Category Archives: Economic Indicators

April Import and Export Prices

KEY DATA: Imports: +0.5%; Fuel: +1.6%; Nonfuel: +0.3%; Exports: +0.2%; Farm: +0.3%

IN A NUTSHELL: “The steady acceleration in nonfuel imported goods costs is another reason for the Fed to raise rates.”

WHAT IT MEANS: We may be only a week past the last FOMC meeting, but it is already history. With job gains rebounding to decent levels, only some sudden deceleration in inflation might slow the Fed from its appointed round of rate hikes. (The members don’t care much about rain, heat or gloom of night.) Well, it doesn’t look like inflation is going to decelerate anytime soon. Import prices rose sharply in April, led by a jump in fuel costs. But it wasn’t just energy, which has backed off lately. Nonfuel prices rose solidly as well. Food, building supplies, metals, vehicles and even to a small extent consumer goods costs were up. The acceleration in the rise in imported goods prices, excluding energy, has been going on for sixteen months now. While the increase over the year of 1.4% for non-petroleum goods imports is not great, it is an awful lot more than the 3.7% decline that was posted as recently as December 2015.

On the export side, the farm sector is doing fine again. Prices rose for the fourth consecutive month and sixth out of the last seven. Since April 2016, prices are up 4.6%. In comparison, one year ago, farmers were looking at a 9% drop, over-the-year, in their export prices.

MARKETS AND FED POLICY IMPLICATIONS: Given yesterday’s events, it is likely this report and most others that come out this week, will be trees falling in the forest. Yes, we get additional inflation numbers and April’s retail sales report, but for investors, the political implications of FBI Director Comey’s firing are critical. Let’s face it, what matters to investors is whether the president’s agenda, specifically, tax cuts, regulatory reform and spending increases, is hurt by the action. The passage of the AHCA was viewed in that light, not whether it made health care better, worse or did nothing to it. If the firing backfires and harms the ability to pass legislation, then markets will react accordingly. If it goes away, then investors can continue dreaming of changes in those issues they hold dear. But we may not know for a while. There are lots of politicians hiding under rocks today but they may have to actually say something eventually. I just don’t know what stand they will take. Meanwhile, the Fed will be watching the week’s data carefully and if the consumer and producer price indices also show further acceleration in inflation, it would be prudent to expect that the FOMC will do something at its June 13-14 meeting.   

March Job Openings and April Small Business Confidence

KEY DATA: Openings: +61,000; Hires: +11,000; Quits: +80,000/ NFIB Confidence: -0.2 point; Business Expectations: -8 points

IN A NUTSHELL: “The labor market is slowly tightening, yet even small businesses are managing to find workers to hire, though with great difficulty.”

WHAT IT MEANS: We hear lots of stories about how hard it is to find workers. Nevertheless, firms are still hiring. Job gains so far this year have been solid and all the measures of unemployment are at levels consistent with full employment. Today’s numbers support that view. The closely followed JOLTS report, produced by the Bureau of Labor Statistics, pointed to further hiring and some growing turnover in the labor market. The number of job openings was up in March, signaling that firms are still trying to add their workforces. That they are having problems finding the ones they want is clear in the somewhat limited increase in hiring. But the most interesting number in the report was the level of quits. The number of people willingly leaving their jobs continues to rise (though in a saw-tooth manner). Since September 2009, the level has nearly doubled. That shows that people have pretty much overcome their fear of making a move.

The problems that businesses are facing finding people was highlighted in the National Federation of Independent Business’ monthly survey. The optimism index eased a little in April, though it remains near record highs. But confidence about the future took a major hit. Political reality is colliding with hopes that regulations and taxes will be cut. That said, firms hired quite heavily and hiring plans remained strong.   Still, this segment of the economy is saying that qualified workers are extremely difficult to find. The report noted that “87 percent of those hiring or trying to hire reported few or no qualified applicants for their open positions”. When it comes to problems facing small businesses, quality of labor now ranks just below regulations and red tape and is rapidly closing in on taxes.

