Tag: interest rates

What Will The “New Normal” Look Like?

What Will The “New Normal” Look Like?

Over the past several months we have written that the new economic normal means a target CPI in the 3-4% range and muted Real GDP in the 0-2% range. Interest rates can't go back to the Volcker days as Treasury would not be able to refinance its debt at double-digit rates. We could however see … Continue reading What Will The “New Normal” Look Like?

More Layoffs Are Coming

More Layoffs Are Coming

Inflation, interest rates and OpEx are climbing while demand softens for many companies. One glance at the table below shows that layoffs over the past two months are fairly widespread across industries. We believe that more layoffs are coming as inflation and interest rates rise. Rates will accelerate higher in June should the Fed make … Continue reading More Layoffs Are Coming

NASDAQ: Further To Fall

NASDAQ: Further To Fall

Some months ago we stated that the NASDAQ Composite had 40-50% downside. On March 8th we said another 20-30% downside. This implies a NASDAQ Composite of around 9,000. Thus, we have further to fall. Interest Rates: Rates are going higher regardless of what the Fed does (other than more QE of course). Economy: There will … Continue reading NASDAQ: Further To Fall

The U.S. Economy Is Long-Term Fragile

The U.S. Economy Is Long-Term Fragile

We do not believe that investors fully appreciate how fragile the U.S. economy is. Our view is that the U.S. economy is in a recession and that this period will be followed by long-term muted growth given: 1.) the enormous U.S. Government debt load ($30.4 trillion), 2.) persistent price inflation, 3.) a consumption-driven economy rather … Continue reading The U.S. Economy Is Long-Term Fragile

Tough To Be A Fixed Income Investor

Tough To Be A Fixed Income Investor

It is tough to be a fixed income investor in this market. Yields are rising, but in real terms even high yield securities are in negative territory given the inflated CPI environment. Some fixed income portfolio managers are spinning that now is a great time to be a fixed income investor because high yield securities … Continue reading Tough To Be A Fixed Income Investor

A Recession Is Inevitable

A Recession Is Inevitable

It is inevitable that the U.S. Economy will enter recession this year should the Fed continue to tighten monetary policy as inflation persists. Wall Street is already seeing slowed activity with some M&A deals and credit pricings put on hold indefinitely or cancelled outright. The real economy will feel the negative effects of higher interest … Continue reading A Recession Is Inevitable

Tangible Value When Inflation Persists

Tangible Value When Inflation Persists

Last year we predicted 2022 Real GDP in the 0-2% range (The Atlanta Fed's GDPNow cast for Q1'22 is 0.5% as of March 8th). A recession this year is inevitable as the Fed moves to increase the Fed Funds rate and migrates from Quantitative Easing to Quantitative Tightening (Thereby shrinking the money supply). The first … Continue reading Tangible Value When Inflation Persists

Inflation Is Going Higher Regardless of The Fed’s Actions. Stocks Will Go Lower.

Inflation Is Going Higher Regardless of The Fed’s Actions. Stocks Will Go Lower.

Inflation is going higher regardless of the Fed's actions at its March meeting. The noise around whether the Fed will raise by 25 or 50 basis points is almost inconsequential as it relates to inflation as the inflation we are experiencing is a function of the dramatic increase in M1 during 2020 and 2021. The … Continue reading Inflation Is Going Higher Regardless of The Fed’s Actions. Stocks Will Go Lower.