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A Softening Economy Will Be Buffeted by Stimulus Withdrawal

While the story of the week was the big “miss” in Nonfarm Payrolls, most of the incoming data continue to be much softer than the markets or financial media let on, as they continue to ignore the implications.  The chart above shows U.S. vehicle sales beginning in 2015.   Note the steady sales levels until the pandemic, the climb out to just above normal, and now a renewed falloff.   Sales in …Read More

Why Interest Rates Are Falling

#*!? CRASH BAM @#$ Suddenly, markets (well, at least the bond market) now see falling interest rates in the short and intermediate term. The 10-Year U.S. T-Note fell from 1.47% on June 30 to close at 1.29% on Thursday July 7 (a big move in just four market sessions). Some of the rapid fall was due to short covering, so the slight give back on Friday (to 1.36%) wasn’t a surprise. For context, …Read More

“V” vs. “u” and the Flawed Inflation Narrative

The equity markets finally took a breather last week (ended January 15th), with the S&P 500 falling a mere 1.5%; that’s down from its record high a week earlier.  Perhaps the really poor economic data played a role, but then again, equity markets like such poor data because it means more stimulus (Biden’s $1.9 trillion plan), and markets know that much of the stimulus always finds its way into the …Read More

We Don’t Live in “Normal” Times

The equity markets are in one of those rare moods where they continue to rise no matter the news, even when there are riots in the nation’s capitol complex, and when non-farm payrolls fall -140K.  Would you say this is “normal?” Regarding inflation expectations, interest rates rose rapidly along the Treasury yield curve with the 10-year T-Note yield rising from 0.93% (93basis points) from its close on January 4th to …Read More

Priced For More Than Perfection, Markets Have Dismissed Economic Reality

The holidays are upon us, and we wish our clients and friends health, peace and happiness. Recent income, output, and employment data have turned sour. We’ll see what that does to holiday shopping. The financial markets, especially equities, have looked past the valley (abyss), and the vaccine news has enhanced the view that “normal,” or at least a “new normal” is just maybe a quarter or so away. The DOW set an …Read More

The Wile E. Coyote Market/Economy

The Wile E. Coyote stock market has now looked down. Nothing but air! The “good news” data from the U.S. economy is all stimulus related. Without stimulus, Q3 GDP would have fallen double digits. The economy has yet to face the oncoming eviction crisis in the rental markets and foreclosure tsunami in the commercial real estate market. No matter how the economic numbers are presented, 22+ million unemployed tells you all you …Read More