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Economic Growth

The Recovery Stalls; Fed Pledges “Lower for Longer;” Equity Markets Pause

With the Fed pledging to keep rates low even when (or if) inflation rises above its 2% target, it is hard to see why long-term Treasury yields (and those of other quality issuers) won’t move toward yields of similar debt in the world’s other industrial economies (i.e., Europe and Japan). The economic lull is now showing up in both the labor market (Initial Claims) and in retail sales, likely because …Read More

The Economy: On a Sugar High With 28 Million Unemployed

  Last week, interest rates moved slightly lower, with the 10-year T-Note falling about 7 basis points from 0.71% to 0.64%, a retracement of 37% toward the 0.51% August 4 low.  Like its brethren, the 30-year T-Bond fell 10 basis points from 1.45% to 1.35%, a 38% retracement to the 1.19% low (also August 4).  Some of the up-move had to do with the “Inflation Scare” discussed in last week’s …Read More

The Inflation Scare

Interest rates backed up last week.  The 30-year T-Bond, which was 1.19% on August 4, closed at 1.44% on Friday (August 14).  The 10-year T-Note closed at 0.71%.  It was 0.52% on August 4.  The CPI showed up with a +0.6% M/M rise (7.4% annual rate) for July.  That pushed the Y/Y rate to +1.0% from +0.6% in June.  Clothing prices rose +1.1% M/M in July.  They had risen +1.7% …Read More

The Economy: Navigating Scylla & Charybdis

  In Greek mythology, Scylla and Charybdis were mythical sea monsters existing on the opposite sides of the Strait of Messina, between Sicily and the Italian mainland.  Scylla was a six headed sea monster; Charybdis a huge whirlpool.  Because they were so close together, any passing ship was threatened.  In Homer’s Odyssey, Odysseus passed close to Scylla, losing only a few sailors rather than risking losing his whole ship in …Read More

Recessionary Impacts: ‘Down The Road’

When JPMorganChase reported earnings in mid-July, CEO Jamie Dimon quipped: “This is not a normal recession… the recessionary part of this you’re going to see down the road.” This observation is spot on. Dimon was observing that, while government had shut down much of the “nonessential” (i.e., 80%) economy, they also transferred $2.1 trillion to private households which more than made up for the $720+ billion of lost wages. We have seen many …Read More

A ‘W’ Recovery, Obstructed By Bankruptcies And Unemployment

The Recession’s ending isn’t the story – it is whether or not the Recovery lives up to its billing. In truth, the Recovery’s shape was never going to be a CAPITAL “V.” Like in the post-Great Depression period or the post-1918 pandemic period, consumer behavior will radically change. And, there is a lot of evidence that that has already begun. In those past periods, consumers became more frugal, and today’s data shows a surge …Read More