Last week started with investors focused on Jerome Powell's testimony before Congress and any hints about future monetary policy. During the course of two days of testimony, which was deemed more hawkish than expected, the market priced in another rate hike and pushed out the possibility of a rate cut all the way to January 2024. The week ended with [...]
With the 1-year Treasury bill paying 5%, why would anyone take the risk of owning stocks? - Everyone It is a good question and I can't tell you what investors will do this year or how stocks will perform, but history says it isn't the level of rates that matters for stock returns. Believe it or not, it isn't even [...]
I think everyone can agree that stocks and bonds sold off last year because interest rates rose. You might get some argument about why rates rose but the fact they did is sufficient to explain the drop in stocks and bonds. It doesn't matter if you think rates went up because the Fed raised their target rate on Fed funds [...]
The hardest thing about investing is the patience it requires. Markets can and do go through long periods of stagnation that test every investor's commitment to their strategy. The last year has been a tough one for investors but the frustration actually extends back further than just 2022. The total return of the S&P 500 since June 1, 2021 is [...]
As I sit here writing this Sunday afternoon, the US has just shot down a third UFO in the last 3 days in addition to the Chinese "weather" balloon last week. I have no insight into what these things might be but I do wonder if we haven't declared war on the National Weather Service. The federal government has become [...]
A one year, educational look back through the lens of Super Bowl commercials. The economy was awash in liquidity. Behavior had changed. Would trends continue? Would behavior revert? The Fed's first rate hike would occur roughly one month later. H/T Steve Beiser. Last year’s Super Bowl commercials – if you invested $10k when they aired you would have….• FTX - [...]
Has the Fed's rate hiking campaign actually lowered inflation? Or would it have happened anyway? Jerome Powell has said that the rate hikes would involve "pain" but if that is the criteria I don't see it. Higher rates have hit the real estate market but almost nothing else. And even there, mortgage rates are now trending back down and activity [...]
Your cares and troubles are gone There'll be no more from now on! Happy days are here again! The skies above are clear again Let us sing a song of cheer again Happy days are here again! Lyrics: Jack Yellen, Music: Milton Ager That's certainly how it's felt since the turn of the new year with the NASDAQ up nearly [...]
I've been writing for over a year about the economy rebalancing back to its pre-COVID trends. The massive fiscal expansion during COVID and the Fed's accommodation of that spending via QE is what caused the spike in prices over the last 18 months. Yes, there were supply issues too but the size of the demand shock overwhelmed the supply issues. [...]
The Fed meets this week and is widely expected to raise the Fed Funds rate by 0.25% to a range of 4.5% - 4.75%. The market has factored in a small probability that they do nothing and leave rates alone, but they'll probably do what's expected because they've spent the last couple of months preparing the markets for exactly this [...]
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