A Slower Economy, Lower Inflation The Odds of a June Rate Cut Are Significant

During the last week in March, there were several significant foreclosures (hundreds of millions of dollars per property). They included properties in SanFrancisco and Mountain View, CA, a large complex in Washingdon, D.C., and a medical office building (still under construction) in the southern part of Florida.   Leveraged loan delinquencies now exceed 6% (normal is […]

Why the Fed is Bluffing

As expected, the Fed “paused” after 10 straight rate hikes. They characterized this as a “skip,” not a “pause,” as the former implies the rate hiking regime is still in place while the latter has been construed to mean that the hiking cycle is over. The Fed does not want to convey that for fear […]

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 […]

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 […]

Inflation Expectations Rise Even as the Economy Cools

It has now become clear, and mainstream, that the economy weakened significantly in November, and that such weakness will carry forward to year’s end, at a minimum.  The weakness occurred primarily in the services sector as the virus’ resurgence caused some governors to mandate new or additional service business restrictions. As a result, jobless claims […]

Vaccine: That Pinhead of Light at Tunnel’s End

Pfizer’s vaccine announcement gave the equity market the vision and hope that some semblance of “normal” was closer than previously assumed; perhaps a light at the end of the tunnel. Reality is that, due both to the complex logistics of handling the Pfizer vaccine, the two shot inoculation process, and the voluntary system in America, […]