Operating at the Intersection of Technology and the Capital Markets
Tag: interest rates
Despite today's uptick in Consumer Confidence, I suspect the measure will turn on a dime (negative sentiment), early next year as job losses mount, as rates remain elevated, as the market rolls over and as the housing market collapses. I expect forced selling in the housing market whether it be of primary homes, secondary homes … Continue reading Consumer Confidence Will Turn On A Dime
There will be more equity market fallout. Historically, equity markets haven't found a bottom while the Fed is in a tightening cycle. I see the NASDAQ index falling to 9,000 during Q1 2023 as: 1.) the Fed tightens further; 2.) weak 2023 earnings guidance is provided on Q4 EPS calls; and 3.) global recession combine … Continue reading Equities Have A Tough 2023 Ahead
The Fed reduced its Treasury and Government Agency security holdings by $32.9 billion over the week ended November 30th. The Fed has reduced its balance sheet holdings by $79.7 billion over the last 4 weeks. Fed Balance Sheet – Treasuries: The Fed’s Treasury security holdings were $19.6 billion lower over the last week and $60.0 … Continue reading The Fed’s Balance Sheet Reduction (QT) Update
The Fed reduced its Treasury and Government Agency security holdings by $4.8 billion over the week-ended November 23rd - essentially no change. The Fed has reduced its balance sheet holdings by $80.7 billion over the last 4 weeks as it modestly tightens monetary policy by shrinking the money supply (QT) and raising its Fed Funds … Continue reading The Fed’s Balance Sheet Reduction (QT) Update
Approximately 1.2 million residential mortgages in Great Britain are adjustable rate mortgages (ARMs). As the Bank of England (BOE), continues to move interest rates higher (3% rate today and likely moving to 3.5% on December 15th), the average ARM holder will have to absorb significantly higher monthly payments which translates to commensurately less disposable income. … Continue reading ARMs Will Drag Great Britain and The U.S.
This spring when I said the NASDAQ would bottom around 9,000 my thinking was as follows: 2022 would be a year where higher interest rates reset equity valuations lower, especially as it relates to the NASDAQ Composite. 2023 would be a year where poor company fundamentals reset equity valuations lower. The NASDAQ has experienced some … Continue reading Markets Have Another Leg Down
We believe the Fed will talk tough on Wednesday, lift rates into Q1 2023 and then hold the Fed Funds Rate at an elevated level for all of 2023 and well into 2024. No pivot in sight as we wrote last week. More importantly, the Fed continues to trim its balance sheet, thereby shrinking the … Continue reading Something Wicked This Way Comes
The Fed is almost done hiking and what they do this week (probably a 75 BPS hike), and in December (probably a 50 BPS hike), is almost irrelevant over the long-term. The larger question is how long will the Fed hold rates at an elevated level? We likely won't see a zero percent Fed Funds … Continue reading Almost There
The Fed does not have to shatter the economy to fight inflation. However, it will. There is a better solution. We break the article into 5 sections. Sections 1 and 2 provide background on how we arrived at the current inflationary state. Sections 3 and 4 describe a weak economy where monetary policy has already … Continue reading Must The Fed Shatter The Economy? No, But It Will.
Money is tight when we observe the monetary base (currency in circulation plus reserves). It is dangerous to shrink the monetary base at the pace in which we have done so as interest rates rise. Doing so could be the difference between an economic recession and a depression. One can see based on the first … Continue reading Money Is Tight. Perhaps Too Tight.
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