Tag: stagflation

Consumer Strength Is Waning

Consumer Strength Is Waning

The New York Fed released its quarterly report on Household Debt and Credit this past week. Consumer strength is waning, not gaining. Loan delinquencies and foreclosures are up across auto loans and mortgage debt which is primarily where debt expansion has occurred in prior months. There are a number of charts between pages 3-40 that … Continue reading Consumer Strength Is Waning

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

Treasury Yields Will Only Move In One Direction

Treasury Yields Will Only Move In One Direction

10-year Treasury yields sit around 2.72% and will climb higher as the Fed: a.) lifts the Fed Funds Rate and, b.) trims its balance sheet (i.e. quantitative tightening "QT"). There is no scenario in which the Fed executes QT only to have Treasury yields move lower. It is simply a question of supply and demand. … Continue reading Treasury Yields Will Only Move In One Direction

Tech Earnings Season Is Here

Tech Earnings Season Is Here

Technology company earnings season is in high gear. It is a heck of a time to be a Technology fund PM or Analyst. Despite the NASDAQ Composite being down 13% YTD, the group has another 40% downside or more in our view. Many of the high-multiple of revenue (no earnings) stocks have 80-90% downside as … Continue reading Tech Earnings Season Is Here

Too Little Too Late

Too Little Too Late

Three or four quarter point rate increases in 2022 won't be nearly enough to curb inflation. The Fed does not have the luxury of taking interest rates anywhere near the Volcker-era Fed. Thus, inflation is likley to persist for an extended period of time measured in years not months. Further, we do not believe that … Continue reading Too Little Too Late

Google Search Trends: Stagflation

Google Search Trends: Stagflation

The word "stagflation" is at peak interest at the moment as measured over the most recent 12-month period using Google Trends to calculate search interest. We have beat the drum on stagflation for the past year and some on Wall Street have picked up the baton in recent days. Below we have created a chart … Continue reading Google Search Trends: Stagflation

How The CPI’s Fuzzy Math Understates Inflation

How The CPI’s Fuzzy Math Understates Inflation

The CPI data category "Owners' Equivalent Rent" ("OER"), uses data derived from surveys of homeowners in select markets rather than real world data. This technique allows the BLS and the Federal Reserve to understate price inflation. OER understates CPI by 1% or more. September's 5.4% CPI increase was understated by at least 1% per our … Continue reading How The CPI’s Fuzzy Math Understates Inflation

Real GDP Growth Remains Muted

Real GDP Growth Remains Muted

The Atlanta Fed updated its model for Real GDP ("GDPNow"). The Atlanta Fed's 3.2% Real GDP estimate as of today is down from 3.7% as of September 21st. We have previously written that real GDP growth may very well be zero percent or even negative as we believe the Federal Reserve underestimates true price inflation … Continue reading Real GDP Growth Remains Muted

It Is Beginning To Look Like Stagflation

It Is Beginning To Look Like Stagflation

The Atlanta Fed's real GDP estimate of 3.7% is well below inflation as measured by the Fed (CPI of 5.4%) and well below any real world price inflation measure. We do not subscribe to the Fed's theory that price inflation is transitory. Our view is that price inflation will grow from here. If real GDP … Continue reading It Is Beginning To Look Like Stagflation