The Rate Spike Will Damage the Recovery
Fed Intervention Needed There was quite a spike in interest rates the last week of February with the 10-Year T-Note spiking from a 1.36% level as of the close on Wednesday to as high as 1.60% intraday with a close of 1.55% on Thursday. Friday’s close was 1.45%. But, a lot of damage was done. […]
Markets Are Bubbly – The Economy, Not So Much
Not a Bubble? The equity markets have been driven by momentum and speculation these past few weeks, not by underlying business fundamentals. We had GameStop, followed by Silver, then Pot stocks, and now SPACs, all driven by retail. PE ratios are in the top 1% of their historical range. Junk bond yields are at all-time-record […]
Bubble Markets Display Bizarre Behavior
Right Before They Tumble Like the Dot.Com bubble of the late ‘90s, the typical signs of an approaching bubble bust were on full display in the equity markets last week (week ending January 29th). GameStop (GME) and other failing or troubled companies (AMC, Blackberry, Nokia, Bed Bath) have become the darlings of the WallStreetBets (WSB) […]
“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 […]
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 […]
Using 2020 Hindsight: The Emerging “New Normal” Picture
Using 2020 Hindsight: The Emerging “New Normal” Picture The year finally ended, and, as has been typical, the latest data continued to be downbeat. Despite the weak economic data, the equity market ended the year at all-time highs. The S&P 500, at 3,576 was up 10.5% for the year after falling 34% in the February/March […]