How might stocks and bonds perform during the pause and eventually when the Fed cuts rates?
The problem is not a deficit or a debt-issuance problem. It's an interest rate problem.
The labor market is undoubtedly deteriorating and sending signals that have been historically valuable warnings that a recession is coming.
Given the likelihood that economists are again myopic in their inflation forecasts and bond traders are betting on such projections, I see a day soon when a disinflationary or deflationary reality hits the bond market and bond yields plummet.
Whether retirement savers in TDFs know it or not, and I presume most don't, they are mindlessly investing their wealth.
The relationship and the recent divergence between real rates and stock valuations is critical. Be ready for the historical trend to reassert itself.
This article discusses one of my favorite bond fair-value models to show you the true bond-yield signal.
The odds of a unicorn spraying rainbows across the sky and the government running a surplus are the same: zero percent.
This is the 25th anniversary of the collapse of LTCM, so let’s reflect on the similarities between that debacle and what might unfold in the capital markets today.
A financial crisis, following the 5.50% hike in Fed funds and similar increases in all bond yields, is virtually inevitable.
Can the economy grow 2.0% to 2.5% faster per year over the next 10 years than the last 30 years? I don't think so.
Normalizing economic activity and the slow but steadily growing lag effect will result in a recession.
Investors believe that U.S. government debt is risk free. Why shouldn't they? Every economic and financial textbook, media outlet, and bond guru says so.
Michael Lebowitz: Inflation, deficits and QT don’t mean higher yields
Entrenched long-term economic growth trends and low inflation, coupled with high and increasing leverage, all but ensure lower interest rates. This article defends that thesis and helps us better appreciate the bearish concerns weighing on bond traders.
What if I told you that CPI is effectively at 2% now? Would the Fed's policy stance remain the same?
Personal consumption growth rates are showing signs of fatigue. Given it consistently accounts for more than two thirds of economic activity, it's worth exploring the state of the consumer.
History, analytical rigor, and logic argue that long-term buy-and-hold investors should shift their allocations from stocks toward bonds.
The Fed and government can ill afford to maintain today’s interest rates.
Bond yields well above implied and historical inflation rates are a great opportunity.
Investors will not be willing to pay an above-average valuation for what will seem like below-average profit growth.
History tells us to ignore the Fed’s and market forecasts and anticipate a rate-cutting cycle.
Will this yield curve inversion lead to continued economic growth and avoid a recession?
I share valuable tools to improve the odds of success using a relative-rotation strategy.
The Eurozone just entered a recession as the region posted two consecutive quarters of negative economic growth. The manner in which it entered a recession is a bit quirky.
Relative rotation entails shifting among stocks, sectors, and stock factors. The strategy adds significant value to portfolio management if done well.
Central bank digital currencies (CBDCs) are the next step in financial innovation. The government will do what it deems in its best interests. CBDCs will replace physical currency; it's just a question of when.
The Fed failed to recognize the danger of its loose monetary policy in 2021. We are seeing its pernicious effect, as the money supply and velocity combined to inflict non-transitory inflation.
Long-term Treasury bonds are an excellent investment. But timing the purchase of bonds is difficult because three headwinds are keeping rates higher.
With the Fed purposely trying to slow economic growth and a banking crisis in full swing, do the heightened risks argue for accepting the current bond yields and reducing equity exposure?
Bank stocks have underperformed conservative sectors and the broader S&P 500. Despite the broad risks, there are good banks that can be investment worthy.
Four reasons, the rule of law, liquid financial markets, and economic and military might, all but guarantee the death of the dollar will not occur anytime soon.
There are four critical reasons why the dollar will not lose its global reserve status anytime soon.
I get many inquiries from bond investors on whether they should buy bills, notes, or bonds based solely on expected Fed policy.
Stock investors wishing for the Federal Reserve to pivot should rethink their logic and review the charts below.
Lower interest rates and more liquidity are the keys to boosting confidence in the financial sector, but they impede the Fed's ability to fight inflation.
The banking earthquake is sending shockwaves through the financial markets. The financial and economic aftershocks, soon to follow, are underappreciated and will prove worse than the earthquake.
Having raised rates by over 4% over a short period and in a very leveraged economy, the Fed no longer has the big stick it used to have. Therefore, speaking loudly with hawkish rhetoric and narrative must become a priority.
Maybe UFOs are carrying wealthy aliens wanting to buy a lot of stuff and boost our economy. More likely, those forecasting a no landing have a false sense of optimism that the economy will continue to be resilient.
Gold investors are betting the Fed will continue to be negligent with its monetary policy.
History tells us it's a matter of when and not if tighter monetary will send the economy into a recession.
Suppose recession warnings, such as the yield curve and manufacturing surveys, prove prescient, as they reliably have. In that case, this will be a rough year for the Goldilocks soft-landing believers.
A trading tool like portfolio insurance is poised to trigger a stunning display of market instability.
Successful investment management can be Impaired by perverse incentives, which are what now plagues value funds.
You read that right. The Fed wants lower stock prices.
Let's examine the three paths the Fed might take in 2023 and what they mean for stock prices.
Extremely harsh weather conditions from winter storm Elliot resulted in thousands of flight cancellations last weekend.
The Fed’s repeated manipulation of the price of capital has weakened productivity growth and reduced economic activity. Ultimately it is the citizens that pay the price.
Capital represents the resources and labor used to produce goods and services.
The key takeaway from Wednesday’s FOMC meeting: despite encouraging inflation news, the Fed believes they have a long inflation fight ahead.