Media Appearances

TrendMacro CIO Donald Luskin and Patriarch Organization CEO Eric Schiffer on whether investors should be cautious about buying Lyft and the problems surrounding the tech sector.

Raymond James chief investment strategist Jeff Saut and TrendMacro CIO Donald Luskin discuss how earnings will affect the U.S. market and whether investors should be concerned about special counsel Robert Mueller’s investigation.

Trendmacro CEO Donald Luskin says President Trump’s optimistic approach towards a U.S-China trade resolution is helping the markets.

TrendMacro CIO Donald Luskin discusses the economic problems facing Venezuela and President Trump’s upcoming State of the Union address.

Investors are turning their attention to this week’s Federal Reserve policy meeting. How will the markets react? TrendMacro CIO Donald Luskin and Erin Gibbs of S&P Investment Advisory Services with more.

TrendMacro CEO Donald Luskin on U.S. trade negotiations with China and the outlook for stocks.

FBN’s Trish Regan, TrendMacro chief investment officer Donald Luskin and former Reagan economic adviser Art Laffer discuss how former President Barack Obama tried to take credit for the booming U.S. economy.

All of this suggests that the communist who runs China has no interest in embracing freer trade with the United States. But Don Luskin of Trend Macrolytics argues that to avoid an economic calamity and resulting social unrest, Mr. Xi will have to cut a deal with the U.S. In a note to clients this week, Mr. Luskin writes that the arrest in Canada of Meng Wanzhou, chief financial officer of Chinese telecom giant Huawei, is only adding to the pressure on Mr. Xi:

"Indeed, the greatest effect of the Meng arrest, we think, has been to elicit an outpouring of global support for the move and condemnation of China, and a catalyzing of what is developing into a global boycott of Huawei and ZTE products. With the US’s global allies having been conspicuously silent on trade issues, it would seem that there is nevertheless a great willingness to stand up and be counted on security issues.

"Since the Buenos Aires summit – falsely called in the media a mere 'truce' – the US has continued to exert every form of pressure that was in place before (indeed, added pressure through the Meng arrest), while China has laid down its arms: it has resumed buying US agricultural products, dropped retaliatory tariffs on US autos, and announced it will re-engineer its provocative – and seemingly sacrosanct – Made In China 2025 doctrine.

"So make no mistake about it – we are getting to 'yes' with a very high probability."

Let’s hope Mr. Luskin is right on China. No word yet on whether he can persuade Times contributors to stop contemplating mass suicide.

While nobody on Wall Street believes the road to a broad, final trade agreement between the two nations will be easy or free of risk, the thaw in relations has boosted investors' hopes for a deal. "Negotiations over those 90 days will no doubt be rocky, but this is the all-clear signal that nobody is going to walk off a cliff," noted Donald Luskin, chief investment officer at research firm TrendMacro.

Trend Macro chief investment officer Don Luskin on the possible causes to the market selloff.

Donald Luskin, chief investment officer at Trend Macro, discusses the left wing media’s attacks against the current state of the economy, how Democrats have criticized President Trump’s tax policy and the U.S., Mexico trade deal.

Don Luskin, chief investment officer at Trend Macro, joined SiriusXM host Rebecca Mansour on Monday’s Breitbart News Tonight to discuss his recent Wall Street Journal op-ed, “China Is Losing the Trade War with Trump.”

...Don Luskin of Trend Macrolytics wrote to clients about Mr. Trump’s plan for new tariffs—essentially taxes on steel and aluminum consumers: "Trump’s economic record has been excellent, and we draw assurance from that. But the very fact that this is his first big mistake requires markets to let him know he’s making it – which is one reason we think this has to prolong the present stock market correction. Considering that Trump has bragged so often about the rising stock market, presumably he would listen when it sends him a message."

