recession this year, according to a majority of economists in a Reuters poll, in which scores said U.S. President Donald Trump’s tariffs have damaged business sentiment.

Just three months ago, the same group of economists covering nearly 50 economies had expected the global economy to grow at a strong, steady clip.

But Trump’s push to reshape world trade by imposing tariffs on all U.S. imports has sent shockwaves through financial markets, wiping out trillions of dollars in stock market value, and shaken investors’ confidence in U.S. assets, including the dollar, as a safe haven.

While Trump has suspended the heaviest tariffs imposed on almost all trading partners for a few months, a 10% blanket duty remains, as well as a 145% tariff on China, the United States’ largest trading partner.   Continue reading

“It’s hard enough for firms to think about July right now where they don’t know what the reciprocal tariffs are. Try and plan another year down the road. I mean, who knows what it looks like, let alone five years down the road,” said James Rossiter, head of global macro strategy at TD Securities.

The post April 2025 Stock and Fund Picks first appeared on MarchéEconomics.

There are some parallels to Trump’s recent election victory. Many blue-collar workers have lost jobs to competition from international trade over the last 80 years or so because every trade negotiation round has reduced tariffs. Based on theories from Adam Smith and David Ricardo, international growth and wealth creation have been enormous as a result of reduced tariffs and increased trade. Trade negotiations have been driven by academics who thought to also consider the loss of jobs that would result in import-competing industries. For example, some may remember the garment workers and their union. Thus, some of the wealth created from greater specialization and trade was diverted into retraining workers who lost their jobs to trade.

But this was a tremendously narrow consideration as it turns out. Blue-collar workers are among those demographic groups that prefer the status quo. Staying put geographically and working at the same job is highly preferred. Thus, the retraining programs and subsidies, along with job loss, may more often be seen as a threat rather than an opportunity. So along comes Trump who promises to fix things and return the beloved status quo by raising tariffs. The problem is that those who fell under the spell of such demagoguery were not among those who could perceive the true consequences of such a policy. As a result, Trump has been voted back in so the effects of these policies are going to surely be learned the hard way. The only upside is that the resulting economic disaster may truly be the end of Trump.

Despite the recent stock market euphoria, the longer-term economic and stock market trajectory does not appear rosy. Higher prices for consumers will more than offset any jobs protected within the less efficient import-competing industries. More efficient export industries that might have hired more workers will now face retaliatory tariffs from our trading partners. Like Harley Davidson threatened to do under Trump’s previous administration, these exporters may want to move their manufacturing facilities to other countries to avoid facing tariffs on their exports. Other manufacturers will simply search for unaffected low-cost places to source inputs and locate manufacturing processes. If they cannot find those, they are more likely to go out of business because onshoring would be too cost-prohibitive.

Creating monopolies and greater inefficiency in import-competing industries is unlikely to create many jobs or increase industrial production. But then, it is also hard to imagine markets working better with a bunch of tariffs or taxes. It will, however, embolden socialists who don’t want markets. So maybe we will vote for another Ricard Nixon next.

With this said, here are some stocks to consider that should be good for about another 3 months or so: MCY, CSTL, THC, KGC, IDCC, PSN, LDOS, and ENVA. Dividend growth stocks include KSS, BBY, AB, ALSMY, PFE, TROW, APAM, FFIC, and WASH. Over the previous 3 months, the top ETFs were PTF, SKYY, FDN, TRFM, and PAVE. I hope your expectations for the future are better than mine. Good investing!

The post November Stock and Fund Picks first appeared on MarchéEconomics.

Buffett believes the market economy has become more and more “specialized” with “economic rewards flowing to people with specialized talents.” This, he says, has caused the wealth gap with many people barely getting by while others thrive.

“It was an agrarian economy a couple hundred years ago,” he said in an interview with CNN. “Very hard, you know, to get 20 times the wealth of the next guy because you were a little bit better farmer. But if you’re better at some skills now, you can become incredibly wealthy at a very young age … You get to capitalize [the] value of an idea. And so the wealth moves big time, even on an anticipatory basis.”

Now, he says, there’s a “mismatch” between the requirements of attractive jobs and the skills of the early American labor force, which is “simply a consequence of an economic engine that constantly requires more high-order talents while reducing the need for commodity-like tasks.”

The brutal truth, he says, is that “a great many people” will be left behind in an advanced economic system.

According to him, the solution is the right economic policies. “First, we should wish, in our rich society, for every person who is willing to work to receive income that will provide him or her a decent lifestyle. Second, any plan to do that should not distort our market system, the key element required for growth and prosperity,” he wrote.

Simply put, he thinks it’s difficult for average Americans to earn their way to significant wealth. Investing offers a simpler way of securing your financial future and growing your money in this specialized market-based economy.

Buffett’s advice to people is “just keep buying” and ignore “jabbering” about the market. In an interview with PBS, he said, “They should be willing to bet on America … They should just keep buying and buying and buying a little bit of America as they go along. And 30 or 40 years from now, they will have a lot of money.”

