223 results found
Invest
Part One of this series highlights how the government’s fixation with full employment and the Fed’s belief in the faulty Phillips Curve model from 1965 to 1982 fueled multiple bouts of inflation. We also touched on that fateful day in 1971 when President Nixon removed the fiscal and monetary shackles, essentially giving the government and […]
Daily Market Commentary
We have noted numerous times that corporate bond spreads, the yield premium versus U.S. Treasuries, are not aligned with default risks. As evidence, the graph below illustrates the yield premium on B-rated junk, which is near the lowest in 15 years. Therefore, the spread should be higher, given the high-interest rates and the fact that […]
Daily Market Commentary
The Fed came to the banking sector’s rescue in March 2023 with the Bank Term Funding Program (BTFP). This latest bank rescue program allows banks to replace lost deposits with a Fed loan. Instead of having to sell underwater assets and take a loss, participating banks can replace deposits with a collateralized loan from the […]
Daily Market Commentary
Since January 2022, nominal GDP has grown by $2.5 trillion or 5.77% annually. Such a growth rate is much better than the 4.30% annualized growth rate in the three years leading up to the pandemic. In fact, the last time the three-year annualized growth rate for the economy was better than that was after the […]
Daily Market Commentary
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 […]
Newsletter
It's that time of year when Wall Street analysts start pinning targets for next year's performance of the S&P 500. Unsurprisingly, they are unanimously bullish, but there is a simple reason for that, which we will discuss today.
Invest
“For me context is the key – from that comes the understanding of everything.” -Abstract Artist Kenneth Noland. That holds true for us as well! Proper context is required to appreciate better if market narratives accurately describe the truth. For example, in Moody’s recent decision to put the United States government on credit watch negative, […]
Daily Market Commentary
Goldman Sachs released its 2024 forecast for the S&P 500 and the economy. “We forecast the S&P 500 index will end 2024 at 4700, representing a 12-month price gain of 5% and a total return of 6% including dividends. Our baseline assumption during the next year is that the US economy continues to expand at […]
Newsletter
Mr. Powell heard our concerns, and on Thursday, he responded to the recent loosening of financial conditions. As discussed below, the recent drop in bond rates and surge in the stock market works against the Fed's goal of tightening monetary conditions. The Fed's goal remains "tighter" conditions to reduce consumer spending and increase unemployment to reduce economic demand. The demand reduction is how inflation, which is solely a function of supply and demand, gets reduced.