Optimism for US Economy Fading According to Federal Reserve Bank President

Raphael Bostic, the President of Federal Reserve Bank of Atlanta, gave a speech yesterday in Savannah Georgia. Below are two excerpts from Mr. Bostic’s speech that I pulled out of the article of Bloomberg reporter who covered the event.

• “I began the year with a decided upside tilt to my risk profile for growth, reflecting business optimism following the passage of tax reform”.
• “That optimism has almost completely faded among my contacts, replaced by concerns about trade policy and tariffs. Perceived uncertainty has risen markedly. While projects under way continue, the bar for new investment is currently quite high,”

According to the Bloomberg article, Bostic, who is a member of the Federal Reserve’s Open Market Committee (FOMC), which is charged with the raising and lowering of interest rates based on US economic activity, said the current economy reflects a tight labor market and that inflation was near the Fed’s 2% goal. His comments are in further support of my argument that the probability of a recession beginning before the major US stock market indices make a new all-time high has increased considerably.

The full article entitled “Fed’s Bostic Says Business Optimism Is Fading While Trade Tensions Rise”, is available at Bloomberg June 19, 2018.

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Disclaimer.Mr. Markowski’s predictions are frequently ahead of the curve. The September 2007 predictions that appeared in his EquitiesMagazine.com column stated that share-price collapses of the five major brokers, including Lehman and Bear Stearns, were imminent. While accurate, they proved to be premature. For this reason he had to advise readers to get out a second time in his January 2008 column entitled “Brokerages and the Sub-Prime Crash”.His third and final warning to get out, and stay out, occurred in October of 2008 after Lehman had filed for bankruptcy.In that article “The Carnage for Financials Isn’t Over” he reiterated that share prices for Goldman and Morgan Stanley were too high.By the end of November 2008, the share prices of both had fallen by an additional 60% and 70%, respectively — new all-time lows.