Let’s hope so. Mr. Trump’s tweets this week suggesting it’s all just part of a NAFTA renegotiation may have some investors feeling less concerned, and perhaps that’s reflected in a more cheerful market as of this writing. This column thinks Mr. Trump is playing with fire. But on Friday Mr. Luskin suggested that the anti-growth tariff plan might be watered down a bit and expressed the hope that we are simply witnessing “the classic ‘big ask’ gambit in the art of the deal, designed to wring concessions out of counterparties. The negotiations will overlap with the ongoing NAFTA wrangling, as Canada and Mexico are the number one and number three exporters of steel to the US, respectively.”

The Wall Street Journal editorial page has always been appropriately skeptical of the claims of former Federal Reserve Chair Ben Bernanke during the quantitative-easing era. So there’s no reason, today, to let his dubious rationales for QE be a basis for worry about stock prices now that these programs are finally being unwound.

In your Jan. 17 editorial “The Tax-Reform Stock Rally,” you say Ben Bernanke sold QE “as a tool to drive investors into riskier assets, including stocks.” But it isn’t true just because he said it. When the Fed buys bonds or mortgage-backed securities, it gives the seller, in payment, a cash deposit on the Fed’s balance sheet. In such a transaction, all that happens is that the duration-risk of long-term Treasurys and the prepayment risk of MBS is taken out of the market by the Fed, replaced with a riskless overnight deposit that earns the prevailing fed-funds rate. Whatever rationales Mr. Bernanke may have offered, the true boon of QE was simply to de-risk a market that was reeling from the worst financial panic in generations.

Nobody was driven into stocks, or into anything else. If for some reason an investor, who had sold his Treasury bonds to the Fed, decided to use the cash proceeds to buy stocks, then some other investor would have to sell those stocks. There is, of necessity, no change at all in the net ownership of stocks.

De-risking was important after the global financial crisis, so the Fed’s buying several trillion dollars of Treasurys and MBS may have actually made a difference, if only by calming things down a little bit. But the crisis has long been resolved, and markets don’t need to be de-risked any longer. In today’s more risk-tolerant environment, the Fed’s glacial runoff of its bond and MBS portfolio, through natural maturation, not outright sales, will drip a little risk back into the market one day at a time. Today’s market won’t even notice.

By unwinding its asset portfolio now, when the market can easily tolerate a little more risk, the Fed is not imperiling the economic expansion and the bull market in stocks, but prolonging them by returning to a more normal and predictable policy posture.

Donald L. Luskin

CIO, Trend Macrolytics LLC

Chicago

But the tax math will be tricky for many high-earners in states with the highest tax rates. The bill reduces the top federal tax rate to 37% from 39.6% and increases the threshold at which it kicks in to $600,000 from $470,000 for couples filing jointly. Our friend Don Luskin did the math and says that high earners in states with top rates exceeding 6.56% could see their tax bills increase.

The risk to financial markets is more about political unrest and instability in Saudi Arabia, rather than a dramatic drop to Prince Alwaleed's U.S. stock holdings, like Citigroup, which he has owned since 1991, and Apple.

"The risk for global markets is that the Saudi royal family destroys itself in a fratricidal game of thrones, opening the door to a new radical regime that would be hostile to U.S. interests or play games with oil supplies," said Donald Luskin, chief investment officer at the financial firm TrendMacro.

"Don't let the milestones cause you to miss the simple underlying story: corporate earnings are at all-time highs. So stocks are at all-time highs," says Donald Luskin, chief investment officer at TrendMacro in Chicago. That's how it is supposed to work, he adds.

As our friend Donald Luskin has pointed out, the Schumer Democrats have no standing to stop Republicans from eliminating the blue state tax benefit if they sit out the debate. The GOP only has an incentive to deal if Mr. Schumer delivers at least eight Democrats to provide the 60 votes to make tax reform permanent under Senate budget rules. What will it be, Chuck, play or have your constituents pay?

