The federal debt cap was lifted on June 3, 2023. The Treasury immediately flooded the markets with large debt issuance to meet its massive borrowing needs. Most investors presumed market liquidity would decline as net positive Treasury issuance pulls money from other investments. As shown below, the Treasury has since added about $450 billion to […]
Yesterday’s Wall Street Journal led with a troubling article on Europe’s economy. Their article, Europeans are Becoming Poorer, leads off as follows: “The French are eating less foie gras and drinking less red wine. Spaniards are stinting on olive oil. Finns are being urged to use saunas on windy days when energy is less expensive. […]
Earnings season began with mixed results from three of the largest US banks on Friday. JPMorgan and Wells Fargo beat expectations on the back of higher net interest income, while Citigroup missed the mark on earnings. JPMorgan took the spotlight as it reported record quarterly profits of $14.5B (+67% YoY), partly due to a $2.7B […]
The Magnificent Seven (Apple, Amazon, Google, NVIDIA, Meta, Tesla, and Microsoft) have been on a tear this year. At the same time, market breadth was horrendous as most other stocks were not following their lead. For example, the market-weighted S&P 500 is up more than 10% versus the equal-weighed S&P 500. Recently, the market’s breadth […]
The BofA graph below (right) is making the rounds on Twitter and causing investors quite a dilemma on how to think about CPI. Barring zero monthly rates of CPI for the rest of the year, CPI, computed on a year-over-year basis, will increase. Investors’ dilemma is decoding the stark differences between changes and absolute levels […]
The US and much of the global economy are driven by bank credit. Since debt has grown consistently faster than GDP for over 40 years, bank credit is critical in steering economic activity. Given the strong dependence on debt for growth, a pick-up in bank credit levels typically results in stronger GDP growth and vice […]
NASDAQ announced it will rebalance the NASDAQ 100 Index to “address overconcentration in the index by redistributing the weights.” They do not expect to add or remove stocks from the index. They will announce the changes to the NASDAQ 100 this Friday, but they will not take effect until July 24th. Click HERE for the […]
The past week’s labor market data continued to show strength. However, the week’s data varied wildly between reports, confusing investors. After ADP showed a whopping gain of 497k jobs last month, the BLS followed a day later with a relatively paltry 209k new jobs. Such was slightly below expectations. As we share in the Tweet […]
The Federal Reserve closely follows how restrictive or easy its monetary policy is. While many indicators are available, such as yield curves, loan growth, and bank lending standards, real interest rates are their preferred indicator. Real rates are simply interest rates, less the expected inflation rate. More precisely, U.S. Treasury yields for various maturities are […]