Category: Investment Banks

The U.K., The U.S., Inflation & Real Yields

The U.K., The U.S., Inflation & Real Yields

The Bank of England stepped into the bond market, agreeing to purchase Government long bonds until October 14th. The BoE plans to restart its Government bond sale program on October 31st (the central bank plans to sell GBP 80 billion of bonds each year as part of its tightening process). How did the U.K. find … Continue reading The U.K., The U.S., Inflation & Real Yields

The Return of Active Management

The Return of Active Management

Our view of the Equity market over the next few years calls for a choppy market that will reward Active Managers and penalize the Buy & Hold crowd. This forthcoming "choppy" market will not be a market where most Technology stocks move up or down, or where certain sectors move in unison. Rather, we are … Continue reading The Return of Active Management

GDP, Inflation, Yields, Currency & 2023 Earnings

GDP, Inflation, Yields, Currency & 2023 Earnings

Real GDP: If the Atlanta Fed is correct, Q3 will be the third consecutive weak GDP quarter given the bank's Q3 Real GDP estimate of 0.3%, which follows two consecutive negative Real GDP quarters.Inflation: We expect inflation to be sticky when the CPI is reported on October 13th. Core CPI will remain elevated largely due … Continue reading GDP, Inflation, Yields, Currency & 2023 Earnings

The U.K. Is Not In An Enviable Position

The U.K. Is Not In An Enviable Position

The Bank of England will likely institute an emergency rate hike of 25-50 BPS today in our opinion as the Pound plummets against the USD (FX Headwinds Will Persist Into 2023). What is fascinating is that the fiscal side loosened policy last week as U.K. Prime Minister Liz Truss pushed tax cuts. Conversely, the monetary … Continue reading The U.K. Is Not In An Enviable Position

How The Fed’s Balance Sheet Has Changed

How The Fed’s Balance Sheet Has Changed

We detail changes in the Fed's Balance Sheet since May 2022 as the Fed has embarked on its QT program (which has yet to kick into high gear). QT ramps up this month. Approximately $92 billion of Treasury securities have been pared from the Fed's Balance Sheet since May 4th 2022.Approximately $6 billion of Government … Continue reading How The Fed’s Balance Sheet Has Changed

The Strong U.S. Dollar. Or Is It?

The Strong U.S. Dollar. Or Is It?

Sure, the U.S. Dollar may be strong as of late versus other currencies, but when measured versus the price of gold, the USD has experienced significant value destruction over the years as a result of the Federal Reserve's persistent money printing. The USD has lost 98% of its value versus gold since August 1971 when … Continue reading The Strong U.S. Dollar. Or Is It?

The Economic Genie Is Out Of The Bottle

The Economic Genie Is Out Of The Bottle

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

The Cost of Debt Rises

The Cost of Debt Rises

Management Teams Have Less Discretionary Capital as The Cost of Debt Rises As the cost of debt rises, management teams have less discretionary capital to allocate toward growth initiatives and various sources of competitive differentiation (Product Development for example). Belt tightening will be required as corporate America braces for the new normal of higher input … Continue reading The Cost of Debt Rises