It’s disappointing that Martin Feldstein, once the champion of Reaganomics, would now need to defend the House GOP’s border-adjustment scheme by arguing that it is necessary for “cutting the corporate tax rate—and stimulating economic growth—without a major increase in the budget deficit.” Three decades ago Mr. Feldstein would have argued that cutting the U.S. corporate tax rate from the highest in the world would decrease the budget deficit precisely because it will stimulate growth.

In the course of my hunt for Donalds, I happened to connect with Donald Luskin, a Chicago-based economic strategist who supported Trump in the election. His firm, TrendMacro, was by his estimation one of the earliest predictors of a Trump win. So does Luskin love all the attention he’s getting just because of his first name? “I can’t think of a single case where anyone’s ever raised it,” he said. Still, he’s worked it into a few jokes, sure. “Part of my work is to talk about political developments, so I’ll say something like, ‘I just want to make it perfectly clear that I am only a Donald, I’m not the Donald.’ ” And that’s really it. “Donald’s just not all that unusual. I think it’s less weird than if my name happened to be Barack.”

The Journal article also indicated that “retailers and oil refiners have lined up against the measure, warning it would drive up their tax bills and force them to raise prices.” It also reported that Koch Industries “last month said the border-adjustment measure could have ‘devastating’ long-term consequences for the economy and the American consumer.” In an opinion piece, Donald Luskin wrote that “the costs [of taxing imports] would be passed on to Americans in some form: either to consumers through higher prices or to stockholders through lower profits.”

Whether the bullish hype turns out to be the right trade remains to be seen, as Trump has yet to get the keys to the White House or make one of his campaign promises come true.

"Whatever else the future holds, Trump has already made the U.S. stock market great again," Don Luskin, chief investment officer at investment firm TrendMacro, told USA TODAY.

The market is similarly divided over recent comments by Fed Chair Janet Yellen that there could some benefit to running a "high-pressure economy," with 49 percent saying the Fed should run one and 43 percent saying it shouldn't. "It's hilarious that Yellen thinks, at this point, she has the power to wave a magic wand and 'run a high-pressure economy,'" wrote Donald Luskin, chief investment officer of Trend Macrolytics.

Republicans see the growth in the 1980s and the late 1990s growth after capital gains rate cuts as proof that people are more willing to save, work and invest if they can keep more of what they earn.

“When the pie is as large as possible, then you have the least questions about the distribution of that pie,” said Donald Luskin, chief investment officer at Trend Macrolytics. “We’re not having a serious economically driven conversation about this. We’re just having a populist appeal.”

"God bless Lael Brainard,'' wrote Donald Luskin, chief investment officer of Trend Macrolytics, a reference to the Fed governor who recently offered a detailed speech of why the Fed shouldn't hike.

Says Don Luskin, chief investment officer at TrendMacro: “Trump’s plan has been up on his website for many months. There is nothing new about it at all. Everyone is acting as though he ‘finally’ laid out his ‘plan’ for ‘the economy.’ It’s been there in plain sight all along. It got a few tweaks yesterday, but there is no news here at all.”

If only Mr. Trump were as eloquent in expressing his goals and objectives as Mr. Luskin, what a difference it could make for America.

"We don't believe it will happen," Don Luskin, chief investment officer at TrendMacro, told clients in a note titled "Is the Fed Stuck On Stupid?"

Adds Luskin: "We still think no hike until December, and probably not even then. There's not good reason for it , and lots of good reasons against it."

We speak with Luskin about how the dramatic drop in crude oil prices has affected the global economy and how it will likely affect it in the future. 

"The current very strong relative attractiveness of stocks versus bonds puts a safety net under how far equities can fall," says Donald Luskin, chief investment officer at TrendMacro. "There's a natural hedge here. More panic in China should drive long-term bond yields lower as a safe-haven play, and that would make stocks look even more attractive on a relative basis."

"Many of the headwinds that sparked the U.S. stock market's biggest swoon since 2011 are no longer weighing down the market like they did earlier this year, says Don Luskin, chief investment officer at TrendMacro.