MARKETS AND FED POLICY IMPLICATIONS: There is a debate over which measure of unemployment is the best measure of unemployment. The reality is that it doesn’t matter. The two measures commonly used are both at levels consistent with full employment. Yes, one is higher than the other.   But level doesn’t matter, only what the level should be at full employment and we are there. In addition, people are quitting more often, while business people running firms of all sizes are saying they are having massive problems filling jobs with qualified workers. Those are indicators of a tight market. Yesterday, the Conference Board reported that its Employment Trends Index jumped in April, another sign that firms are hiring. But that doesn’t mean we are going to see job gains above or maybe even near 200,000 per month. Without the workers to hire, firms are doing the next best thing: They are moving part-timers into full time jobs. That solves the qualified worker problem without actually adding any workers. So going forward, it may be the hours worked number that really counts, as payroll gains should remain in the 150,000 to 175,000 range. Since that should be enough to keep the unemployment rate trending downward, look for the Fed to tighten again soon. If we get a tax cut bill by the end of the year and the economy accelerates even a modest amount, the Fed may be forced to move more quickly than anticipated. Timing is everything in life and while tax reform (not just tax cuts) is critical, when it occurs is important. The labor markets have limited slack now and will have even less at the end of the year. Hyping the economy with tax cuts and spending increases will come with a cost, which is likely to be higher wages, inflation and interest rates.

First Quarter Productivity, March Trade Deficit, April layoffs and Weekly Unemployment Claim

KEY DATA: Productivity: -0.6%; Labor Costs: +3%/ Trade Deficit: $0.1 billion narrower/ Layoffs (Over-Year): -27,539/ Claims: -19,000

IN A NUTSHELL: “The tightening labor market is raising costs but firms are failing to improve productivity to offset those increases.”

WHAT IT MEANS: You can get growth either through adding workers or working more efficiently (or, of course, both). Well, firms are adding workers, but they are showing few signs that they are able to use those workers more effectively. Productivity fell in the first quarter, which was not really a major surprise given the weak economic growth during the quarter. Since payroll gains were strong, it was clear that we would get an ugly labor cost number and we did. Unit labor costs, a key measure of the cost of producing a good, rose sharply. These data bounced around sharply, as does GDP, so it would normally not be major concern. But given that productivity has been growing at a pretty pathetic 0.6% pace for the past five years, today’s report provides little comfort that anything is changing. And if you don’t get a surge in productivity, the ability of the economy to accelerate will remain limited.

The trade deficit was largely flat in March, as exports and imports declined by the same amount. That is hardly good news since we would like to see both increasing. On the export side, we sold more food and capital goods, but that was just about it. Foreign demand for our motor vehicles, consumer products and industrial supplies dropped. Oil played a major role in that decline, but some of that may have been related to the decline in prices. Imports, though, also fell, hardly a sign that the U.S. economy is surging along. The only thing we bought more of was motor vehicles. Given the weakening sales numbers (the April pace was disappointing and that followed a truly soft March number), I am not sure that is a good thing. Adjusting for prices, it looks like the trade deficit estimate in the first GDP report was on target, so if the growth rate is changed, it is not likely to come from any major revision to the deficit.

Firms are holding on to workers quite tightly. The Challenger, Gray and Christmas April report on layoffs showed that workforce cutbacks continue to decline from 2016 levels. Just about the entire drop came from the new-found stability in the energy and computer sectors. On the other hand, retailers are closing stores like crazy and that is pumping up the layoff numbers.

Unemployment claims dropped back to labor shortage levels. That reinforces the view from the layoffs numbers that firms simply will not fire someone unless they have to, such as when they close stores.

MARKETS AND FED POLICY IMPLICATIONS: Today’s story is the productivity numbers. You cannot grow at a 3% pace if productivity is increasing at a 1% pace. That is because the labor force is just not there. There simply is no reserve army of the unemployed or underemployed to call on and hours worked are already fairly high. The increase in hours worked during the first quarter was less than what we saw in 2016. While jobs may be declining in traditional retailing, they are growing in Internet retailing, warehousing and distribution. Technology still requires people, either directly or indirectly. Robots may replace some workers, but a totally robotic economy is not in the near future. So, if you believe that all you need to do is loose the animal instincts of the business sector and growth will magically surge, you might want to reconsider that view. As for the health care bill, I am fascinated by the idea that the way to introduce more private sector competition into the health care system is to ramp up government payments to companies. Since when did Republicans start believing that the government should subsidize the private sector and that more government spending was a good thing? Please, someone explain this to me.

