A bank’s assets triple over a few years when interest rates are low. The bank invests those assets in long term, higher yielding municipal bonds with little credit risk. Inflation flares up and interest rates rise, reducing the value of the municipal bonds and funding dries up. Regulators become concerned that the failure of this […]
Last week started with investors focused on Jerome Powell’s testimony before Congress and any hints about future monetary policy. During the course of two days of testimony, that was deemed more hawkish than expected, the market priced in another rate hike and pushed out the possibility of a rate cut all the way to January […]
I was reading Bill McBride’s blog, Calculated Risk, recently and came across this post on heavy truck sales as a recession indicator. As Bill notes: Usually, heavy truck sales decline sharply prior to a recession. Sales were solid in January. It certainly looks like sales do indeed peak before recession. But how long before recession? […]
I’ve been writing for over a year about the economy rebalancing back to its pre-COVID trends. The massive fiscal expansion during COVID and the Fed’s accommodation of that spending via QE is what caused the spike in prices over the last 18 months. Yes, there were supply issues too but the size of the demand […]
The Fed meets this week and is widely expected to raise the Fed Funds rate by 0.25% to a range of 4.5% – 4.75%. The market has factored in a small probability that they do nothing and leave rates alone, but they’ll probably do what’s expected because they’ve spent the last couple of months preparing […]
Note: This will be my last full commentary for 2022. I will spend the month of December on research for next year, visiting with family and taking some much needed time off. I will still be watching markets, as will all the other members of the Alhambra team and if something happens which requires me […]
When we think about the challenges facing an investor today, the big problems, the things we worry about that could cause a lot more harm than some interest rate hikes, are mostly outside the United States. China is prominent this weekend because of demonstrations against their zero-COVID policies. The Chinese people appear to be pretty […]
Stocks had a rip snorter of a rally last week and a lot of people are pondering the question in the title over this long weekend. The S&P 500 was down 20.9% from intraday high (4818.62, January 4th) to intraday low (3810.32, May 20th). From that intraday low the market has risen 9.1% in just […]
Crude oil prices rose over 25% last week and as I sit down to write this evening the overnight futures are up another 8% to around $125. Almost every other commodity on the planet rose in prices last week too, as did the dollar. Those two factors – rising dollar and rising commodity prices – […]
As I write this the S&P 500 futures are down over 80 points, apparently in response to some rather harsh comments from Vladimir Putin concerning Ukraine. Russia recognized the independence of Donetsk and Luhansk, two breakaway regions in eastern Ukraine that border Russia, and is apparently deploying troops in these regions. This is seen by […]
