Jan 3 2023

Mortgage Rate Arbitrage

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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Dec 23 2022

2022 Year in Review – Part 5

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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Nov 25 2022

2022 Year in Review – Part 1

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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Aug 10 2022

Inflation Nothing Burger

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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Aug 5 2022

Bull vs. Bear

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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Aug 3 2022

Slow Motion Train Wreck

SLOW MOTION TRAIN WRECK   “How did you go bankrupt”, Bill asked. “Two ways”, Mike said. “Gradually, then suddenly”. This is a popular quote from the Hemingway novel, “The Sun Also Rises”. It describes well, the slow-motion train wreck that is the US economy.   The US economy has had a tough year. Each bear …

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Jul 11 2022

I Got A Fever

I GOT A FEVER   …and the only prescription is more cowbell. This is a quote from a classic SNL skit featuring Will Ferrell and Christopher Walken.   Walken isn’t the only thing heating up, so is inflation, or at least that has been the story of 2022 … so far. In the SNL skit …

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May 6 2022

Soft Landing

SOFT LANDING   Since WWII there have been 14 Fed rate hiking cycles. 11 out of 14 have resulted in recession (two consecutive quarters of negative GDP). All hiking cycles that invert the curve have led to recessions (and lower rates) within 1 to 3 years.   The big concern is prior to even the …

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May 1 2022

April Fool

APRIL FOOL   So far 2022 has been a bad year to be an investor, and April was a month that added insult to injury. US stocks adjusted for inflation (real terms) are on pace for the worst annual drop since 1974.   Tech led the slide lower with the NASDAQ monthly change in April …

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