March Existing Home Sales

KEY DATA: Sales: +4.4%; Over the Year: +5.9%; Prices (Over-Year): +6.8%; Inventory (Over-Year): -6.6%

IN A NUTSHELL: “Home sales are on the rise despite the rapid rise in prices.”

WHAT IT MEANS: Economic growth during the first part of the year may have been disappointing but the housing market decided not to participate in the slowdown. According to the National Association of Realtors, sales of existing homes rose solidly in March with the pace being the highest since February 2007.   The recession is over, long live the recovery, at least the housing rebound. The March increase was spread across most of the nation, though there was a small decline in the West. It was also fairly evenly distributed between single family and condo purchases. The increase in demand is happening despite a sharp rise in prices. That is the result of limited inventory. The number of homes for sales was down quite a bit from a year ago despite an increase in March. A rising sales pace and a declining supply can only lead to one thing, higher prices and we certainly are getting that.

MARKETS AND FED POLICY IMPLICATIONS: Is the housing market in good shape or is it in trouble? Rising sales are a sure sign that there are lots of people out there who are ready, willing and able to purchase homes. But the problem is that there simply is not enough product for buyers to choose from. Housing starts are starting to come back but probably need to rise about 20% to 25% to reach levels needed to supply the demand. Meanwhile, despite rising prices and a shortening in the time it takes to sell houses, homeowners are just not bringing their units on to the market. Right now, the constraining factor in the market is supply, both new and existing, and as long as that persists, prices will rise sharply. The threat that creates is that mortgage rates might actually start rising again. The combination of higher rates and higher prices should ultimately slow down sales, but that is not likely to happen for quite some time. It’s a sellers market and it is likely to remain that way for much of the rest of the year.  

March Private Sector Jobs, NonManufacturing Activity and Online Want Ads

KEY DATA: ADP: +263,000; Manufacturing: 30,000; Construction: 49,000/ ISM (NonManufacturing): -2.4 points; Employment: -3.6 points/ Ads: +102,000

IN A NUTSHELL: “I guess you don’t need strong economic growth to get strong job growth.”

WHAT IT MEANS: The economy didn’t grow a whole lot during the first quarter but if you believe the ADP estimate of private sector job gains, firms added workers like crazy in March. According to their estimates, private sector companies hired even more people last month than they did in January or February, when payroll gains were really strong. And the increases were in just about every category, from small to large, goods producing and services. Eye-opening were the huge increases in manufacturing, construction and the leisure and hospitality sectors. I get the manufacturing numbers, as the supply managers indicated they upped their hiring. But construction hiring was robust in a month where there was unsettled weather. And were people really out vacationing in a March that didn’t contain Easter? Okay, enough for my uncertainties. Even if this is an overestimate of the increase we will see on Friday, it does point to a clear strengthening in the labor market.

How strong is the labor market? Well, the Conference Board reported that online want ads rose decently in March. But the increase didn’t come close to wiping out the huge decline posted in February, so we cannot say the downward trend in job ads that has been going on for over a year has been stopped. Still, demand did rebound across the nation and in eight of the ten largest occupational categories.

There were also some questions about whether the labor market really is picking up steam that came out of the Institute for Supply Management’s March Non-Manufacturing survey. The overall index fell moderately, with business activity growing at a much less rapid pace. The employment index fell sharply and while it is still showing that firms are hiring, they are not doing so at a robust pace. Given that the non-manufacturing portion of the economy accounts for over 70% of total employment and almost 84% of private sector payrolls, it is hard to get strong job gains without this portion of the economy adding workers like crazy.

MARKETS AND FED POLICY IMPLICATIONS: The robust ADP report is likely to dominate the discussion today as it sets up the possibility of a stronger than expected jobs number on Friday. I am still not confident that we will see another really good payroll increase. While consumer confidence has soared since the election, consumer spending has been disappointing. Rising business optimism is nice, but firms don’t add workers without a real need for them. Hope for the future is one thing. Actually seeing that those prayers are answered is something else. Regardless, investors will likely take today’s data and run with it. As for the Fed, these are the types of reports that provide some reason to think that their expected rate hike strategy makes sense. If employment is surging, it is likely wage gains are accelerating. That would mean more future spending and higher inflation, which is what the Fed wants to see. But let’s wait until Friday before we start patting the Fed members on their backs.

