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Hedge Fund Shorts Are Extreme
At the bottom of this Commentary, we share a popular Tweet warning that Hedge Funds collectively have their largest net short position in S&P 500 mini futures contracts in over ten years. The broad takeaway from most analysts is bullish. They presume hedge funds and CTAs (non-commercial traders) will cover their positions resulting in a […]
Apr 12, 2023
Bank Loans Shrink At A Disturbing Pace
CPI, Retail Sales, and Employment are often the three most important economic data releases in a typical month. It turns out that last Friday’s employment report was not even the most important report on that day. On Friday, the Federal Reserve reported that U.S. Commercial Bank Loans fell by $104.7 billion in the last two […]
Apr 11, 2023
30 Year Yields Break Lower
We added to our 30 year UST bond exposure on Wednesday via the ETF TLT. The recent rally in bond prices and the corresponding decline in 30 year yields shows promise it will continue. The graph below charts the steep increase in 30 year yields since late 2021. Throughout 2022, 30 year bond yields were […]
Apr 10, 2023
Will Robots Dominate the Workforce?
As we gear up for Friday’s employment report, we wonder if we are in the dying days where the BLS labor report only measures human employees. Might a BLS report in 2030 break down the unemployment rate between laid-off humans and broken-down robots? That may sound crazy, but there has been a big uptick in […]
Apr 6, 2023
Bond Markets Are Also Sending Confusing Messages
Our most recent newsletter (Analysts Warn of Recession. Analysts Disagree) discusses confusing signals emanating from the stock and bond markets. To wit: “Currently, 100% of the 10-yield spreads we track are inverted. Historically, a recession follows whenever more than 50% of those spreads are inverted. Every. Single. Time.“ Yet despite a 100% reliable recession warning- […]
Apr 5, 2023
Oil Prices Surge on OPEC Cut
In a surprise announcement Sunday morning, OPEC cut oil production by 1.15 million barrels per day (bpd). Per OPEC, the cuts aim to support stability in the oil market. Since December, crude oil prices have oscillated between $70 and $82 a barrel. In mid-March, it broke the range falling to $64 a barrel. A break […]
Apr 4, 2023
Demand Drives Inflation
Thomas Barkin, President of the Richmond Fed, made a very important pronouncement on Thursday. In a speech he states: “It’s difficult to imagine inflation falling without demand falling.” His message seems to be have fallen on deaf investor ears. In plain English, Barkin is telling us that demand, i.e., personal consumption, will have to decline, […]
Apr 3, 2023
Nasdaq Bull Market or False Hope
Bloomberg heralds “Nasdaq 100 Enters Bull Market as Bank Jitters Ease.” The Nasdaq is now up over 20% from recent lows, leading many media outlets like Bloomberg to declare the birth of a new bull market. Many investors seem to associate 20% declines with the start of bear markets and 20% increases with the beginning […]
Mar 31, 2023
Is Cash on the Sidelines Bullish?
We have read commentary equating the sharp increase in money market assets with cash on the sidelines waiting to be redeployed into the stock market. Therefore, the analysts imply the extra cash sitting in money market funds is fodder for a stock rally. During the 2008/2009 market swoon, money market assets rose sharply and peaked […]
Mar 30, 2023
Berkshire Hathaway Loves Oxy
Warren Buffett’s firm, Berkshire Hathaway, continues to amass a large position in Occidental Petroleum (OXY). In just the last week Berkshire bought 3.7 million more shares, raising its ownership percentage of OXY to 23.6%. Berkshire Hathaway has the approval of the U.S. Federal Energy Regulatory Commission to buy up to 50% of the company’s stock. […]
Mar 29, 2023
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