The post Warren Buffet explains the wealth gap first appeared on MarchéEconomics.

Let’s examine the balance sheet run-off aspect by looking at the opposite scenario first. When the Fed buys bonds and builds up its balance sheet it injects money into the economy and expands excess reserves in the banking sector. This makes credit easier to get and lowers the Federal Funds rate, which is the private sector overnight rate that banks lend excess reserves to one another in order to meet their reserve requirements. The Fed announces this expansionary process buy cutting interest rates, or equivalently, the discount rate that the Fed sets for making loans to banks to meet their reserve requirements. Typically, the Fed seeks a private market Federal Funds target rate that is a little less than the directly set discount rate. This is so that Federal Reserve system banks will tend to borrow excess reserves in Federal Funds market rather than at the Fed’s discount rate. This allows the Fed to scrutinize banks that borrow from it at a higher rate than they could in the Federal Funds market, possibly indicating a bank that is in a bit of trouble.

When, in contrast, the Fed raises rates it typically sells bonds thereby reducing excess reserves in the banking sector, raising the Federal Funds rate, and reducing the money supply in the economy in order to fight inflation. This process makes credit harder to get and slows aggregate demand. Although the Fed has ended its campaign of raising rates it has never simultaneously embarked on a bond selling scheme. Instead it has simply allowed its balance sheet bonds to mature and then roll off its balance sheet. In other words, it has slowly allowed its balance sheet credit to decrease. This has reduced the money supply (such as the monetary aggregate M2) very little.

As I have indicated, the rate these bonds mature and role off the Feds balance sheet are beginning to accelerate, and quite rapidly. When the US Treasury refinances this government debt at higher rates and auctions the bonds the money supply is decreased. The rate of money supply decrease will accelerate with the rate bonds mature and role off the Feds balance sheet. The Fed has no control over this process and thus cannot directly reduce the rate of its balance sheet run off in spite of its intention to do so.

So, what can the Fed actually do? Maturing bonds represent government debt that must be refinanced by newly issued Treasury bonds. Since the Fed cannot slow is balance sheet run off directly, the only thing it can do to slow its balance sheet run off is to buy up some of the newly issued and higher rate bonds. It must do this fairly soon. Otherwise, banks will use their excess reserves to make loans or create assets by purchasing these zero risk, higher rate bonds from the Treasury. This will decrease excess reserves and drive up the Federal Funds rate so as to become greater than the Feds discount rate. Assuming the Fed doesn’t want this to happen it must buy up some of the bonds before the banks do and thereby monetize the newly issued higher interest rate government debt. This is what the Fed actually means when it says it wants to slow its balance sheet run off. Of course, when the Fed buys bonds it must correspondingly cut its discount. rate in order make everyone aware of just what it is doing.

When the Fed monetizes US government debt it is expansionary, especially on the aggregate demand side of the economy. Thus, instead of trying slow the economy with interest rate hikes, it must now stimulate the economy with interest rate decreases and money supply increases. Luckily, we also have secular productivity increases on the supply-side of the economy caused by AI. The productivity increases due to AI decease the unit cost of output, increases business profits, and increases real incomes. The labor market will stay relatively tight as long as the technological advances are more labor augmenting than they are labor substituting. Like during the 90s when microcomputers were introduced into production processes, AI appears to be relatively more labor augmenting, at least on average.

During the mid 1990s the Clinton Tax increases, military expenditure decreases, and Republican social funding decreases combined to be very contractionary on the aggregate demand side of the economy. That said, supply-side forces such as the increased use of microcomputers and low oil and gas prices dominated the contractionary forces on the demand side of the economy and created an economic and stock market boom during the 90s. I expect similar supply-side expansion to occur again but this time driven by the increasing use of AI. The big difference with the 90s is that there are no fiscal austerity or contractionary forces on the demand side of the economy, but instead only expansionary forces. However, if aggregate supply growth dominates aggregate demand growth, inflation and potential asset bubbles associated with excessive money supply growth such as occurred from 2001 through 2007-8 might become less of a problem.

So, with good times expected, I’d consider growth stocks such as: ACMR, AMSF, EIG, WMS, AWI, CRH, IBP, KNF, LRN, MGDDY, and IMXI. For dividends and growth, consider: BCSF, KRO, LXFR, and OUT. Over the preceding 3 months, the fastest growing ETFs were: SMH, SOXX, SOXQ, IGPT, and IGM. As always, good investing!

The post March 2024 Stock and Fund Picks first appeared on MarchéEconomics.

The Fed rate hike and attack phase pause is a positive. Another short-term positive is the only about 25% of stocks remain below their 200 day moving average which is broad-based and bullish. When only 25% of stocks are above their 200 day moving average bullish market breadth is very narrow and bareish. This is usually a good time to buy. But it could turn out to be a bear market rally that soon turns sour.