February Trade Deficit and Home Prices

 KEY DATA: Deficit: down $4.6 billion (-9.5%); Exports: +0.2%; Imports: -1.8%/ Home Prices (Monthly): 1%; Over-Year: 7%

IN A NUTSHELL: “It was nice to see the trade deficit shrink so much, especially given all the other factors that seem to have slowed growth early this year.”

WHAT IT MEANS: After the huge rise in the trade deficit was reported for January, it looked like growth would be greatly restrained by the foreign sector. Well, maybe not so much. The trade deficit narrowed sharply in February. Imports were down, led by large drops in demand for foreign vehicles and cell phones. Swings in Chines activity around the Chinese New Year may have been at work here. We did buy more foreign food, capital and consumer goods as well as oil. On the export side, weakness in aircraft shipments and the unwinding of the soybean anomaly was offset by increases in sales of oil, vehicles and pharmaceuticals. Adjusting for prices, it looks like the first quarter trade deficit is pretty much the same as it was in the final quarter of last year. While I wouldn’t be surprised if the deficit widened in March, the total impact on growth should be relatively minor.

Housing prices continued on their inexorable upward trend in February. According to the latest report by CoreLogic, costs soared and are up sharply since February 2016. And that is raising questions about the sustainability of the market since it was indicated that much of the pressure is coming from the lower end of the market. If mortgage rates rise sharply, new-buyer affordability may be hurt. That said, I still believe that we need the “churn” in homes to rebound. With equity rising in most metro areas and many hitting new highs, the ability to sell is improving. Now we just need the desire to find a new home to also make a return appearance. For the price increases to be slowed, the inventory of homes on the market has to rise sharply. Otherwise, we could start seeing new local bubbles forming. Indeed, by CoreLogic’s calculations, in February, 102 markets were considered to be overvalued.

MARKETS AND FED POLICY IMPLICATIONS: Growth in the first quarter is likely to be modest, once again. At least now it looks like it may not be pathetic. Given the January trade numbers, we could have seen something close to 1% but I suspect it will be in the 1.5% to 20% range. In other words, the more things change, the more growth stays the same. Given that expected growth rate, it is hard to see how we can be creating 237,000 jobs per month, as we did in January and February. That does not bode well for Friday’s jobs report. Meanwhile, the accelerating price gains in home prices have yet to bring out the sellers and we are already starting to see the return of some housing bubblets (I am not ready to call them bubbles just yet). Economic uncertainty remains a concern and now there are rumblings of attempts to revive the Republicancare bill. So add political uncertainty to the mix. Nevertheless, investors seem to be confident that everything will turn out just fine.

February Spending and Income and March Consumer Confidence

KEY DATA: Consumption: +0.1%; Disposable Income: +0.3%; Prices: +0.1%/ Confidence: +0.6 point

IN A NUTSHELL: “Despite high levels of confidence, the consumer has become cautious and that does not bode well for growth.”

WHAT IT MEANS: It is hard to grow the economy strongly if people don’t go out and spend and that appears to be the case so far this year. Consumption barely budged in February and when adjusted for price increases, it went nowhere. That comes on top of a decline in price-adjusted spending in January. Demand for both durables and nondurable goods was soft while the increase in spending on services was modest. In other words, we didn’t buy a whole lot of anything. This cautiousness is not being driven by terribly weak income gains. Disposable income, which excludes taxes, increased moderately. Even adjusting for inflation, income was up at an acceptable pace. Wages and salaries are rising decently, which should make people happy.

One thing is certain; the failure to spend is not due to consumers being depressed. While the University of Michigan’s Consumer Sentiment Index rose less than expected, it is still at a pretty high level. Unfortunately, the political divide remains as wide as ever. As the report notes, “Democrats expect an imminent recession, higher unemployment, lower income gains, and more rapid inflation, while Republicans anticipate a new era of robust growth in incomes, job prospects, and lower inflation.”  Either the sky is falling or happy days are here again. The reality is neither and that may be why spending is soft. The point is that with politics driving perceptions, the consumer confidence numbers are not likely to tell us much, if anything, about spending.  

