Michael K. Farr is president and majority owner of Farr, Miller & Washington LLC. He is chairman of the investment committee and is responsible for overseeing the day-to-day activities of the firm. Prior to starting FM&W, he was a principal with Alex, Brown & Sons.
Farr is a paid contributor for CNBC television and has appeared on "The Today Show," "Good Morning America," "NBC's Nightly News," CNN, Bloomberg TV, Reuters and the "Nightly Business Report." Farr is heard on Associated Press Radio, CBS Radio and National Public Radio. His market blogs can be found on CNBC.com, HuffingtonPost.com and Politico.com.
He is a member of the Economic Club of Washington, D.C., National Association for Business Economics,The World Presidents' Organization, International Atlantic Economic Society and The Washington Association of Money Managers. He is the author of "A Million Is Not Enough" and "The Arrogance Cycle." His third book, "Restoring Our American Dream: The Best Investment," was released in March 2013 and is available on Amazon.
Farr is the chairman of the Sibley Memorial Hospital Foundation. He also serves on the board of trustees at Sibley Hospital; he is the former vice chairman of the board of the Salvation Army; a former member of the Board of Trustees of Ford's Theatre; the former chairman of the board of directors of the Traveler's Aid Society, Nation's Capitol Progress Foundation; and the Paul Berry Academic Scholarship Foundation. He also is a member of the board of the Neediest Kids.
He graduated from the University of the South in Sewanee, Tenn. He is married and has two children.
Data out this week confirmed one of the Fed's greatest fears—housing prices are double-dipping. The S&P Case-Shiller Index of 20 major metropolitan areas fell for the third straight month in October, taking the index back to its lowest level since April 2010. And while the index is still 4.4 percent above the April 2009 low, the new trend suggests that we may easily test those lows in the months to come.
Things appear to be heading in the right direction as we prepare to welcome a new year. GDP growth estimates are being revised upward, corporate profits are up sharply, and stocks are about to log their second consecutive year of impressive gains.
I gave a presentation in Bethesda this week to a group of clients and subscribers to my market commentary. While it was my hope to engender some optimism with regard to the future investing climate, I was also very frank about the numerous challenges we face as a country over the next several years.
For quite some time now, we have been writing about the loftiness in the Treasury bond market. We have repeatedly said that high-quality stocks appear attractive when considering the meager yields available through investment in Treasuries. Well, it seems that the euphoria over bonds may be over…for now.
Interest rates will rise on Treasuries, home prices will fall and the banking system will be under renewed stress.
There are real consequences to monetary and fiscal policy, and not all of them are immediate. The effects of profligate government spending and profligate consumer borrowing remain with us.
The Fed has been on a deliberate path toward inflating financial asset prices, and in this endeavor the central bank has enjoyed much success. Most notably, the stock market is up nearly 19% since the year's low on July 2. The Fed believes that higher stock prices will lead to improved consumer confidence and spending.
In my opinion, it will take several months of positive job additions in the 150K+ range before the Fed feels comfortable that the employment situation is getting better. There is still a very high level of unemployed people as well as people who remain out of the labor force because they are frustrated. Therefore, we would expect QE2 to go ahead as planned.