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Jul 15

A rough week for peak inflation

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... read more →
Jul 14

The End of Speculation #2:

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... read more →
Jul 12

The End of Speculation #1:

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... read more →
Jun 30

The Fed and spreads

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... read more →
Jun 23

Don’t look now but inflation is peaking

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... read more →
Jun 21

Demand destruction underway

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... read more →
Jun 15