Recent experience shows that a third mandate – preventing financial instability – trumps the Fed’s two congressional mandates of full employment and low inflation.
Will the plight of consumers drag GDP lower in the second quarter, resulting in a recession?
The tale of Bear Stearns’ rally and investors' myopic vision in the spring of 2008 is a valuable lesson for today.
Recent warnings from corporate executives and rapidly declining regional manufacturing surveys make me wonder if a recession has already started.
The terms "value" and "growth" have been blurred. What appears to be a value stock may be in its reputation only.
Liquidity is fading due to the Fed, and therefore volatility is on the rise. Illiquid and volatile markets are not conducive to long-term wealth generation.
The BOJ is trapped. It is conducting unlimited QE to keep rates low and weaken the yen, which promotes inflation.
In propping up Japan's economy and financial markets, its central bank indirectly provided liquidity to the world's financial markets. But the BOJ could unleash a liquidity vacuum felt around the world.
Does a risk-free bond with 7% yield interest you? If so, read about the red-headed stepchild of the bond world that is finally attracting investors.
The more the Fed decides to dance with inflation and ignore the bond market and economy, the more we should expect stock prices to fall.
This article explores the problem vexing Russia and its trade partners. I explore how the threat and use of sanctions may force some countries to contemplate weaning off the world's reserve currency.
With QE finished and QT on the horizon, I answer a few questions to help you better appreciate what QT is, how it will operate, and discuss how draining liquidity will affect markets.
Filling out your March Madness bracket provides insight into how investors select assets, structure portfolios, and react during volatile market periods.
The Windfall Profits Tax Bill doesn’t penalize energy companies. It punishes consumers with more inflation. Further, it uses a faulty assumption to help gain support from the public.
While higher gas prices may be welcome news to the oil industry, the rest of us should be concerned. It is a glaring recession warning. Over the last 40 years, higher gas prices have been linked to economic stagnation and recessions.
Fiscal spending is normalizing quickly, and the Fed is warning investors it is ready to remove the stimulus. Such a reversal of monetary and fiscal liquidity does not guarantee a reversal of asset prices, but the odds of a bear market are increasing.
I propose a strategy that can produce larger price gains or losses than bonds and higher yields than traditional bond funds or ETFs. If yields decline soon, investors can expect double-digit returns in a relatively short period.
The term “value” is being grossly misapplied.
The strike price on the Fed put has moved significantly. The Fed may sit idly by if markets voice displeasure with abrupt changes in monetary policy.
I examine two biases that often handcuff investors and push them to make the wrong decisions at the wrong time.
The Fed is walking a tightrope between instability and inflation. Can it successfully tame inflation without causing severe market dislocations?
Stocks are priced for perfection. Bonds trade at historically low yields despite 7% inflation. What could go wrong?
While no one knows what 2022 holds in store for investors, my concern is that it should not foster the same optimism as 2021.
MMT offers a new "logic" that allows the government to spend without facing the traditional constraints of debts and deficits. Is MMT too good to be true?
The dollar is on the rise, and with it comes underappreciated consequences.
Investors have no idea the most considerable risk to their portfolio is if the Fed cannot continue to be a market magician.
This article contrasts the valuations and environments now and in 2000 to ask if it's time to leave the party or stay and rock on. I provide a statistical analysis showing the downside risk facing the S&P 500.
The economy is at maximum employment. Inflation is running red hot and increasingly showing signs it is persistent. Having neglected one mandate and largely fulfilled the other, why is the Fed so slow to reduce asset purchases and unwilling to contemplate hiking interest rates?
If easy money is the bedrock of valuations and the Fed is getting ready to shift the bedrock, investors best pay attention to market forecasts and how the Fed ultimately acts.
Is the Fed’s aggressive policy, which purposely goes against its mandate, hiding something?
Given record profit margins and valuations, there is little upside, especially if inflation remains problematic. Throw stagflation into the formula, and the outlook is bleak.
I explore the essential factors that drive bond yields and assess whether the recent increase in yields is a buying opportunity or foreshadows even higher rates.
If the U.S. and other countries sit idly by, we may look back at today as a turning point in global economic affairs. The U.S. does not have to cede economic growth. But it must readapt capitalistic logic, which, ironically, China is slowly grasping.
Understanding inflation beyond the headlines helps us answer the all-important question: How transitory is transitory? From there, we can assess potential Fed and market reactions.
Many Fed members are vocal about tapering soon, but the Fed has not backed their words with action. Might the Fed be speaking loudly but carrying a feather?
With a 30% contribution to CPI, shelter prices are prone to boost CPI higher in the months ahead. It seems like a logical conclusion, but is it?
Those on Wall Street and the Fed do not see the debt elephant in the room. Even worse, they see it but ignore that perpetuating the problem serves their interests best.
he current inflationary surge is temporary. When flexible prices, especially some of those mentioned, normalize, inflation is likely to follow suit.
Forcing the price of money to absurdly low or even negative rates is slowly but constantly detracting from economic progress and ripping the social fabric of our nation.
Much is being written on the state of extreme equity and bond valuations. Surprisingly, there is little research focusing on what keeps valuations at such levels. Liquidity is our asset bubble's lift and worth closely examining to better assess the markets' potential flight path.
The eventual tapering of QE will foster a change in investor behaviors. This article focuses on bond yields and a few interest-rate-sensitive equity sectors to provide forward guidance on how fixed income and interest-rate-sensitive assets may perform in a tapering environment.
The level of confidence in economic and market forecasts is remarkably high. There is nary a mention of debilitating inflation and no recognition of the troubling deflationary hurricane off at sea.
While investors are enthusiastic, the odds are growing that the Noah effect will come sooner than they think. The math is clear that returns over the next 10 years will pale in comparison to the last.
For those who elect to take passive strategies, like TDFs, assess your risk profile and that of the markets and invest accordingly.
Someone must pay for rampant federal spending.
In this article, I dissect Operation Twist. I also look back at Operation Twist 2.0 circa 2011- 2012 and assess its effectiveness and how it impacted various asset classes.
Short-term interest rates are approaching zero percent and will likely be negative shortly. The culprit is an unusual circumstance at the U.S. Treasury.
Inflation has been missing in action because there has been a collapse in the velocity of money.
The Fed juices the stock market in four ways.
Of the many tales being told to justify record equity valuations, low interest rates are among the more popular. However, that is only half the story.