"The big August correction was caused by the strong dollar, collapsing oil prices, a scary slowdown in China, and a Fed that seemed determined to hike rates despite it all," says Luskin. "Every risk factor driving the big correction has reversed for the better now."

"China's move highlights the fragility of the global economy, and the Fed is always inclined toward a 'safety first' attitude -- so in the absence of any compelling reason to hike rates, this will be just one more reason not to," Donald Luskin, chief investment officer at TrendMacro, told USA TODAY. "China's move will have repercussions that may take time to play out, including an implicit strengthening of the dollar that would tend to lower inflation. The Fed will want to play wait-and-see. They've waited almost seven years. Why not a couple more meetings?"

I'm saying that, five years from now, if you adjust for today's dollars, we're going to be between $15 and $40. That's been our forecast all along and it still is.

However, it takes time for technology to play out. Right now there are frackers who can produce a barrel of oil for $23 and there are frackers who can produce a barrel of oil for $90. Somewhere in between there is a fracker who can produce a barrel of oil for $50. Right now he's the one for whom there is just enough demand. So that's why the price is where it is.

OPEC is no longer the swing producer. It's the American fracker who is the swing producer. American frackers have, at today's level of demand, a cost function that is between about $25 and $80. So, unless there is a demand collapse and I can show you all kinds of statistics that show that demand is actually growing, which is what you would expect when prices come down we're moving up through the cost structure.

The ECB's move is "not as big a deal as it seems," TrendMacro CIO Donald Luskin wrote in a note, especially in light of Wednesday morning's announcement that the ECB had authorized Greece's central bank to use "Emergency Liquidity Assistance" for Greek banks as needed.

"If you put both of today's policy moves together, what it means is that the Greek government -- not the Eurosystem -- will be on the hook for the collateral. But there will still be a funding mechanism for the banks, in case there is a serious run on them. That's the important thing," Luskin wrote.

The geographic shift of the Ebola crisis to U.S. soil in recent days has also put investors on edge, as concern about the spread of the virus and its potential impact on economic growth mounts but with no clear answers evident.

"This is the authentic black swan, the one nobody expected," says Don Luskin, chief Investment officer at TrendMacro. "Markets are experiencing the shock of recognition with Ebola."

Big round numbers like 1900 are often tough to barrel through easily..

Don Luskin, chief investment officer at TrendMacro, says the recent market weakness is history.

"Round numbers are meaningless, but it's meaningful to make all-time highs," says Luskin. "The winter correction is over. Spring has sprung. It's going to be a very good year. The sector rotation out of growth stocks that had everyone scared in April is over, and in fact has reversed itself. "

"To have only a 6% correction is a great sign of strength," says Donald Luskin, chief investment officer at TrendMacro. "It is telling us that U.S. stocks might have been tired but didn't want to go down. They just took a little nap."

..."The economy is not sprinting, but it's finally back on its feet," Luskin says.

Lorcan Roche Kelly, chief Europe strategist at TrendMacro, a US fund advisory firm, said the euro-area GDP numbers were at odds with ECB lending data, which showed continuing reductions in credit to small and medium- sized companies.

Without increasing credit to this critical sector, any return to vigorous growth was nearly impossible.

In a note put out yesterday, Lorcan Roche Kelly of Trend Macrolytics has a slightly contrarian take on what the ECB should do tomorrow. First of all, he does think there will be a rate cut, whereas previously he was skeptical.

BUT, he argues that a rate cut isn't the right tool for the job, and won't accomplish anything because of how broken everything is. Instead, the ECB needs to open up new channels to extend credit to Small and Medium Sized Enterprises, especially in the periphery where traditional monetary policy channels are impaired.

For a broad example of what the ECB could do that would actually be effective, he writes:

It may be that these moves are enough to prompt action from the ECB -- such as increasing collateral eligibility of SME credits, or so-called "structural operations" through the national central banks. If they were, then that would certainly be much more positive for the euro area than a rate cut.

