Jul
19
Volatility fatigue led to extreme weak investor sentiment which has now finally translated in defensive portfolio positioning. Actions speak louder than words. Fund managers surveyed have now taken up their cash balances to extremely high levels. Phenomenal counter indicator. Historical forward returns from high levels of cash are well-above average....
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Jul
15
There’s no sugarcoating it – it’s been a very rough week for all of the peak inflationists who’ve been arguing that the worst is behind us. First the Consumer Price Index (CPI) and then the Producer Price Index (PPI) came in well ahead of expectations and soared to new multi-decade...
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Jul
14
The demise of meme stocks, day trading, and Robinhood (HOOD) Excess money supply growth led to excess inflation which led to a rise in bond yields. That’s the secondary source of the current market volatility. The primary source is that the Fed has been too slow to react to all of the...
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Jul
12
The pain inflicted on high quality, long duration bonds Between March 2020 and December 2021, the US produced about $8 trillion in stimulus to economically battle the pandemic. Roughly half of that came in the form of monetary stimulus from the Fed and half came from fiscal stimulus via stimulus...
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Jun
30
New WebsiteWhat does behind the curve look like? The Federal Reserve is about to tighten monetary policy, i.e., raise rates, while high yield spreads are above their historical mean. They have not done this at all going back to 2000 and have only done it twice since the 1970s (roughly...
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Jun
23
Higher prices have led to tighter financial conditions. Mortgage rates up a lot, gasoline prices up a lot, UST yields higher, credit spreads wider. For the past five months, both the bond and stock market has basically been doing the Fed’s job for it – tightening financial conditions in the face of...
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Jun
21
As the latest sign that the economy is slowing down, the once red-hot housing market is starting to sputter. Based on data released this morning, only 5.41 million existing homes were sold in the US in May, which is 3.4% lower than the prior month and 8.6% lower than the...
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Jun
15
The Fed can’t do anything about the supply of goods and services but does control the creation and destruction of economic demand. In 2020 and 2021 the Fed was creating demand, or at least attempting to, via loose monetary policy and quantitative easing. Those days are over. The remainder of...
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Jun
14
Elevated inflation and a Fed that is way too far behind the curve is where we find ourselves today. The Fed most likely will hike rates 75bps on Wednesday – it’s long overdue and likely will be received by the market as “ok” only because the market is awaiting/pleading/begging for some...
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Jun
14
There are a wide range of investment outsourcing options available to advisors these days. Undoubtedly, the right one is out there for you and your clients. But why outsource? Findings from a recent survey of advisors by AssetMark best sum up what we have been saying for years: “To achieve...
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