We recently published Part Two of a series comparing inflation in the 1970s to today. Part Two discusses the price wage spiral that helped fuel higher prices in the 1970s. To wit- “In the 1970s, workers demanded higher wages to offset the rising cost of living. Simultaneously, business owners, having to pay higher salaries, responded […]
Since peaking in the first quarter of 2022, the net profit margin on the S&P 500 has generally trended lower. During the pandemic, many companies could increase prices more than their rising input costs and improve their profit margins. Strong demand due to pent-up savings and fiscal stimulus also helped. However, with inflation normalizing and […]
Last week’s initial unemployment claims were 187,000. Since 1967, there have only been 21 weekly instances of a total of 2,976 times in which unemployment claims were lower than the current reading. The low number of unemployment claims indicates a robust job market. Is it? In recent years, there is a new factor to consider. […]
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 […]