Bottom line:

As usual with the ECB, this Thursday the rate announcement is made 45 minutes before the press conference starts. An announcement of a rate cut is a likely signal that the ECB is going to do nothing more. Conversely, no rate cut announcement should not necessarily be viewed as a time to sell. The data -- especially the inflation data -- demands a reaction from the ECB. If it -- correctly -- chooses not to use the interest rate tool, then anything else it chooses will have more of the "big bang" properties that can give the ongoing rally new legs. On the other hand, if the ECB does nothing at all, we will have the seen the top in the peripheral debt rally, at least until the ECB finally responds.

The European Central Bank Thursday...announced that if Cyprus didn't finally iron out a deal with international creditors by Monday, then the ECB would cut off emergency funding to the country's banks.

"This is a hard deadline of Monday evening on the continued existence of the Cypriot banking system as we know it," said Lorcan Roche Kelly, chief Europe strategist at research firm Trend Macro in Ireland. "While it was never likely that it would survive intact, the ECB has this morning forced the issue."

TREND MACRO, Lorcan Roche Kelly: "Reports on depositors being in the firing line have been circulating for weeks, and so it is not a surprise that the bail-in has been announced. However, the risks -- beyond upsetting Cypriot depositors -- are unknown. The rather bold assumption on the part of the Europeans is that this will have little effect. They may well be right. There have been rumors of a depositor bail-in for weeks and there have been no signs of flight. The ECB has promised to back-stop any disruption -- that is a promise that we can rely on. However, the risk is that depositors outside Cyprus will take fright and start to leave their banks. The euro has no single treasury backing it. Therefore, more than any other currency it has to rely on trust to maintain its value. With this deal, the euro area is testing the trust of both the markets and ordinary depositors. It seems likely that it will pass the test, but the judgement is out of its hands. Bank deposit flight can be [handled]. Trust in the currency cannot so easily be restored."

There's a debate in Ireland happening tonight designed to help reduce the massive debt burden the country is still facing since the collapse of the country's banks in the financial crisis... Lorcan Roche Kelly of Trend Macrolytics has emailed us a fantastic explainer of what's going on in Ireland. This is the clearest explanation we've seen yet, and we're very grateful for Lorcan's clarity on this. Be sure to follow him on Twitter @lorcanrk.

In the wake of the collapse of the Irish property market, two of the worst Irish banks -- Anglo Irish Bank and Irish Nationwide Building Society -- were nationalized and turned into a new institution called Irish Bank Resolution Corporation (IBRC) with the intention of working the institution down over a number of years.

The new institution had funding needs of over EUR 30 billion that were met by the government -- as owner of the institution -- writing a debt instrument called a Promissory Note. This note was repoed through the Irish Central Bank through a mechanism called Extraordinary Liquidity Assistance (ELA). Under ECB rules, ELA is outside normal ECB lending and is done at a national central bank level with ECB oversight.

The terms of the Promissory notes require payment at the end of each March of EUR 3.1 billion from current spending.

The current government -- elected in 2011 -- promised to reform the Promissory notes to end the arrangement requiring EUR 3.1 bn annual payments.

In the approach to to next payment -- due in 8 weeks the government has promised not to make the payment.

Two weeks ago a government proposal to exchange the prom notes with longer term debt on the Irish Central Bank balance sheet was rejected by the ECB.

Today's developments are the government trying to skin the cat another way. First, they are ending IBRC. After the passage of the legislation currently in front of the Dáil, it will no longer exist.

The IBRC assets will be moved to NAMA (Ireland's bad bank). The prom note will be replaced at the Irish Central Bank with NAMA issued bonds that are covered by a government guarantee.

The NAMA bonds will be structured like normal bonds -- only requiring annual interest payments until the end of their term -- and so will lead to reduced current expenditure in the short term.

However, this deal still has to be given the ok from the ECB who have oversight of the Irish Central Bank. They may make their decision tomorrow, if so it will be announced by Mario Draghi at the ECB press conference at 1:30 GMT.