Executive Summary The Fed is now implementing Quantitative Tightening (QT), thereby reducing the size of their balance sheet. They are also increasing interest rates, which will reduce liquidity through a drop in loan demand. Loan demand will be hurt both by higher interest rates as well as [...]

Executive Summary When short-term interest rates are higher than long-term interest rates, the curve is considered inverted. Typically, this occurs just prior to or during recessions. In the first graph below, one can see the curve has not been this inverted in 40 years. Additionally, leading economic [...]

Executive Summary When short-term interest rates are higher than long-term interest rates, the curve is considered inverted. Typically, this occurs just prior to or during recessions. In the first graph below, one can see the curve has not been this inverted in 40 years. Additionally, leading economic [...]

Executive Summary Over the past decade, the Fed’s monetary policy was seen as the most important determinant for the direction of the stock market. The Fed has maintained tightening policies for over a year, reducing the size of their balance sheet and raising interest rates. A couple [...]

Executive Summary Last Friday the Bureau of Labor Statistics reported 339,000 new jobs were created in May, and the unemployment rate increased from 3.4% to 3.7%.  The jobs number is derived from the Establishment Survey, while the unemployment number is from the Household Survey. Of note is [...]

Executive Summary Recent market movements attributable to “AI” (artificial intelligence) are reminiscent of the 1990’s “.com” era. Recently, Nvidia, a graphics processor manufacturer, reported a fiscal first quarter earnings drop of 20% (year-over-year) with revenue down 13%. Yet the stock soared (see first chart below) because of [...]

Executive Summary After losing around 34% throughout 2022, the Nasdaq 100 index has bounced nearly 30% off the lows. Most of this ramp is due to eight stocks, listed below with their corresponding P/E ratios, along with the return of fear of missing out (fomo). These stocks [...]

Executive Summary After over a decade of zero-interest rate policy, a pandemic, and massive government stimulus, inflation finally arrived with a vengeance on consumers.  In the first graph, the University of Michigan Consumer Sentiment Survey reveals consumers do not feel good about the economy. It is at [...]

Executive Summary Last week’s Federal Funds Rate increase of .25% brings the rate over 5%, all part of the Federal Reserve’s fight to reduce inflation. The second graph shows the corresponding increases in Treasury Security rates. With the U.S. National debt now at $31.7 trillion, interest expense [...]

Executive Summary While the S&P 500 has recovered some of its 2022 losses, do not be fooled into thinking all is well. Eight stocks including Facebook (Meta), Apple, Amazon, Netflix, Google (Alphabet), Microsoft, Nvidia and Tesla are responsible for 100% of the positive return so far this [...]