The “Excess Savings” Hypothesis vs. Economic Deceleration
There is some speculation that because only a little more than half of the buildup in savings from the stimulus checks and enhanced unemployment benefits was spent through July, Q4 economic activity will continue to show recovery as the “savings” continues to be spent. Call this the “Excess Savings” Hypothesis. Unfortunately, the incoming data makes […]
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 […]
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). […]
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% […]
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 […]
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 […]