As I’ve said, it is a threefold failure of statistical models. The first being those which showed the economy was in good to great shape at the start of this thing. Widely used and even more widely cited, thanks to Jay Powell and his 2019 rate cuts plus “repo” operations the calculations suggested the system was robust.Because of this set [...]
Two weeks ago, OPEC+ and the US came to a deal to cut crude oil production. President Trump hailed the deal, saying it would save “hundreds of thousands” of oil patch jobs. The Texas Railroad Commission meets today to “consider” a cut in oil production in the Lone Star state. Meanwhile, the market has made all this high-level negotiating irrelevant, [...]
With volatility in the stock market ebbing somewhat or at least going in a more comfortable direction – 1000 point up-days feel a lot better than 1000 point down-days – it seems a good time to start pondering the long-term implications of the virus and shutdown. All of us have been so focused on the short term – is this [...]
On Tuesday, March 18, 2008, the S&P 500 big cap stock index soared. By the end of closing that day, the index had added 4.2%. Investors were increasingly optimistic that new kinds of “stimulus” which had been hastily introduced over the prior few weeks and months would provide enough of a boost so that the economic and financial downside might [...]
It doesn’t take much effort to find bearish sentiment about stocks or the economy right now. CNN’s Fear & Greed Index, an amalgam of seven discrete market sentiment indicators, is still in the “Extreme Fear” zone. Generally, market bottoms are associated with extreme fear while tops are associated with extreme greed. And it generally works; the gauge was pegged in [...]
A Prognosis for U.S. Stocks The future for U.S. stocks over the next decade appears ominous, regardless of the impact of the Coronavirus. Why? Because valuations matter. And stocks at the end of February were priced for perfection. Any significant negative development was poised to drive them lower. The COVID-19 Virus that shut down the U.S. economy has certainly qualified. [...]
Stocks rose last week, a breathtaking, nearly 20% run off the recent lows before a pullback Friday trimmed the gain for the week to about 11%. That was certainly helpful but investors would be well-advised not to get too excited. This is what bear market rallies look like. They come out of nowhere, they run much further than anyone thinks [...]
There are three things the markets have going for them right now, and none of them have anything to do with the Federal Reserve. More and more conditions resemble the early thirties in that respect, meaning no respect for monetary powers. This isn’t to say we are repeating the Great Depression, only that the paths available to the system to [...]
Joining me for my inaugural podcast to try to make sense of this GFC2 (and more) is my colleague and fellow monetary enthusiast Emil Kalinowski. We talk repo, collateral, and why there are only dudzookas from the Fed. It's also the start and tip of the ice berg for what we hope will become a much bigger project: an expansive, [...]
Why didn’t they think about this first? All of a sudden, with markets in the toilet (especially stocks), everyone is itching to get the economy back up and running. The first real peeks at what’s happened to it (as we’ll see in a minute) have definitely contributed to what seems to be an about-face. Many are starting to ask if [...]
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