Page 78 of 93
Mortgage Rates And Spreads Soar
It’s no secret that mortgage rates have risen sharply. They now stand above those seen on the eve of the financial crisis. However, less appreciated, the difference between mortgage rates and U.S. Treasury yields is almost .75% more than in 2007. The predominant reason for the wider-than-normal gap is the status of the banks. Banks […]
Aug 8, 2023
The Employment Report Shows Normalizing Job Growth
The BLS employment report showed that job growth has finally normalized to pre-pandemic levels. Per the employment report, 187k new jobs were added, slightly below the 200k expectation. Such is the lowest monthly job growth since December 2020. The unemployment rate ticked down from 3.6% to 3.5%. Hourly wages were up slightly, but hours worked […]
Aug 7, 2023
TINA Is Back But For The Bond Bulls
Equity investors used the acronym TINA to justify buying stocks at excessive valuations. TINA followers believed that when bond yields were near zero, there was no investment alternative but to pay high valuations for stocks. Today, however, there is an alternative. In our recent article, Stocks versus Bonds, we share 150 years of equity valuation […]
Aug 4, 2023
Fitch Downgrades America. Does It Matter?
On August 5, 2011, S&P downgraded the United States’ credit rating to AA+. Almost to the day, twelve years later, Fitch came to the same conclusion as S&P. The U.S. credit rating is not worthy of the AAA rating. If the U.S. were a corporation, Fitch and S&P would likely rate its debt as junk! […]
Aug 3, 2023
XOM Is Diversifying Well Beyond Oil
Yesterday we learned that Exxon (XOM) is in talks with Tesla, Ford, and Volkswagen about supplying lithium. If that headline caught you off guard, here is the back story. Earlier this year, XOM bought the drilling rights for 120k acres of land in the Smackover formation, as shown below. The purpose is not shale oil, […]
Aug 2, 2023
Kashkari Is A Moderating Hawk
In last week’s Commentary, Doves Versus Hawks, we stated: “There appear to be two camps emerging, the doves and the hawks, with differing opinions on what to do next. We think this battle will become more pronounced over the coming months. Therefore, understanding the dove’s and the hawk’s points of view is critical to forecasting […]
Aug 1, 2023
Flexible Japanese Monetary Policy Weighs On U.S. Bonds
Ten and 30-year U.S. Treasury bond yields rose sharply, with their yields piercing 4%. The driver was a change in the Bank of Japan’s (BOJ) monetary policy. The BOJ adjusted how they manage yields, aka yield curve control (YCC). They will now conduct YCC via “flexible” operations. Before the flexible stance, the BOJ had a […]
Jul 31, 2023
PacWest is Back in the Headlines
Remember PacWest? Following the demise of Silicon Valley, Silvergate, and Signature banks in March, PacWest Bank was on the ropes. Many investors feared it would be the next domino to fall and other larger regional banks may follow, thus worsening the banking crisis. PacWest shares hit a low price of $2.48 on May 4th, well […]
Jul 27, 2023
Lower Rates Limited Stimulus – The Feds Future Headache
Over the last thirty years, the Fed has relied on lower interest rates to pump the economy when it slowed. Lower rates helped wide swaths of the economy. But quite often, the most immediate benefit was from the housing market. Lower rates made housing more affordable, thus increasing the ability for potential buyers to buy […]
Jul 26, 2023
Taylor Swift and The Swifties Are Pumping the Economy
“Despite the slowing recovery in tourism in the region overall, one contact highlighted that May was the strongest month for hotel revenue in Philadelphia since the onset of the pandemic, in large part due to an influx of guests for the Taylor Swift concerts in the city,” The quote is courtesy of the Philadelphia Fed’s […]
Jul 25, 2023
Page 78 of 93