by Bill O’Grady and Thomas Wash

[Posted: 9:30 AM EST]

Looking for something to read?  In our travels we are often asked about books we recommend.  As a result, we have created The Reading List.  The list is a group of books, separated by category, that we believe are interesting and insightful.  Each book on the list has an associated review to help you decide if you want to read it.  We will be adding to the list over time.  Books marked with a “*” are ones we consider classics and come highly recommended.

FOMC meeting minutes: Yesterday, the Federal Reserve’s minutes revealed that Fed officials are confident that U.S. expansion will continue to gain momentum as a result of the tax bill and strong global growth. Furthermore, Fed officials also cautioned that inflation could be on the horizon in the medium term. As a result of the outlook on inflation, stocks reversed gains and bond yields rose. In our view, the minutes weren’t particularly surprising. Generally, when a country provides fiscal stimulus to an already expanding economy, it risks rising inflation in the short- to medium-term as it takes a while for supply to catch up with rising demand. Given that this meeting took place prior to the release of the stronger than expected wage report as well as the larger than expected government funding bill, we will hold judgment on whether we expect a faster pace in rate increases until after Fed Chairman Jerome Powell meets with the House Financial Services Committee on February 28.

McMaster exit? According to a CNN report, National Security Adviser H.R. McMaster is considering stepping down from his current position in the Trump administration and rejoining the military in the Department of Defense. It has been widely speculated that President Trump has grown annoyed with General McMaster. Tensions seem to have hit a boiling point when McMaster stated that the FBI indictment provided “incontrovertible” evidence that Russia interfered in the 2016 election. President Trump responded to the statement via Twitter, stating that McMaster should have also mentioned that Russian interference did not change the results of the election. The White House has since stated that the president still has confidence in his national security adviser. McMaster’s departure would represent a change of pace for this administration as the president would likely seek to replace the three-star general with someone less assertive; it has been rumored that McMaster has made a habit of correcting and undercutting the president during meetings. At this time, there does not appear to be a list of possible candidates to replace him.

The return of Boko Haram: On Monday, the Nigerian terrorist group Boko Haram attacked another school in the northern region of the country. Although Nigerian security forces were able to repel the attack, the school was unable to account for all of its students. As of today, it is believed that over 100 girls are still missing from the school. This incident marks the first large-scale attack from the rebel group in four years, when it kidnaped an estimated 276 girls from another school. Last year, the Nigerian Army claimed to have defeated Boko Haram “militarily” but had not eliminated the group. Boko Haram, which pledged allegiance to ISIS in 2015, represents a prominent threat to Nigeria as it struggles to recover from a two-year recession and rising inflation. Nigeria is one of the world’s largest suppliers of oil; therefore, instability within the region could be bullish for crude oil. We expect that the Nigerian government will be able to contain the threat but we will continue to monitor the situation.

View the complete PDF