Operating at the Intersection of Technology and the Capital Markets
Month: August 2022
We believe the Fed will continue to raise rates into next year regardless of where the CPI comes in over the next several months. Today the market is trading up as the headline CPI print came in lower than consensus estimates. We believe the market is missing the bigger picture. This CPI / Fed Funds … Continue reading Where We Differ With The Market
We wrote yesterday that we would be surprised if the Fed follows through on its stated plan to reduce its balance sheet by $95 billion per month as it seeks to unwind the heavy hand it played in 2020 and 2021 by subsidizing fiscal stimulus programs and executing its QE program. Robust Fed balance sheet … Continue reading No QT as Far as The Eye Can See
It does not matter what the Fed does with the Fed Funds Rate at this point, the global economy is softening and is likely to get worse. Whether the Fed ultimately takes rates to 3.5% or 4.0% will have little effect on the macroeconomic backdrop (QT is a different story). More job cuts. Large Tech … Continue reading The Economic Genie Is Out Of The Bottle
We wrote about Amazon's (AMZN), project Vesta in 2019 (click HERE). Along those lines, Amazon recently announced that it plans to acquire iRobot (IRBT), a deal which will accelerate Amazon's Vesta strategy, which is essentially to gather information about the home via an autonomous robot (good news for the staff at Amazon Robotics). The folks … Continue reading Amazon’s iRobot Acquisition
We have previously written that it would make sense for Apple (AAPL) to acquire Disney (DIS). Apple and Disney could certainly hold informal talks now, but a letter of intent, formal due diligence and the purchase agreement negotiation would all have to wait until there is a new Administration in the White House in my … Continue reading Apple + Disney
If July Core CPI comes in higher than the 5.9% figure reported for June we believe there will be a 50% probability that the Fed could raise the Fed Funds Rate in August rather than wait for the September 20-21 FOMC meeting. The Fed is nowhere near a neutral rate (as we wrote earlier this … Continue reading A Fed Hike In August?
We expect headline CPI for July to modestly retreat from June's 9.1% print when CPI data is released on August 10th. Our rationale is simple - the price of oil has retreated. We expect CPI less Energy to climb as our real world experience suggests that price increases have broadly accelerated. Similarly, we expect Core … Continue reading July CPI: Headline Down, CPI Ex-Energy Up
Microstrategy (ticker: MSTR), founder and CEO Michael Saylor stepped down this week. We only mention this fact as Mr. Saylor was listed at the top of our CEORater CEO Risk Report ("CRR"), last year as a high risk CEO. Read our initial report HERE.
The Treasury yield curve continued to invert as short rates climbed higher and long rates fell. The 1-Year climbed to 3.14%, the 2-Year rose to 3.10% while the 7, 10, 20 and 30-Year Treasury yields all fell (see table below). The Treasury market is telling us that it expects a near-term recession by way of … Continue reading Yield Curve Inversion Implies Near-Term Risk
The "spend at all cost" fiscal policy of the past number of decades subsidized by dovish monetary policy has led to decades of anemic Real GDP growth. It's about to get worse. Our expectation is that the new "normal" for Real GDP will be zero percent over the next decade. Thank the genius triumvirate of … Continue reading Debt Addiction Strangles GDP Growth
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