How in the heck can the 30 year Treasury bond yield be trading at just 1.97%, an all-time low, when just 10 months ago it was up at 3.46% and “breaking out” to the upside? We were supposed to have a bond-pocalypse, after all, with…
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Today’s news of 10% tariffs on a the remaining $300bn of imports from China took markets by storm with US stocks moving from a 1% gain to almost a 1% loss on the day. Meanwhile, gold closed at a 6-year high of $1445. But the…
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When the US government gets near its statutory debt limit, congress must lift the debt limit in order for the Treasury to continue to issue debt to pay for government expenses. Simple enough. However, even after the debt limit is reached, the Treasury can use…
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We have been surprised over recent weeks to read a slue of commentary proclaiming that the economy is in great shape and Fed Chairman Powell is just pandering to markets by signaling rate cut(s) in July and beyond. Specifically, “strong” readings from the employment report,…
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On January 3, 2019, Chinese stocks made a v-shaped bottom and surged into a peak on April 19, 2019. Since then, stocks have corrected by about 7%, dropping, recouping about 6% of the peak to trough decline that ended on June 6, 2019. Interesting, when…
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Yesterday BASF, the largest chemical company in the world, announced its earnings would fall well short of analyst estimates in the second quarter. Earnings season in the US begins in a few weeks. So, we ran through our charts to harvest any insights about how…
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All eyes will be on the payroll report on Friday for clues about what it means for the Fed’s next move. Indeed, the payroll report will be the most important US economic data point between now and the Fed’s next meeting at the end of…
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On Tuesday of this week we wrote about the four possible scenarios the Fed could adopt in their Wednesday policy decision. In order of most hawkish to most dovish, those scenarios were: Fed does not cut rates and signals that a rate cut may be…
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Tomorrow will obviously be one of the most important news days of the year for financial markets with the Fed expected at the very least to signal that a rate cutting cycle is in the offing. Indeed, since the Fed last raised rates the yield…
Read MoreAs expectations for a Fed easing cycle have gained momentum, we’ve seen an abundance of comparisons between the current period and the late 1990s. In that period the Fed cut rates and stocks simultaneously levitated into the stratosphere. If we are to follow the logic…
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In this mid-quarter update, entitled “Escalation,” we discuss the backdrop of escalating trade wars and our belief that the environment is more favorable for US Treasury bonds relative to stocks. The trade war is escalating at a time of weakening global growth, thereby weighing further…
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Yesterday we wrote about three macro factors that will act to restrain economic growth through the rest of 2019 and into 2020. Those risks are the baked-in fiscal tightening, the lagged effects of monetary policy tightening, and growth retarding trade policy. Together, they could restrain…
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Despite the S&P 500 having made a new all-time high just a few weeks ago, many of the supposed market leaders have not kept pace. Instead, almost all of the FAANNGs (Facebook, Apple, Amazon, Netflix, Nvidia, Google) peaked out either in the summer or fall…
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The relationship between the performance of emerging market stocks and the US dollar is one of the tightest macro relationships that exists in investing. As we can see in the first chart, the relative performance of EM stocks vs the S&P 500 is highly negatively…
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Last week we wrote how the US dollar could be in for a major move when it breaks up or down out of the major consolidation it has been in for the better part of six months. We wrote that given the setup of the…
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