For the first time since March we are seeing a positive correlation between bond yields and reverse repos sold by the Fed. The change started during the last week of October and has continued throughout November. The correlation in March coincided with bank failures, mainly Silicon Valley Bank and Signature Bank. In between March and the end of October, the [...]
It's the residual of all the stuff we can't explain. It's not that our models are wrong, it's the dark matter that's out there. - Fed Governor Neel Kashkari, referring to the "term premium" in long term Treasury yields The curious task of economics is to demonstrate to men how little they really know about what they imagine they can [...]
So, is that it? Have rates peaked? Is the long bear market finally over? The market decided last week that interest rates have peaked for this cycle. And if rates have peaked then all the assets that have been pressured over the last two years can finally come up for air. Since October 18, 2021, over two years ago, investors [...]
The most likely candidate for what moved markets today is the GDPNow update. The forecast for growth in Q4 dropped from an initial forecast of 2.3% to 1.2%. Of note, this is also a much slower growth than we saw in Q3. The bond market certainly reacted as yields continued to drop. The stock market appears to be reacting to [...]
A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. - Warren Buffett, October 16, 2008, Buy American. I Am. , New York Times That was a month after the bankruptcy filing of Lehman Brothers, in the teeth of the Great Financial Crisis. At the beginning of the article he admits that [...]
Well, I finally got it. I've been fighting COVID for the last week and while most of my symptoms have improved, I am not 100% yet. My goal from the beginning of COVID was to avoid it, if at all possible, until it became endemic and less lethal. It seemed logical to me, a layman, that it would follow this [...]
I said a couple of years ago that I thought that once all the distortions were past, we'd be back to where we started prior to COVID, but with more debt. The decade from 2010 to 2020 was the slowest decade of nominal GDP growth since WWII and the prospect of another decade of that wasn't all that appealing but [...]
Alhambra CEO Joe Calhoun discusses stock market valuation, whether the market is overvalued or undervalued, and how Alhambra Investments arrives at that conclusion.
The employment report on Friday seemed like a good one. The unemployment rate was unchanged as the economy added 336,000 jobs in September. The gains were widespread with additions in manufacturing, construction, wholesale trade, retail trade, transportation, warehousing, leisure and hospitality, healthcare and education, and government. Average hourly earnings were up 0.2% for the month and 4.2% year-over-year. It was [...]
Joe explains why he thinks rates are about to peak. He also does some teaching about the correlation between interest rates, GDP, Nominal GDP, and more.
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