Interest payments: A boon now, bane later?
Debt can be both a boon and a bane. Used properly, it can be a very useful tool – be it to an individual, a business, or a government. Too much of it at the same time can unleash destructive … Continued
NYSE margin debt goes sideways in May; 2H Nasdaq ramifications
In many ways, this cycle has been like none other. Equities continue to grind higher. Multiples (valuation) continue to expand. The Fed continues to provide support – both monetary and verbal. Equity bulls continue to throw the caution flag out … Continued
XLY’s near-term direction probably down in midst of energy uncertainty
Crude oil is on the move. Since early April to last week’s high, the Brent has gone up by over 11 percent. The West Texas Intermediate found a trough much earlier – early this year – and until the high … Continued
NFIB respondents’ comp plans portend better days ahead, should we trust?
One of the ways the current U.S. economic recovery has seriously diverged from past recoveries is the lack of solid progress on the wage front. In May, year-over-year percent change in average hourly earnings of private-sector employees (seasonally adjusted) came … Continued
Deleveraging — what deleveraging?
The title of the accompanying chart says it all. Despite all the talk behind the ongoing de-leveraging, facts point us to a different reality. Compared to 2007, the outstanding U.S. bond market debt is higher, not lower – $40.4tn in … Continued
ECB action suggests euro-area debt crisis not over yet
The euro so far is trading exactly as expected. ECB President Mario Draghi did not disappoint. Yesterday, the refi rate (main lending rate) was cut to 0.15 percent from 0.25 percent and the deposit rate to negative 0.1 percent from … Continued
Dynamics behind plummeting U.S. home ownership and rental reliance
Sales of new homes are struggling to maintain their earlier momentum. The three-month moving average flat-lined for nearly a year before peaking at 448k (SAAR) in January this year. Those for sale (supply) has been gradually inching up as well … Continued
Recent sideways/down action in ‘job openings’ probably suggests weakness in employment ahead
Any economist or investment professional who knows a thing or two about what is going on in the U.S. job market knows not to be misled by the rapid decline in the unemployment rate. From the cycle high 10 percent … Continued
Bond market is trying to tell us something – part two
In discussing the dynamics behind the U.S. bond market early this week, an important variable got left out. The chart below plots the budget situation of the U.S. government against issuance by the Treasury of notes and bonds. This gives … Continued
Bond market is trying to tell us something
As 2014 began, growth expectations were very high for the U.S. economy. In fact, every year since the recession ended mid-2009, economists’ GDP forecasts have been on the optimistic side, only to be progressively cut back as the year progresses. … Continued