Interest rates on both the short and long end have gone up meaningfully. The federal government sits on nearly $33 trillion in debt, and the budget deficit is on the rise even though the economy is growing. This only means … Continued
The federal government is up to the gills in debt. Interest payments run up in the billions every year. This was not much of an issue in a low-interest-rate environment. But right now, the Federal Reserve is tightening. Higher rates … Continued
Last week, the FOMC slightly tilted hawkish. Repercussions were felt across assets. Then early this week, dovish members were out in full force, pacifying investors that monetary morphine is here to stay; major equity indices are back at/near their highs. … Continued
Last March, the Fed essentially urged investors to take on risk and go up the risk curve. They have obliged. Leverage is high in the system. This works as long as the prevailing upward momentum is in place. When a … Continued
The FOMC meets this week. The Fed already has unlimited QE in place. Not much is expected to come out of this meeting. If anything, aware that low rates are needed, Mr. Powell may drop a hint or two that … Continued
Stocks have diverged from sharp deterioration in fundamentals. At the lows, several indicators were at washout levels, resulting in the massive rally that followed. But at this point in time, they may be responding more to the Fed’s monetary backstop … Continued
US reliance on debt is growing. Having already just about used up the conventional monetary tool and a massive balance sheet, the Fed is looking for new tools – a la Japan. Stocks’ reaction function to Japanification is key. At … Continued
Debt addiction is pervasive among consumers, corporations as well as the federal government. Several debt-related metrics are in uncharted territories. The craving is built into the system and can continue until markets rebel. In December, U.S. consumer credit grew 4.7 … Continued
Post-presidential election last November, U.S. small-caps sprung to life, going nearly parabolic in two separate spurts. President Trump’s promises to cut taxes, prune regulations and increase infrastructure spending helped improve investor sentiment. Small-caps inherently are domestically focused. The first rally … Continued
The financial accounts of the U.S. for 2Q17 was published last Thursday. Better known as the Z.1 report, the massive quarterly publication contains tons of useful data – thus highly recommended. The seven charts below try to highlight where things … Continued