U.S. equities recently completed a majestic 10-year run, with the S&P 500 outperforming cash by 11.9% per year between July 1, 2013 and June 30, 2023. To be sure, the ride was not always smooth. The market realized sizable drawdowns in 2015, 2018, 2020, and, most recently, in 2022 when elevated inflation and aggressive monetary
Read More …

The Federal Reserve has no plans to extend an emergency loan program it launched last year to bolster the capacity of the banking system in the wake of the collapse of Silicon Valley Bank. The Bank Term Funding Program will expire on March 11 as it reaches its original one-year time limit, Fed Vice Chair
Read More …

An emergency lending program the Federal Reserve created during the 2023 banking crisis has turned into easy money. Borrowing from the Fed’s bank term funding program has increased to new highs in recent weeks, a strange consequence of the market’s flip to forecasting multiple Fed rate cuts over the coming 12 months. The rate banks
Read More …

“We have never seen the money supply contract this fast without some sort of negative outcome.” https://dailychartbook.com/p/daily-chartbook-358 via @dailychartbook

[The] system is normalizing after COVID (and more relevantly, after the spastic and dramatic fiscal and monetary response to COVID). But normal is no longer sub-2%. Core services ex-shelter (so-called “supercore”) abstracts both from the deceleration in housing and the sharp drop in core goods, and it is hooking higher (this is partly because Health
Read More …

Modern financial markets are highly developed. Over the past decades they have created ever more refined concepts for investors to hedge against a myriad of risks, and for observers to use their pricing for clues on the economy and markets. One of these concepts is volatility, as measured by the VIX index (“vol”) and its
Read More …

Your grocery bill has increased more than 25% over the last four years!

“Man + Machine” applied to politics / history We do not profess to be political gurus. Our approach is to look for historical analogies to contextualize today’s environment. For example, at the outset of the Russian-Ukraine war, we flagged 20th-century examples of surprise wars and the market implications (link). Today, we re-visit a U.S. election
Read More …

Last year, most of the outlooks I looked at were similar, reflecting fears of an imminent recession. Of course, they were almost universally wrong, as they probably are most years. I say “probably” because when I was a professional investor, I paid no attention to any of these publications. This may mean you don’t want
Read More …

While digging into $BAC’s Q4-23 financial statements, I couldn’t help but wonder if they had lost their minds during the last three months of 2023. No, I am not referring to the “press release” or the “presentation,” which are usually prepared to “feed” the media rather than provide transparency to the shareholders. Hidden in plain
Read More …