Mar
22
Over the course of the past 24hrs, odds have dramatically increased that the Fed will hike by +25bps at 2pm today. 2y UST yields two weeks ago were 5.2%. Those quickly fell to 3.8% when Silicon Valley Bank imploded but 2y UST yields have been on the rise the past...
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Mar
21
The events of the past 10 days – including the collapse of Silicon Valley Bank and the extraordinary measures enacted by the Fed to protect/quasi guarantee deposits of any shape or size – has resulted in above-average market volatility (which I think after 15 months of such we are all...
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Mar
15
There is certainly a lot happening in the financial markets right now. It is more important than ever during times like this to step back and focus on what we do know. And the clearest messenger right now is the bond market. We have discussed the 10-2-year treasury yield curve...
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Mar
13
The death of the nation’s 16th largest bank was both swift and shocking and the events of the past few days as it relates to the bank run that went down at Silicon Valley Bank (SVB) has implications for both policy and markets. There are few knowns so far and...
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Mar
09
As much as Fed Chair Jerome Powell may claim that the Fed is not trying to push the economy into recession, it is becoming increasingly likely that their fight against inflation will produce that exact result. Following a series of stronger than expected economic data prints over the last couple...
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Mar
02
Retail sales remain strong, unemployment claims remain low, and broadly speaking economic growth as measured by consumption and GDP is solid. That’s the good news. The bad news is that some cracks are starting to emerge in consumer lending. Subprime auto loans is lending to those with the worst credit...
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Mar
01
With 475 companies (96% of market capitalization) of the S&P 500 index having reported 4Q 2022 results, the earnings season is officially drawing to a close. As expected, 4Q 2022 was the first quarter to record negative year-over-year earnings growth since 3Q 2020, with earnings declining by 4.9% compared to...
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Feb
24
Three years ago, this week, the world was hit by the onset of the COVID pandemic. Levels of serious illness started to spike and global markets recoiled accordingly. That truly seems like a million years ago. One year ago, the war in Ukraine started. Neither of these are happy anniversaries,...
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Feb
22
Supply and demand drives inflation, including the supply and demand of money itself. Why did inflation spike in early 2022? Because we had record money supply growth in BOTH 2020 and 2021 combined with a Fed unwilling/late to act with regards to rate hikes. The M2 chart below captures the...
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Feb
16
With fears of oncoming recession still swirling, the corporate bond market continues to mostly mimic a big shoulder-shrug about that very prospect. As we’ve noted, the difference in yield between corporate bonds and comparable risk-free Treasuries (i.e., the credit spread) is one of the go-to places to look for signs...
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