We have frequently lamented the CPI index as its underlying prices tend to lag real-time data significantly and cause it to misrepresent what is happening. For instance, shelter costs, representing about 40% of CPI, lag real rent and imputed rent prices by over six months. Further, energy costs lag by three months. Additionally, the BLS […]
The price of Bitcoin rose over 10% in the first two weeks of 2024, peaking on January 11th. Driving the performance were rumors that the SEC would finally approve Bitcoin ETFs. On January 10th, they approved 11 Bitcoin ETFs. Spot Bitcoin backs these ETFs. Such means that each new share of the ETF is directly […]
Various politicians and a Fed member have recently claimed that the recent bout of high inflation was due to pandemic-related production and transportation shortages. They are correct in that the reduced supply of goods and services is undoubtedly a cause of inflation. However, this convenient excuse seems to take the blame away from themselves. Excessive […]
We have noted numerous times that corporate bond spreads, the yield premium versus U.S. Treasuries, are not aligned with default risks. As evidence, the graph below illustrates the yield premium on B-rated junk, which is near the lowest in 15 years. Therefore, the spread should be higher, given the high-interest rates and the fact that […]
“Fed Tiptoes Toward Dialing Back Key Channel of Monetary Tightening,” by Nick Timiraos, appeared in Tuesday’s Wall Street Journal. Author Nick Timiraos, a.k .a. the Fed Whisperer, is often the recipient of Fed leaks. Tuesday’s article alludes that the Fed may soon slow down the pace of QT. As we have written, the Fed’s overnight […]
The SEC approved 11 spot Bitcoin ETFs on Thursday. Unlike the supportive messaging on most new products the SEC approves, Bitcoin ETFs were accompanied by plenty of caution. For starters, in his approval press release, SEC Chair Gary Gensler states the following: Though we’re merit neutral, I’d note that the underlying assets in the metals […]
The Fed came to the banking sector’s rescue in March 2023 with the Bank Term Funding Program (BTFP). This latest bank rescue program allows banks to replace lost deposits with a Fed loan. Instead of having to sell underwater assets and take a loss, participating banks can replace deposits with a collateralized loan from the […]
Axios recently put out an article with the graph below. As shown, the wealthy, defined as the top ten percent of the population as measured in wealth, own over 90% of stocks. The percentage has been steadily increasing. Axios notes that 58% of American households own stocks, but “in the aggregate, the amount of stock […]
There is a gap between the logic of the stock and bond markets. Most stock market analyst expectations are bullish, while Fed Funds futures warn of a recession. The following Business Insider interview with Jeremy Seigel highlights the dichotomy of opinions. Per the article: “The S&P 500 could surge by 10% to a record high […]