The reason why the market could turn is that most economic indicators are rather weak. If either the labor market or consumer confidence change for the negative, a recession is guaranteed. Because the Fed failed to attack inflation directly and, because as Mayur Thaker of Zacks Weekly Market Analyses, 6 November, 2023 states “. . . remains steadfast in keeping short end rates higher for longer, and as both S&P and Fitch Ratings downgraded US credit ratings, the 2yr-10yr UST spread has been rapidly steepening, primarily driven by a rising 10-year yield—often called a ‘bear steepener’. Moody’s recently warned of further credit rating cuts on the US if the government shuts down later next month.

. . . It remains possible that long rates actually increase due to the perception of increasing credit risk. Some 31% of all Treasury debt outstanding is set to mature in the coming 12 months, and with a large and burgeoning $2 trillion budget deficit—or 8% of GDP, highest in 60 years—that the US government will have to refinance at significantly higher rates partially due to the notable absence of buyers at the Federal Reserve and China this time around.”

Thaker continues, “. . . The effects of high nominal and real yields together for an extended period of time, including the possibility of even higher yields in the near future, will exert extraordinary pressure on economic decision-making at the margin and tilt us toward recession.” Which will be made worse after a long-period of the Fed weakening the economy. “. . . Although the Fed is clear they are okay with a mild to moderate recession so long as they achieve their objective of inflation sustainably around 2%,” I would argue that the mild recession may become much worse.

Thacker adds that, “. . . We can now confidently add higher bond yields due to rising credit risk to the list of market headwinds, which include negative real retail sales, declining weekly hours, manufacturing in recession, large negative revisions to jobs, leading economic indicators in recession, banks under duress, rising defaults, delinquencies and bankruptcies.”

I think the bottom line is a short-run stock rally. But throwing a monster anchor of debt on a weakened economy that appears now more like a tired swimmer will not produce the results anybody wants. Ultimately, this may very likely become a huge Fed or government failure that will be extremely difficult for the market economy to endure.

And, I’ll add one more caveat: Let’s be smart an not add a Trump disaster to the mix.

On that note, consider the following growth stocks as likely to produce positive results over the next 1 – 3 months: PBF, BHC, MTK, GWRE, OCUP, QRTEA, CXM, PODD, VITL, ASUR, VEOEY, ACDVF, FUTU, ACGL. For dividends and growth over the next 1 – 3 months: GPS, ISNPY, LPG, HRZN, NNGRY, UUGRY, AY, BBY. Over the last 3 months, which the stock market has been largely down, the 5 top ETFs with positive to zero gains and listed from high to low include: IEO, XLK, IGV, IYW, and IGPT. As always, good investing!

The post November Stock and Fund Picks first appeared on MarchéEconomics.

Thus, we can expect the Fed to increase the discount (short) rate some more. Given that inflationary expectations must be contained so that businesses will quit marking up output higher than necessary and thereby causing inflation, the Fed should be expected (based on the Taylor Rule) to get short rates up to where they are above the actual inflation rate by about one to two percentage points. That would actually require another series of quarter point bumps in the 4 to 8 range.

The bottom line for investors is that the end of this long tunnel of dismalness and despair may be in sight, yet still be a ways off. In the meantime, the market will have several more short-lived rallies followed by profit taking, as we just experienced. Eventually, one of these rallies will be for real — and you don’t want to be out of the market when that happens — but for now be patient.

There are actually some growth stocks to consider such as: HUBB, PKOH, KMT, ENS, FELE, RRX, and CASY. Growth and dividend stocks you might also consider include: EPM, MDC, AROC, IBM, CCAP, CTO, HRZN, PFLT, and SBGI. The previous 3 months recorded the best ETF performance from: XNTK, IYW, SOXX, IGM, and XLK. In general, I’d stay invested and look to take profits after any short rally, but then be sure to re-invest theme in a “rinse-and-repeat” fashion for about the next 4 – 6 months or so. In the meantime I’ll wish you good investing!

July 13 update: With a better than expected CPI and PPI read than was expected, all expectations for future FED rate hikes shift down. In other words, the lower inflation readings cause the discount rate to be relatively higher now than before. Thus, the number of future rate hikes is reduced significantly. The latest readings lower inflation about 1 – 1.5 percent making that discount rate about 1 – 1.5 percent above the current inflation rate, thus the target rate for the discount rate to reduce inflationary expectations is nearly met.

All this sounds rosy but corporate profits have been in decline for about a year. All else held constant, this pushes up P/E ratios and tends to short-circuit any rally that pushes up prices. Until the downward corporate earnings trend bottoms and an uptrend begins to develop, any stock market rally should remain suspect. Given that inflation trends remain downward, attention should be shifted more toward corporate earnings. Any earnings driven rally is like catching a good wave. In the meantime, hang loose!

The post June Stock and Fund Picks first appeared on MarchéEconomics.