NEW YORK New York (Texas Insider Report) Dear Santa: When Hillary Clinton was well ahead in the polls for the presidential election the markets both bond and stock surfed along at a comfortable pace. Low interest rates appeared to be on the forecast for months to come maybe even years. Major policy initiatives were expected to be few and far between.
But no the 2016 Election did not work out as many had planned. Donald Trump trumped the skeptics and took the trophy. With that came a sea change in outlook for the economy and government policy. As we await the crowning of the new Prince on January 21st 2017 investors have already planted a few flags in the battlefield.
Although the Fed had threatened to raise the target funds rate again at least 4 times after the December 2015 raise it found reason to fail to take action at each meeting. Coming into the last meeting of this year it was expected that the same conundrum could persist.
At least if they did pull the trigger it would be one and done for the year to come.
Statements out of the Trump Tower on 5th Avenue have energized those little grey cells said Hercule Perot to suggest and anticipate what could be rather than remain defending what should be preserved.
The stock market has been on a tear once the election results were in. The U.S. Treasury bond markets jumped in yield over 80 basis points throughout the curve and the sun came out rather than wait until tomorrow as the song goes.
O-b-wans regulatory crusade against business has come to an end. What a reversal of fortune!!
The Federal Open Market Committee did close out the year bumping up the FFS target rate another 25 basis points but remained cautious in their forecast for the year to come. The yield rally in the credit markets was well on its way before the December meeting. Further moves in their words will only come after these eco-communists connect the colored dots. Both Alan Greenspan and Ben Bernanke gave better guidance than the current Fed Chair.
With the economy dying under the weight of the O-b-wan led liberal-progressive administration that favors cultural social and economic equality assured by strangling regulations and intense oversight the economy has struggled to 
improve beyond a 2 annual growth rate.
Employment statistics on the numbers show a declining unemployment rate a function of workers leaving the labor force some as result of an aging population as the nations birth rate has been declining for decades as well as a result of liberal-progressive programs to support those who choose not to work.
Bank lending restraints imposed by the Dodd-Frank Act (DFA) have held the banks accountable for an unbalanced selection of the credit worthy. A result has been a scattering of lendable funds where they meet the regulatory tests at rates that barely cover the costs imposed to meet those regulations.
With a rallying cry to rupture the DFA bunker bank stocks were a major recipient of the new found enthusiasm for the nations economy. Selection of the President-elects supporting cast from Secretary of State to Secretary of the Army has confirmed for all to see that there is a new leader in town and the shift in emphasis shall be abrupt.
Some of the problems to deal with are not of our own making.
- Brexit may in fact undermine the European Economic Community (EEC) and its Monetary Union (EMU). That would only further the relative appreciation of the dollar to all foreign currencies.
- Migration immigration and refugees seeking asylum from the war factories of Syria Lebanon Libya Somalia to name a few have become a major world cultural identity crisis as well as a density integration problem.
Filtering out those who purport to further the cause of Jihad has put the whole western world on alert. On one side is the Christian ethic to be compassionate but on the other is the directive of our preamble to the Constitution….
Establish justice insure domestic tranquility provide for the common defense promote the general welfare and secure the blessings of liberty…
Domestically the job market is unbalanced. Industrial production has returned to the level recorded before the Great Recession however employment is down 200000. Robots technology and improved techniques have made production more efficient. The most costly unit of any business is people. All business no matter if it is retail or industrial sings the same dirge. The education system under the current leadership stresses the need for a college diploma as the ticket to economic salvation. The engine that could needs engineers not extended college participants under a government grant: laborers with skills plumbers and electricians and most importantly people who want to earn to get ahead.
As the man says there is always a place for someone who is willing to start at the bottom. The next step is up to you!
This is the promise of the incoming administration.
Whether it can be fulfilled is yet to be seen but the limbo bar is set very low. In this case the challenge is to get over it not under it.
Quite a season to be Jolly. May the Great Pumpkin bring your family Good Tiding & Cheer. Aand a shot of schnapps would be welcome as well.
Feel free to share this email with anyone else you believe might have an interest. It is written from my point of view about topics that I 
find interesting and I dont expect readers to agree with me even half the time.
Marc L. Flaster has advised financial institutions across Texas in balance sheet management for over 35 years. The views expressed in this article do not necessarily reflect the opinions of any client or organization with which Marc L. Flaster might be affiliated.