MARKETS AND FED POLICY IMPLICATIONS: People have the money to spend and are confident, but they are just not going out and opening their wallets. So far this quarter, consumption is largely flat and since we are talking about two-thirds of the economy, it is hard to see how growth can be anything but disappointing. The Blue Chip consensus is 1.7%, which is below the 2.1% posted in the final quarter of 2016. And the forecasts are trending downward. Today’s consumption number may make it really hard to even get to that pace. Adding to the uncertainty are the implications of the collapse of the AHCA.  What has been lost in the gloating and recriminations is that optics matter. If there is to be progress on tax reform, the most important elements of the proposals have to pass muster with the public. Otherwise that plan could be doomed to failure as well. And an inability to pass a comprehensive tax reform package would likely have significant implications for the stock markets, the Republican party and, of course, the administration. It might also call into question the ability of the Fed to raise rates as predicted. The Obamacare repeal failure places a lot in jeopardy and ups the stakes to get the tax cuts done. It should be an interesting spring and summer, as the Republican leadership has indicated they hope to get a tax cut plan through by August.


February Industrial Production and Leading Indicators

KEY DATA: IP: 0%; Manufacturing: +0.5%/ LEI: +0.6%

IN A NUTSHELL: “With manufacturing taking off, the economy is moving forward solidly even if consumers don’t want to spend.”

WHAT IT MEANS: It looks like the economic laggard, manufacturing, is now the economic leader. Industrial production was flat in February, but that was entirely due to a major decline in utility production. An exceptionally warm month has a tendency to do that. Wait until you see what the March numbers look like for utilities. They will probably be off the charts. But more importantly, the nation’s manufacturers are showing renewed vigor. The Federal Reserve reported that output surged for the second consecutive month, with both durable and nondurable goods production up sharply. The economy is also being helped by the recovery in the oil and gas sector, which was up for the ninth consecutive month. Oil rig counts are still rising, despite the recent softening in prices – or maybe the prices are softening as a consequence of the rising count. Regardless, this sector is doing better.

Will we see further gains in the economy? If you believe the Conference Board’s Leading Economic Index, the answer is absolutely. This measure of future activity has posted three large gains in a row and after six consecutive increases, it is now at its highest level in more than a decade. It was also reported that the gains were spread across the economy, which is pointing to moderate economic growth ahead.

The University of Michigan’s mid-month reading on consumer confidence was up slightly from the end of February. Given all the chaos in Washington, that was a bit surprising.

When the data were broken down by Democrats, Republicans and Independents, it became clear that the political divide is a chasm. Democrats think a recession is coming while Republicans believe that happy days are here again. Independents take the middle ground, which seems to be where we really are: Not hot, not cold but not really just right.

MARKETS AND FED POLICY IMPLICATIONS: As I like to say, as consumers go, so goes the economy. Well, wrong again, or maybe not necessarily. First quarter growth is like to disappoint, as households are just not doing a lot of shopping. But that is not the full economic story. There are other segments that are starting to pick up the slack. Manufacturing is making a major recovery, led in part by renewed activity in the energy sector. When oil prices collapsed and energy companies stopped spending, the companies that supplied goods and services to that segment of the economy got hurt. Turnaround is fair play and that is happening. The huge political divide raises serious questions whether the confidence measures have any economic meaning. I think it is best to simply recognize the rise in confidence but not assume it means anything as far as spending is concerned. And that should concern investors. Inflation-adjusted income is once again flat and if consumers are not going to spend strongly, there is an upper bound to growth. Europe is recovering, but it is hard to believe earnings will soar if domestic consumption is mediocre. That has implications for stock price valuations.

February Housing Starts, January Job Openings and March Philadelphia Manufacturing Activity

KEY DATA: Starts: +3%; Permits: -6.2%/ Openings: +87,000; Hires: +137,000; Quits: +135,000/ Phila. Fed: -10.5 points

IN A NUTSHELL: “The rising number of people leaving jobs is a further sign that the labor market is really tight.”

WHAT IT MEANS: Yesterday, the Fed made its first of what will likely be several rate hikes this year. A strengthening economy, rising inflation and significant fiscal stimulus could mean a greater total increase than the members seem to indicate. So, it’s time to get back to economic fundamentals, at least until the full details of the spending and tax proposals are released. First, the housing market is getting better. Earlier this week we saw that the homebuilders’ level of confidence was the highest in twelve years. That optimism led to a solid rise in housing starts in February. The single-family portion of the market did all the heavy lifting as multi-family construction eased. There was a warning in the report. Permit requests dropped sharply and are now running behind starts. We could see a modest, short-term slowdown in construction activity.

