Stocks had a rip snorter of a rally last week and a lot of people are pondering the question in the title over this long weekend. The S&P 500 was down 20.9% from intraday high (4818.62, January 4th) to intraday low (3810.32, May 20th). From that intraday low the market has risen 9.1% in just six trading days. That still [...]
Inevitable adjective incapable of being avoided or evaded I heard that word a lot last week. There is now a fully formed consensus that the US, and indeed the world, now faces an inevitable recession. It can't be avoided. Central banks will have to keep hiking rates because that's the only way to kill inflation. Yes, the inflation is due [...]
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 [...]
ECB Governor Christine Lagarde surprised, maybe even shocked most people when a few days ago it was reported she’d told her fellow policymakers to keep their mouths shut. Don’t go running to the financial media. Justifying the censorship, Lagarde said it was important for the central bank’s key officials to present a unified front given some drastic challenges over the [...]
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 [...]
A nod to just how backward and upside down the world is now. The economic data everyone is made to pay attention to, payrolls, that one is, in my view, irrelevant. As is the consumer price estimates from earlier this week, the PCE Deflator. That’s another one which receives vast amounts of interest even though it is already old news.Yet, [...]
What happened in October 2021? Another year’s Halloween, sure, some beerfest gluttony around the world. For all the happy revelries in that month the financial markets took a decidedly ominous turn. It hadn’t exactly been all rainbows and unicorns in them before then, yet they were at least stable to slightly optimistic about the future for 2022 or beyond.The list [...]
What can we make of the fact the US Treasury yield curve inverted between the 7-year and 10-year maturities first? It only took a few more days for more of the curve to bend upside-down, yet that just means the whole middle part is where the bad vibes are congregated. Does this somehow disqualify what would otherwise be a clear [...]
There was some notable grumbling in the months leading up to it, but with the yield curve inverting in August 2019 at the 2s10s junctures, the only part the public has been led to believe is worth noticing, it unleashed a tidal wave of denials. They were weird and obviously desperate, too, because Jay Powell’s Fed had already conducted its [...]
When even Bloomberg can’t help but notice, not just notice but then write about it, that’s significant. Normally a staunch water carrier for the official Federal Reserve position, these curves getting bent so far out of what would be better shapes aren’t so easy to just dismiss and ignore any longer. Jay Powell says household and business finances are holding [...]
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