Stagflation. It's a word that strikes fear in the hearts of investors, one that evokes memories - for some of us - of bell bottoms, disco, and Jimmy Carter's American malaise. The combination of weak growth and high inflation is the worst of all worlds, one that required a transformational leader and a cigar-chomping central banker to defeat the last [...]
Well, that was an ugly week. Of the six major assets we track, only one was up last week - REITs. Large and small-cap stocks - down. General commodity indexes - down. Gold - down. Bonds - down. The early part of the week was actually pretty calm but Thursday and Friday - especially that close on the low Friday [...]
Remember, your goal in investing isn't to earn average returns; you want to do better than average. Thus your thinking has to be better than that of others - both more powerful and at a higher level. Since others may be smart, well-informed and highly computerized, you must find an edge they don't have. You must think of something they [...]
Well, that didn't last long. I wrote last week about the inversion of the 10-year/2-year term spread as the yield of the 2-year Treasury note rose above the yield of the 10-year Treasury note. Using end-of-day data, the curve inverted on Friday, April 1st, and stayed that way until....Monday, April 4th. The spread closed last Friday, April 8th at 19 [...]
The yield curve inverted last week. Well, the part everyone watches, the 10-year/2-year Treasury yield spread, inverted, closing the week a solid 7 basis points in the negative. The difference between the 10-year and 2-year Treasury yields is not the yield curve though. The 10/2 spread is one point on the Treasury yield curve which is positively sloped from 1 [...]
There's an old Wall Street maxim that the cure for high commodity prices is high commodity prices. As prices rise, two things will generally limit the scope of the increase. Demand will wane as consumers just use less or find substitutes. Supply will also increase as the companies that extract these raw materials open new mines, grow more crops, or [...]
Why did stocks sell off in recent months? Was it the emergence of the Omicron variant? That was a popular narrative right after Thanksgiving but that lasted less than a month before stocks decided to look past COVID make a new high right after the new year. Was the correction due to fears of the Fed raising interest rates and [...]
I don't know the answer to the question posed in the title. No one does because the future is not predictable. I don't know what will happen in Ukraine. I don't know how much what has already happened there - and what might - matters to the US and global economy. I don't know if the Fed is making a [...]
Crude oil prices rose over 25% last week and as I sit down to write this evening, the overnight futures are up another 8% to around $125. Almost every other commodity on the planet rose in prices last week too, as did the dollar. Those two factors - rising dollar and rising commodity prices - mean the likelihood of recession [...]
Last week when I wrote this weekly piece, the S&P 500 futures were down 80 points as Russia appeared poised to attack Ukraine, which they ultimately did last week. Today I sit here to write again and the futures are once again down, this time around 100 points. What's interesting is that the level this evening is well above last [...]
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