The huge rise in payrolls over the past two months has raised the specter of a really tight labor market. Yes, that may sound strange since businesses seem to be able to find the workers they need. But given the reality of labor force growth and the likely further decline in the participation rate as we transition from boomers to Millennials, strong job growth doesn’t look sustainable. According the Bureau of Labor Statistics’ closely followed JOLTS report, job openings rose in January, though not greatly. Much more importantly, the quit rate, which is a proxy for the willingness to tell management to take this job and shove it, is back at the high of this recovery and near the peak seen in the 2000s expansion. In other words, workers are starting to believe that they no longer need a new job before they leave their old one. That’s confidence.

The manufacturing sector has really made a turnaround and that appears to be continuing. The Philadelphia Fed’s current activity index did fall sharply in early March, but that was not a surprise given the huge surge posted in February. The level of the index remains extremely high despite the decline and the details were impressive. Orders are booming, backlogs are swelling, hiring is strong and workers are being worker harder and longer because firms cannot find suitable employees. Over sixty percent of the respondents to a special question said they were experiencing labor shortages. Over forty-five percent said they had to raise wages to attract skilled workers. Sounds like a tight labor market to me.

MARKETS AND FED POLICY IMPLICATIONS: Today’s key numbers centered on the labor market. The growing number of people quitting their jobs and the high percent of firms reporting they cannot find skilled workers and are having to pay up for the ones they get point to a labor market that may be hitting the wall. We are still not seeing that in the overall data, as inflation-adjusted wages are going nowhere. Until real wages start rising faster, overall consumer demand will remain moderate and the Fed will be able to sustain a slow upward path of interest rates. But the Philadelphia Fed and JOLTS report are warnings that businesses ability to hold the line on wages may finally be ebbing. As for investors, all eyes are turning toward the budget process. Today’s budget summary release is just the starting point for the discussion. We don’t have any tax changes or any infrastructure spending information. We may not know until May what the administration wants to do and then Congress has to actually pass something. Simply put, fiscal stimulus is months away.

February Producer Prices and Small Business Confidence

KEY DATA: PPI: +0.3%; Excluding Food and Energy: +0.3%/ NFIB: -0.6 point

IN A NUTSHELL: “The rise in price pressures continues and it is very likely the Fed will make a move tomorrow.”

WHAT IT MEANS: The Fed’s rate setting committee, the FOMC, is in day one of its two-day meeting and while you can never be certain what the members will do, it looks like a rate hike is coming when the statement is released tomorrow afternoon. Today’s data only reinforce that view. First, wholesale prices rose moderately in February, led by another jump in energy costs. Over the year, producer prices are have now risen by over 2% and are up by nearly that pace even excluding the volatile food and energy components, as the gains were spread across most areas. Food and services expenses posted solid increases, adding to the cost pressures. Looking down the road, sharp rises in intermediate goods costs are pointing to further increases in consumer finished goods prices and that doesn’t bode well for inflation.

Small business owners have been ecstatic about the election and their confidence has soared. But that could change. The National Federation of Independent Business’ small business index fell slightly in February. Though the index remains at a high level, the NFIB president issued this warning: “The sustainability of this surge and whether it will lead to actual economic growth depends on Washington’s ability to deliver on the agenda that small business voted for in November. If the health care and tax policy discussions continue without action, optimism will fade.” Given the chaos over the AHCA, which should be called Republicancare, and the lack of any proposal on tax reform, don’t be surprised if small business owners become a little more cautious about the future.

MARKETS AND FED POLICY IMPLICATIONS: With a rate hike potentially only 24 hours away, it is time to start recognizing that rates are really going up this year and probably faster and greater than thought. Fed Chair Yellen will have a press conference tomorrow after the meeting and might provide a small amount of guidance as to future actions. In addition, there will even be another round of the infamous and largely useless dot plots that provide “insights” into the members’ thinking. I suspect there will be a shift to as many as four increases. Coming into the year, I had forecasted three increases but a total of one percentage point. It looks like that 100 basis point forecast may occur, but through a quarter point increase every other meeting. Regardless, the markets didn’t have a full point hike factored in coming into the year and many still have the “when I see it, I will believe it” attitude when it comes to Fed actions. That is actually a rational approach given the hesitancy to raise rates we have seen from this Fed Chair. But my view is that once she gets going, and assuming the Republicans actually pass a tax and spending plan, Chair Yellen will push ahead steadily.