Executive Summary As a result of the COVID19 pandemic, student loan payments were suspended. However, on October 1 the payments resume, which will affect around 28 million borrowers. On average these payments will be about $350 per month, which reallocates around $7-8 billion per month from consumer [...]

Executive Summary Long-term (secular) bear markets are normally much shorter than long-term bull markets. However, they usually return stock prices to an undervalued state. Currently the valuation methodology of the Shiller P/E is 30, with the long-term average being about 16 (See first graph). Since the turn [...]

Executive Summary Recently crude oil prices have risen to over $90 per barrel, largely a result of production cuts by  OPEC. Many have felt the pain at the pump (see 2nd graph). Demand has not dropped after the  summer travel season, thus keeping prices on the rise. [...]

Executive Summary The Fed’s response to the 2008 Financial Crisis initiated programs which grew their balance  sheet from $900 billion to $4.5 trillion by 2014. In 2018 the Fed began reversing course and  reducing their balance sheet. However, by mid-2019 markets and the economy were showing  weakness [...]

Executive Summary This week’s newsletter will be abbreviated as is the Labor Day work week. The inverted yield curve, which has preceded most recessions, seems to be indicating recession (see first graph). Two consecutive quarters of negative GDP is generally accepted as a recession. However, in 2022 [...]

Executive Summary With mortgage interest rates soaring, many people expected a sudden drop in home prices. The data shows the quantity of homes sold has decreased significantly (see first graph). Yet, according to the Zillow Home Value Index, home values have risen back to new highs (second [...]

Executive Summary Prior to the pandemic, household savings were trending upward and then spiked with multiple rounds of government stimulus money (see green in first graph). In 2022, the savings drawdown accelerated (see red in first graph). A study by the San Francisco Federal Reserve estimates at [...]

Executive Summary Fitch, one of the three largest credit rating agencies, recently downgraded the U.S. debt rating from AAA to AA+ because the debt-to-GDP ratio is projected to reach over 118% by 2025. This ratio of debt is way out of line of a AAA rating, which [...]

Executive Summary Since the Federal Reserve Bank raised the Federal Funds Rate to 5.25%, the 30-year fixed mortgage rate has jumped to 7.46% (see second graph) – over double the pre-pandemic rate. At the same time, home prices have only dropped between .9%-2.3% (3rd graph) according to [...]

Executive Summary Most U.S. businesses use debt to maintain operations. The first graph shows how banks are tightening lending standards compared to the concurrent rise in prime interest rates on loans moving from 3.25% to 8.5%. Revolving debt outstanding is around $1 trillion. These loans normally contain [...]