Once again, due to the ongoing lack of fiscal responsibility in Washington, the markets and the economy faced a Government shutdown. After a day of theatrics, Congress passed a “stopgap” measure that will keep the Government operating for 45 days. But is that a good thing? First of all, while much media hyperbole surrounds Government […]
We recently wrote The Lag Effect Unveiled to appreciate why it takes time for higher interest rates to inflict economic damage. We follow that up with a discussion of something equally worrying that also lags Fed rate hikes. A financial crisis will likely follow the Fed’s “higher for longer” interest rate campaign. We are not […]
"Compound market returns." During bullish markets, there is inevitably a regurgitation of this myth that was contrived to extract capital from retail investors and place it in the hands of Wall Street. However, the compound market returns myth was contrived from the myth that "markets always go up," therefore, it is ALWAYS a good time to invest. How often have you seen the following chart presented by an advisor suggesting if you had invested 120 years ago, you would have obtained a 10% annualized return?
The hit TV series “That 70s Show” aired from 1998 to 2006 and focused on six teenage friends living in Wisconsin in the late 70s. The irony was that the actors playing the teenagers were not born in the late 70s and had never experienced life during that period. Many alive today cannot fathom a […]
In Our Elevator Pitch For Bonds, we ask, “is this time different.” Our view of the attractiveness of bonds can be honed into an elevator pitch. It essentially boils down to a straightforward question – Is this time different? Have the forty-year pre-pandemic economic trends reversed, and the economy’s inner workings changed permanently over the […]
While September has been a bit sloppy so far, will further weakness in October weigh on investor sentiment before the seasonally strong period begins? As shown by the S&P 500 index seasonality chart below, weakness in the last two weeks of September and the first two weeks of October is common. However, we must also […]
The term “Bond Vigilantes” is a nostalgic twist on an old-west theme. In the nineteenth century, the American West formed self-appointed groups, or committees, to assume the duties of law enforcement and judicial authority when citizens found law enforcement lacking. In the bond market, the term “Bond Vigilante” was first coined by Ed Yardeni in 1980, […]
Despite surging interest rates, there are few signs they are impeding economic activity or causing distress amongst borrowers. It may seem strange that higher rates are not proving troublesome for an economy with such a high amount of leverage. Don’t breathe a sigh of relief quite yet. There is often a delay, called the lag […]
“(Market) Predictions Are Difficult…Especially When They Are About The Future” – Niels Bohr Okay, I took a little poetic license, but the point is that while we try, predictions of the future are difficult at best and impossible at worst. If we could accurately predict the future, fortune tellers would win all the lotteries, psychics would […]