For the most part the “reflation” narrative has focused on nominal interest rates. That, for once, actually makes some sense given interest rates are really at the center of all this. Stocks are whatever they are, but whether you figure the Federal Reserve and monetary policy or just the economic reflections of interest rates, the nominal world does seem to [...]
Economic Reports Scorecard The incoming economic data has improved since the last update with a plethora of reports coming in better than expected. This is the longest run of better than expected data we've had in some time and encompasses a wide variety of indicators. Most surprising I think is that we are seeing a bit of an upturn in [...]
For years it was uncontested convention that the lower the rate the better. Stimulus was, after all, intended as a borrower boost. Make the cost of adding debt low and lower, then it was assumed borrowers would borrow more than they otherwise might have with recovery the promising result. Every time rates went lower, the common refrain of “stimulus” went [...]
Markets have moved sharply over the last month, mostly in the post-election period. Stocks are up - small caps exuberantly so - the dollar is up, bonds and gold are down. Surprisingly though, our indicators did not move all that much. The direction of change in the indicators is consistent with the moves in assets but not the magnitude. The [...]
Economic Reports Scorecard The reported economic data of the last few weeks (it's been 3 weeks since my last update so I guess technically this isn't the Bi-Weekly Review) provides about as much direction and insight as the polls conducted prior to the election. To my eye, the trend here is trendless with a decidedly mixed set of data, each [...]
Clichés are clichés for a reason, largely because their meaning no longer requires precision in order to communicate information. Because of that, their use is usually limited to cultural exchanges, being largely shunned in areas when technical proficiency requires a high level of exactitude. Economics and finance in more recent years, really since August 2007, seemed to have shifted more [...]
When I first started some years ago, the guy I worked for told me to prepare myself because this business is so often just stupid. It does make sense given the high stakes and pressure, where everybody is literally trying to outsmart everybody else every minute of every day. And those kinds of conditions, variable as they are, lead to [...]
Economic Reports Scorecard There was little improvement in the economic data the last couple of weeks, the Citigroup Economic Surprise index still well below zero (-8.1). And frankly, where there was improvement such as the GDP report, it doesn't look sustainable...unless the US is about to become a soybean exporting powerhouse. Anything is possible I suppose but counting on Brazil [...]
As with last month, I delayed this update a few days to see if we might gain some clarity that would warrant some change in our allocation. Alas, no such clarity has emerged and so, as it has been since August, the risk budget remains unchanged this month. Indeed, as last month, the entire portfolio is unchanged. For the moderate [...]
According to the TIC estimates, more than half a trillion in UST’s have been perhaps liquidated from foreign official holdings since October 2014. More than half of that total has taken place just in 2016 alone in the eight months through August. And, of course, in that time UST nominal rates have only fallen and sharply so, contradicting the nightmare [...]
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