market update

MARCH MADNESS   March 2020 was the beginning of utter madness, in so many ways. For the financial markets, it meant unprecedented intervention from governments and central banks to keep the global economy from imploding. As a result of their policy decisions, we all experienced the severe side effect of 40-year high inflation in 2022. …

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HOUSING MARKET   In Part 5, the final post of the financial markets “2022 Year in Review”, we look at everyone’s favorite topic … the housing market. The 2022 Housing Bubble in the US is BIGGER than 2006, when considering home values adjusted for median income.   Meanwhile, the rapid change in mortgage rates this …

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YIELD CURVES   Yield curves, specifically INVERTED yield curves, are one of my favorite topics. Perhaps because they precede big moves lower in mortgage rates. Certain yield curves, once inverted, have an almost perfect track record for predicting recessions. An inverted yield curve is when a shorter-term bond has a higher yield than a longer-term …

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THE STOCK MARKET   The Fed liquidity suck is also reflected by the collapse in margin debt. In dollar terms, the U.S. equity market (stocks) erased nearly $16 Trillion of market cap from the peak, worse than the Great Financial Crisis (GFC).   Which conjures up the fear of “what if 2008/09 hit again” in …

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INFLATION OR DEFLATION   Why has The Fed been on such an aggressive tightening path? That question is for all the people who live under rocks. The obvious answer is INFLATION. Unfortunately a lot of the data used by The Fed to determine monetary policy is backward looking. They are driving the US economy while …

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GOBBLE GOBBLE   Does the tryptophan in turkey make you sleepy, or is it the glycemic shock of massive overeating? Does indulging in cheap credit make you a smart investor, or have governments and central bankers lulled you to sleep with massive intervention (QE, stimulus checks, PPP loans, bail outs, etc.)?   No matter how …

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INFLATION NOTHING BURGER   Inflation is measured as a rate of change. It is also a lagging economic indicator because it uses backward looking data from the month before. I was suggesting the last two months that inflation had likely peaked, especially when we consider month-to-month trends, which had already been slowing.   Today’s July …

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BULL VS. BEAR   Prolonged asset price declines are called a Bear Market, whereas the continuous increase in price is known as a Bull Market. Besides higher prices, bull markets are characterized by extreme euphoria and often punctuated by an intense spike in price known as a “blow-off top”. Meanwhile, bear markets only reach their …

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THE DUAL MANDATE   The Federal Reserve, the US Central Bank, is as “federal” as Federal Express (FedEx).   They are a privately held bank, owned by many of the country’s largest banks. This seems like a conflict of interest, but that is a rabbit hole we can go down another time. Congress granted The …

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