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Frontrunning Tariffs Boosts Economic Activity
Recent consumer sentiment readings have been horrendous. For instance, the University of Michigan’s latest consumer expectations and the Conference Board’s consumer confidence index are at or near their lowest levels in ten years. However, despite poor sentiment and concerning outlooks, recent consumer spending reports show increased spending. We, and many economists, believe this is a […]
Apr 17, 2025
Rare Earth Metals: Does China Have The Trump Card?
The chart below, courtesy of JP Morgan Asset Management, highlights how much the US relies on certain rare earth metal imports from China and other nations. It also lists some of the products the metals are needed for. As the chart shows, imports play a critical role in securing our rare earth metal needs. Furthermore, […]
Apr 16, 2025
Volatility Boosts Bank Bottom Lines
Despite, or actually because of, the recent market turmoil, many large banks and brokers reported better-than-expected earnings. Market volatility provided a nice boost to trading revenue, which helped offset weakness in other business lines. Goldman Sachs, reporting earnings on Monday, said their equity trading revenue rose 27% from the prior quarter. JP Morgan and Morgan […]
Apr 15, 2025
The Dollar And Inflation: Don’t Believe The Hype
Recently, we have seen claims that the “collapsing” dollar will cause inflation. While a weaker dollar can create inflation, many factors impact prices. Accordingly, we have two issues with such dire statements. First, the dollar is not collapsing. Second, we have experienced much more significant dollar declines without an inflationary impulse. The dollar has fallen […]
Apr 14, 2025
The Pause Heard Around The World
The S&P 500 surged 8.5% off its lows on Wednesday as the administration announced a 90-day tariff pause for all countries except China. Sound familiar? In Tuesday’s Commentary, we wrote: For those of you with bearish nightmares, we share one important takeaway from Monday’s market roller coaster. While there is a good chance the market […]
Apr 11, 2025
Is The Bond Basis Trade Freaking Out The Bond Market?
What is up with the bond market? Many rumors are floating around. For instance, some claim China is selling Treasury bonds in retaliation for increased tariffs. Another rumor claims the bond market is besieged by investors raising money for equity margin calls. While both are plausible, negative interest rate swap spreads point to liquidity problems. […]
Apr 10, 2025
One Important Takeaway From Manic Monday
For those of you with bearish nightmares, we share one important takeaway from Monday’s market roller coaster. While there is a good chance the market may explore new lows over the coming months, we must appreciate that there is plenty of fuel for a sizeable bounce. The one piece of important evidence supporting this thesis […]
Apr 9, 2025
Corporate Yield Spreads Start To Widen
Is a recession coming? That is the billion-dollar question investors now face. One gauge to help us answer the question is corporate bond yield spreads. When the yield differential between corporate bond yields and risk-free Treasury bonds widens significantly, it signals that bond investors are taking a risk-averse stance. Simply, they are pricing higher odds […]
Apr 8, 2025
Stagflation Or Just Stag?
While stagflation fears grip the market and make headlines, the bond market appears more concerned about ‘stag than ‘flation. Stagflation describes sluggish economic activity or a recession coupled with higher prices and rising unemployment. The ‘stag’ refers to a stagnant economy, while the ‘flation’ is inflation. Please read our article, Stagflation Panic: A Misdiagnosed Media Spin, […]
Apr 7, 2025
Fair Trade Isn’t Equal Trade: Trump Breaks Key Economics Rule
Heading into April 2nd, investors were under the impression that Trump’s goal was to set tariff rates that allow for fair trade with other nations. Trade impediments like tariffs, taxes, VATs, currency manipulation, and other methods that don’t allow for fair trade would be offset with tariffs. More simply, Trump would level the playing field. […]
Apr 4, 2025
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