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Tag Archives: Yield Curve

Corporate Profits Are In The Middle of the Only Debate Which Matters

The BEA has completed its unscheduled departure from its release schedule. Due to the prior federal government shutdown, the government agency was only able to put together two estimates for Q4 2018 real GDP. The first had seemed to calm some fears that US growth was wobbly toward the end of last year, aligning uncomfortably with what we are more and more finding “overseas.” Coming in originally at 2.55617%, it was enough to disappoint both sides of the divide, neither confirming nor denying...

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Monthly Macro Monitor: Well Worried

Don’t waste your time worrying about things that are well worried. Well worried. One of the best turns of phrase I’ve ever heard in this business that has more than its fair share of adages and idioms. It is also one of the first – and best – lessons I learned from my original mentor in this business. The things you see in the headlines, the things everyone is already worried about, aren’t usually worth fretting over. The market may not be perfectly efficient...

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A River In Egypt

No, no, no. Everything is awesome. The denials have spread faster than the market prices have changed. Globally synchronized growth did a number on a number of people. I really think it a function of time. It has been so long since we’ve seen economic growth, real economic growth, that so many just believe it has to happen because it hasn’t. Meaningful economic advance is a given, that’s what we are taught from Day 1. And it is central bankers, our best and brightest, who safeguard that...

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Same Planet, Very Different Worlds

This is really getting out of hand. For the fourth day in a row, unofficially, effective federal funds or EFF remains above IOER. At the same, now the 10-year UST yields less. What was last week pretty concerning stuff before the Fed’s capitulation is this week whatever category lies below. This is not a resumption of the bond bull market. Despite so many popular stories which had predicted it being called off throughout 2018, a bond bull market never existed. To begin with, there is...

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Downturn Is Everywhere

Europe is a total mess, no one can (honestly) argue otherwise. But that’s just Germany and France, right? PMI’s in those countries were a disaster. Those reported for the US weren’t really all that bad. Weaker, sure, hardly the obvious sinking especially when compared to German manufacturers. IHS Markit’s flash US Manufacturing Index for March 2019 was 52.5. This was the lowest in 21 months, so some concern. Still, it was miles away from Germany’s 44.7. The US composite remains better than...

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The Real End of the Bond Market

These things are actually quite related, though I understand how it might not appear to be that way at first. As noted earlier today, the Fed (yet again) proves it has no idea how global money markets work. They can’t even get federal funds right after two technical adjustments to IOER (the joke). But as esoteric as all that may be, recent corporate statements leave much less doubt at least as to the primary effect. Before the FOMC gave up on the boom, company bellwethers like FedEx beat them...

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Where Doves Are Dreaded

If “rate hikes” and QT are the world’s big problem in 2019, then why is the FOMC announcing the end of “rate hikes” and QT failing to have a positive effect? The answer will surprise most people. Central banks, dominated by central bankers who are Economists, meaning statisticians, are always behind. They do not lead. Monetary policy, which has no money in it, is reactive rather than proactive. Pay no attention to that inflationary boom Jay Powell spent the first significant portion of his...

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Has This Cycle Reached Its Tail?

We asked a few friends what the picture below looks like, and most told us they saw a badly drawn bird with a wide open beak. Based on the photograph below our colorful bird, they might be on to something.  As you might suspect, this article is not about our ability to graph a bird using Excel. The graph represents the current bull market and economic cycle as told by the yield curve and investor sentiment. As the picture is almost complete, the bird provides a clue to where...

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Chart(s) of the Week: Reviewing Curve Warnings

Quick review: stocks hit a bit of a rough patch right during the height of inflation hysteria. At the end of January 2018, just as the US unemployment rate had finally achieved the very center of attention, global markets were rocked by instability. Unexpectedly, of course. Over the next several weeks, share prices sagged and people blamed it on a number of things: Korean War, the unemployment rate itself (the economy was going to be too good, the Fed would have to hike rates faster and...

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