The Large-Cap China ETF $FXI just hit 18-month highs relative to the S&P 500 $SPY, signaling a potential shift in market leadership. A trend reversal seems to be in play in favor of Chinese equities. No one’s talking about it. Everyone’s ignoring these stocks. The rules have changed. What worked in previous years isn’t necessarily going to cut it today. In a market like this, uncorrelated...
During recessions and credit crises, the spread soars. You can see this in the chart below. It also shows what has happened to the high-yield credit spread since the 1990s, with recessions highlighted in gray... During recessions, bankruptcies spike and investors want nothing to do with corporate bonds. Their prices plummet, and their yields soar. That makes them safer to own.Today, with the...
Elon Musk and DOGE are fighting a seemingly unwinnable war against a massive and deeply entrenched Federal bureaucracy. Last week I wrote about the $4.7 trillion in untraceable Treasury payments recently discovered.
Americans are asking, “where did this money go?”
This question gave rise to another, “Where is the gold?”
The gold in question is the 4,600-5,000 tons supposedly held in Fort...
The chart above demonstrates the Money Velocity since 1960. The MV peaked just prior to the Dot-Com Bubble bursting and has been in a downward trajectory ever since. Note the black arrow to the right, t his is where we are today. This “blip” higher in the MV is not due to an increase in economic output/activity, this the direct result of what now is, the effect of un-needed currency/debt now...
Let’s examine the track record of these Treasury Secretaries since 1993. Below are the numbers and reasons to ignore these Masters of the Universe. The percentage in the bio is how much the dollar's purchasing power dropped during their short tenures.
Janet Yellen (Jan 2021 – Jan 2025)
Approx. +21% decline in dollar purchasing power in four years. Yellen is Keynesian to the core - a former...
In other words… after five months of choppy inflation data… we are now entering a period where inflation should steadily drop for two straight months. And that period starts this week with January’s CPI report. That is exceptionally bullish for stocks. Inflation has been a huge thorn in the stock market’s side for the last several years. Since 2022, when inflation has risen, stocks have...
An uneventful jobs report: January nonfarm payrolls were solid at +143k and a +50k revision to the previous month. The US economy remains near full employment, with labor force participation rising, jobs still growing and real wages still rising. Are the good old days now?
Feb 3: Construction Spending
Feb 4: JOLTS
Feb 4: Factory Orders
Feb 5: U.S. Trade Deficit
Feb 6: Jobless Claims
Feb 6: U.S. Productivity
Feb 7: Unemployment
Feb 7: Wholesale Inventories
Feb 7: Consumer Sentiment
Feb 7: Consumer Credit
An Oxford Economics analysis released in November demonstrates the historical pivot these tariffs reflect, with economists’ “full-blown Trump scenario” falling below the 25% tariffs placed on our neighbors to the north and south.
Now, the number of homes completed but not yet sold hit the highest level since June 2009... This signals stress for U.S. consumers. Remember also, this was one of the biggest issues with the homebuilding business during the housing crash...At that time, homebuilders would buy up lots and build houses, thinking that the high demand would continue. But when demand started to stall, they had sunk a...
First, unemployment is rising, which is a great predictor that the market is close to a top. Just take a look at the inverse relationship between the unemployment rate and the S&P 500 Index...
You can see this dynamic clearly with the chart below comparing the US labor force participation rate (the amount of people in the US working and being productive citizens) vs. the US government debt as a % of GDP (the amount of debt that makes up the economy’s GDP). Source: Global Macro Investor This chart is one of the most important charts in macro and there are 2 key takeaways from this: 1/...
The story of global liquidity and markets begins with an aging and infertile global population. You see, world population growth has been declining massively since the 1980s. Source: Wikipedia A big part of this has to do with a decline in fertility rates in women globally, mainly due to a significant change in the average humans health over the last 40 years (consuming fake foods, living...
Friedman’s observation was simply that countries that experienced high inflation were invariably countries that had put too much money into circulation. (An observation near and dear to every Bitcoiner’s heart.) This relationship between inflation and the supply of money is helpfully intuitive: Prices rise when there is more money chasing the same amount of goods. And if that’s all there is to...
The Fed’s Mandates Are Not in Balance The Fed’s mandate is dual: support the economy while protecting the labor market and keeping interest rates low. The trend in inflation data is undeniable: it’s not cooperating, and the trend in labor data is one reason. The labor market has cooled from its peak in 2022/2023. Still, it remains healthy, strong, and resilient, with job gains averaging 191,000...
If Powell keeps rates high to fight inflation, interest payments will consume our entire budget. If he cuts rates to help the recovery, it risks destroying the dollar's value. There's no middle ground because the math simply doesn't work anymore.
Why is the market not crashing? 1. FED balance sheet down $1 Trillion from peak. 2. Reverse Repo 1.2 Trillion. 3. TGA moved only 600B in last 12 months. Total < $3 Trillion. 4. Govt debt by $4 Trillion in last 2 years. Is this good? Very bad in long term! #stopspending
They see storm clouds ahead... When businesses stop hiring, consumer spending slips. That’s a red flag for oil demand because less consumer spending means fewer goods shipped and fewer trips made.
The last Fed rate hike was way back in July of 2023.
The Fed has maintained the overnight federal funds rate at the current range of 4.75% to 5.0% and many experts believe the Fed will likely decide to CUT rates going forward... So far in 2024, bank five-year CD rates have held steady at around a 5.00% annual yield.
Reeves ‘on verge of breaking her own fiscal rules’ as borrowing costs surge According to Capital Economics, the Chancellor has a cushion of just £1bn left before she faces a “nasty choice” between more tax rises, spending cuts, and breaking her main fiscal rule to balance the books by the end of this parliament.
In research published on Tuesday afternoon , it said that the jump in borrowing...
This chart above from Econ PI shows some sluggishness in the hiring market. However, the U.S. Purchasing Manufacturers Index is at a nine-month high, buoyed by bullish expectations on domestic manufacturing growth in the Trump 2.0 years.
December’s Jobs Report There’s a focus on jobs this week, with December’s unemployment report due on Friday. Forecasts show non-farm payrolls rising by 155,000, down from 227,000 in November. The unemployment rate is expected to stay at 4.2%.
“Consistent with a firm labor market”: Bloomberg suggests employers tempered their December hiring, and puts the average 2024 monthly job growth at...
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