Category Archives: Markets Views & Analysis

This Chart is Driving the Higher for Longer Message

This chart of US CPI Inflation has been making the rounds for a few weeks. It shows the year-on-year percentage chage from 1966 to 1982 (blue) overlayed on the past decade (orange). Is this mearly a coincidence? Or could it be a pattern of longer-term

Quantitative Tightening Should Drain Liquidity from Markets

The Federal Reserve aggressively started to buy assets on their balance sheet to stimulate asset markets (read the economy) in the wake of the Great Financial Crisis. The Federal reserve has always used US Treasury Bonds and Bills (repo market) to help control the money

It’s a Bear Market, is it Time to Sell High?

By all metrics, we are in an end of cycle bear market. The yield curve (the cost of money) is our best leading indicator. Historically, bull markets have almost always ended with a recession. There have been exceptions with the market crash in 1987 for

Market Based Pricing Suggests We May Have Seen Peak Inflation

The breakeven spread is the implied rate of inflation between nominal bonds and inflation protection bonds (TIPs. Real Return). The breakeven rate is a market-based price of inflation expectations. We can see by looking at the 2-to-5-year part of the curve that expectations have not

How High Can The Market Bounce?

In looking at how high the market can bounce here; we should look at the potential of the technology sector that has been leading the downside. We saw a ferocious rally in March (about 17%) before the 200-day average turned the QQQs back. While the