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Record Highs In Sight As Breadth Improves
The S&P 500 is only 2% below record highs set two years ago. It appears highly likely the index will set new record highs in the next week or so. The bigger question is what comes after that. While the Fed’s policy stance, economic data, and coming Q4 earnings will help form expectations, let’s focus […]
Dec 19, 2023
The VIX Index Warns Of Complacency
The VIX index, measuring the implied volatility of the S&P 500, is now at its lowest level since the pandemic started. Some bears warn that the very low VIX forewarns of trouble ahead. In one sense, they are correct. A spike in the VIX from very low levels, as we have today, ultimately precedes steep […]
Dec 18, 2023
Santa Powell Lights Up The Markets
Following Wednesday’s Fed meeting, ZeroHedge aptly titled an article, “Santa Powell Unleashes Global ‘Buy Everything” Frenzy As Dollar, Yield Tumble.” Stocks and Bonds surged higher as the Fed was much more dovish than expected. Like Paavolov’s dogs, investors latched onto the prospect of rate cuts in 2024 and bought stocks and bonds without asking essential […]
Dec 15, 2023
The Pause Lengthens As The Fed Walks A Tightrope
The Fed’s pause since the last rate increase is five months old. To help appreciate the tightrope the Fed walks between recession and inflation, we closely follow Fed communications and appreciate history. At yesterday’s FOMC meeting, Jerome Powell used the balance of risks between inflation and recession as the justification for the pause of rate […]
Dec 14, 2023
The Nasdaq Rebalances To The Chigrin Of The Magnificent 7
The Nasdaq rebalanced its holdings as expected yesterday. However, investors were not expecting the NASDAQ to reduce the contributions of the Magnificent 7 (AAPL, MSFT, TSLA, GOOG, NVDA, AMZN, and META) and, in the aggregate, raise the contribution of the remaining 93 stocks. The heat map below shows that each Magnificent 7 stock was red. […]
Dec 13, 2023
US Oil Production Hits Records
The US now accounts for the most oil production in the world. Importantly, as we share in the graph below courtesy of Axios, the ramp-up of US oil production since 2020 has helped offset recent supply reductions by Russia and Saudi Arabia. Oil production troughed in 2020 as the pandemic crushed demand and limited production. […]
Dec 12, 2023
RRP Program Dwindles As Excess Liquidity Fades
The Fed offers banks and money market funds reverse repurchase agreements (RRP) to drain excess liquidity in the money markets, allowing them to manage the Fed Funds rate. RRP are collateralized overnight loans made by banks and money market funds to the Fed. In March 2021, RRP balances surged due to the excessive liquidity caused […]
Dec 11, 2023
Bitcoin Is ‘A Hyped Up Fraud’ Says Jamie Dimon
JP Morgan CEO Jamie Dimon testified to Congress on Wednesday in a routine meeting about the banking industry. In the process, the topic of Bitcoin and other cryptocurrencies came up. Despite having significant investments in blockchain, Dimon had some choice words for Bitcoin and other cryptocurrencies. In particular, the following quote is making headlines: “If […]
Dec 8, 2023
The ADP Jobs Report Shows Below Trend Growth
The ADP jobs report came in at 103k versus the expected 130k. The ADP also revised the jobs count from October to 106k from 113k. Over the last three months, the average gain has been just under 100k. Unlike the BLS, which surveys companies about their employment activity, ADP uses actual payroll data, including more […]
Dec 7, 2023
To Rent Or Buy A Home? The Tide Has Turned
The Economist published an article entitled Is It Cheaper To Rent Or Buy Property? It shows how the financial decision of buying versus renting has drastically changed due to the fiscal and monetary response to the pandemic. With massive stimulus came inflation and higher mortgage rates. Typically, higher mortgage rates result in lower home prices. […]
Dec 6, 2023
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