Rates, Budget Deficit, Treasury Debt Issuance And Federal Interest Payments – All Rising

posted in: Credit, Economy | 0

Interest rates on both the short and long end have gone up meaningfully. The federal government sits on nearly $33 trillion in debt, and the budget deficit is on the rise even though the economy is growing. This only means … Continued

Higher Rates Not Helpful In Levered Economy, Raising Hopes Of Easing Late Next Year, But Fed’s Hands Are Tied Given Elevated Inflation

posted in: Credit, Economy | 0

The federal government is up to the gills in debt. Interest payments run up in the billions every year. This was not much of an issue in a low-interest-rate environment. But right now, the Federal Reserve is tightening. Higher rates … Continued

Fed Put At Work – After Slight Hiccup Last Week, Equity Indices Back At/Near Highs

posted in: Credit, Economy, Equities | 0

Last week, the FOMC slightly tilted hawkish. Repercussions were felt across assets. Then early this week, dovish members were out in full force, pacifying investors that monetary morphine is here to stay; major equity indices are back at/near their highs. … Continued

Fed Succeeds In Driving Investors To Take On Risk And Go Up Risk Curve, But End Game Is Bound To Be Painful Regardless

posted in: Credit, Economy, Equities, Technicals | 0

Last March, the Fed essentially urged investors to take on risk and go up the risk curve. They have obliged. Leverage is high in the system. This works as long as the prevailing upward momentum is in place. When a … Continued

FOMC Meets Tue; With Leveraged Economy Desperately Needing Low Rates, Fed Cornered

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The FOMC meets this week. The Fed already has unlimited QE in place. Not much is expected to come out of this meeting. If anything, aware that low rates are needed, Mr. Powell may drop a hint or two that … Continued

Stocks Increasingly Pricing In V-Shaped Recovery – What If It Is W Or U or L?

Stocks have diverged from sharp deterioration in fundamentals.  At the lows, several indicators were at washout levels, resulting in the massive rally that followed.  But at this point in time, they may be responding more to the Fed’s monetary backstop … Continued

Fed Increasingly Eyeing New Stimulus Tools, Stocks’ Reaction Function Key

posted in: Credit, Economy, Equities, Technicals | 0

US reliance on debt is growing.  Having already just about used up the conventional monetary tool and a massive balance sheet, the Fed is looking for new tools – a la Japan.  Stocks’ reaction function to Japanification is key. At … Continued

U.S. Fascination With Debt Knows No Bounds

posted in: Credit, Economy | 0

Debt addiction is pervasive among consumers, corporations as well as the federal government.  Several debt-related metrics are in uncharted territories.  The craving is built into the system and can continue until markets rebel. In December, U.S. consumer credit grew 4.7 … Continued

Tax-Cut Hopes Propelling Small-Caps — To Face Reality Test Ahead

Post-presidential election last November, U.S. small-caps sprung to life, going nearly parabolic in two separate spurts.  President Trump’s promises to cut taxes, prune regulations and increase infrastructure spending helped improve investor sentiment.  Small-caps inherently are domestically focused. The first rally … Continued

Z.1 — 2Q17 Household Assets At New High, Several Other Metrics At Nosebleed Territory

posted in: Credit, Economy, Equities | 0

The financial accounts of the U.S. for 2Q17 was published last Thursday.  Better known as the Z.1 report, the massive quarterly publication contains tons of useful data – thus highly recommended. The seven charts below try to highlight where things … Continued